Union Jack Oil (UJO) is a junior oil play with a sizeable portfolio of UK onshore license interests including a 10% share of the revenue-generating Keddington field. News is expected in the coming days, which could trigger a value event in the stock.
Much of its current focus is on the Egdon-operated Wressle field which is due to substantially increase revenue for the company in the 2nd half of 2017, with an anticipated constrained flow rate of 500 bopd. Union Jack recently increased its interest in Wressle and now holds 15%.
Wressle the issue
Today, the 3rd of July, is an important day for Union Jack as North Lincolnshire County Council’s Planning Committee meet at 2pm to decide whether to accept a revised planning application enabling the development of the Wressle field.
As stated in an RNS on Friday 30th June, the new application ‘includes additional detailed information to address the specific concerns raised by North Lincolnshire County Council in its 11 January 2017 decision to refuse the original application’. In addition, Union Jack also said that the new application has received a recommendation for approval from North Lincolnshire County Council’s Planning Department.
The committee report can be viewed here.
Price Movements
The share price of Union Jack was sitting above 0.2p towards the end of 2016 but the planning application refusal was a major factor in the price crashing as low as 0.1p in January. However, the company successfully raised £1.4m in February at a placing price of 0.135p and now has £2m cash available to fund the remaining costs of the Wressle development and the subsequent drilling of two exploration wells which are scheduled to spud late in 2017.
Amongst its other 9 licenses, the company also has exposure to Broughton North providing exploration drilling exposure on a similar structure to Wressle as well as the Holmwood prospect, which lies just 7.5 miles west of the much talked about Horse Hill-1 discovery. With drilling of the Europa operated Holmwood exploration well expected later in 2017, Union Jack holds a 7.5% interest in gross mean prospective resources of 5.6 mmbbls.
Where now?
In anticipation of planning approval for Wressle, the share price has swiftly headed back towards 0.2p in recent sessions. We are now ever closer to Union Jack’s further exploration plans, which along with positive progress at Wressle have the potential to drive the share price significantly further north than Lincolnshire.
Buy below 0.2p for a potential flag waving 0.3-0.4p later this year.
UPDATE 1610:
The North Lincolnshire County Council’s planning committee has again refused permission for the development of the Wressle Oil field. In an RNS released by the fields operator Egdon, Managing Director Mark Abbott expressed his disappointment by the decision which went against the positive recommendation of the County Council’s planning officer and stated ‘We will now take forward our appeal against the original 11 January 2017 determination which is due to be heard in November 2017’.
The share price of Union Jack Oil has crashed on the news briefly hitting a low of 0.097p on the offer before steadying around 0.12p just before market close.
Although a tough pill to swallow today, shareholders are fortunate that Union Jack Oil has a number of irons in the fire spread across its 11 license interests with some exciting exploration activities still to come in the 2nd half of the year including the Holmwood prospect in the Weald basin.
It wouldn’t be at all surprising to see this latest Wressle knock back be appealed. While sentiment has certainly taken a hit, and there might be further selling over the coming days, any further weakness in Union Jack’s share price could present an excellent opportunity to average down, with a medium term outlook.
DISCLOSURE: The Author owns shares in Union Jack
