Union Jack Oil – “pleased to announce” West Newton update: Really?! By Hotstockrockets | Saturday 1617 Oct 2021 16:24
Union Jack Oil (UJO) states that it “is pleased to announce an update in respect of the West Newton A-1, A-2 and B-1z discovery wells as part of the Extended Well Test programme, accompanied by an updated estimated best estimate in-place oil and gas volumetrics of the Kirkham Abbey reservoir”. The shares have responded more than 6% lower to 18p to sell, so is the news really ‘pleasing’?
The company emphasises that the test results “have confirmed that the WNA-1, WNA-2 and WNB-2 wells are substantial hydrocarbon discoveries within the Kirkham Abbey formation” and notes a West Newton updated best estimate 113.6 million barrels of hydrocarbon liquids stock tank oil initially in-place and 50.6 billion cubic feet of gas initially in-place.
House broker SP Angel notes those respectively compare to prior estimates of 146MMbbl and 212Bcf, whilst Union Jack is now to have a number of studies conducted on potential reservoir stimulation treatments.
The test results with those developments are not ‘pleasing’ and are why the shares have responded lower, to a current £20.6 million market capitalisation. We previously noted clear Wressle development upside potential but that West Newton also remains key. There was then also a “strategy U-turn, so why not placing U-turn?!”, with we noting then that, not understanding that, we would look to use upcoming news flow as an exit point.
We apologise that this has not worked out as hoped but, with now less project and strategy confidence here and various other plays already in the portfolio which we consider now much better placed to take advantage of the current positive sector momentum and seven year high oil prices, we now apologise and suggest you sell.
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