Union Jack Oil reports £2m of net profit in 1H22 with £21.5m of distributable reserves

[source: Union Jack Oil]

Union Jack Oil (UJO Follow | UJO), a UK-focused onshore conventional explorer, unaudited results for the 6 months ended 30 June 2022 (H1 2022) made good reading this morning.

The Company reported £4.38m of revenues and £2.03m of maiden profit in H1. The company was debt-free with a cash balance of £10.5m as of 6 September 2022.

In August 2022, the High Court also approved a Capital Reduction, creating additional distributable reserves of £21.5m, providing Union Jack with flexibility to deliver future dividends and/or share buybacks.

Wressle Field

During the period, Union Jack received approvals for its Wressle Field Development Plan and licenses for a production phase through 2039, from the North Sea Transition Authority (NSTA).

Wressle has now produced and sold 225,000 barrels of high-grade oil, currently averaging 300 bopd. In March, Union Jack increased its interest to 40% in PEDL180 and PEDL182, containing Wressle.

Later in September, further analysis on Wressle is to be published in GaffneyCline Reserves and Resource Report, Illustrative Production Profile, and Upside Potential of the Wressle Field.

West Newton

Planning was granted for West Newton for A and B site works, with a 3-year permit extension. Joint Venture partners are progressing with a conceptual development plan for West Newton, predominantly as a major gas producer, Union Jack said.

The first horizontal appraisal well at West Newton is planned for 2023.

RPS Group is expected to publish a Competent Person's Report by Q3 2022, covering West Newton and other significant prospects within PEDL183.

View from Vox

Union Jack Oil has had a very good year with shares currently up 155% YTD despite challenging economic and market conditions. 

Today's results reaffirmed investors' confidence in the company, with £2.03m of maiden profit, £4.38m of revenues, no debt, and a strong cash position recorded at the end of 1H22.

Cash flow is steady from the company's flagship Wressle project. Wressle is currently among the most productive conventional-producing UK onshore oilfields, set to become second only to Perenco's Wytch Farm. To date, Wressle has produced over 225,000 barrels of oil with zero water cut, with instantaneous rates of over 1,000 bopd achieved. Union Jack is actively developing the site, approved for production through 2039, and recently increased its stake in Wressle to 40%.

Wressle's gas monetisation is another priority project for Union Jack that is currently in the planning phase. The company says the ability to process and sell gas from Wressle will also allow oil production to be increased.

"Union Jack continues to be cash flow positive covering all G&A, OPEX and contracted or planned CAPEX costs, including any drilling activities for at least the next 12 months." commented David Bramhill, Executive Chairman. He added:

"We look forward to the remainder of 2022 and reporting on a number of fronts, including our dividend and share buyback policy, the GaffneyCline Report and RPS Competent Persons Report for Wressle and West Newton respectively, both of which I am confident will confirm the future operational and financial strengths of these two flagship projects."

Union Jack was also given the nod by the High Court for a Capital Reduction, creating additional distributable reserves of £21.5m, that may be used to pay a dividend and/or activate a share buyback programme.

Looking ahead, H2 is seeing considerable activity from Union Jack's operators involving the planning and designing of key wells to be drilled at West Newton and Keddington and potentially Biscathorpe during 2023, along with additional development programmes at Wressle. The company remains fully funded and debt-free as it proceeds with these forward drilling and development programmes.

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