Malcy view of things for those that have missed it23 Sep 2021 23:23
Union Jack Oil has announced that it has raised £3 million by way of a placing of 13,636,364 new ordinary shares of 5 pence each at a price of 22 pence per share. I understand that the placing was massively oversubscribed which is not a surprise as this funds success. With so much going on operationally at UJO it is worth looking at their comments below.
‘In light of the excellent performance at Wressle where flow rates in excess of 950 barrels of oil equivalent per day have been achieved, and the potential untapped upside, the Board has decided to continue to focus on its core projects at Wressle, West Newton and Biscathorpe while also progressing its other existing production and appraisal projects. The Placing will be principally applied to upgrade the Wressle producing assets to expand future cashflow generation and to fund the planned side-track well at Biscathorpe’.
The Company intends to use the net proceeds of the Placing to expand the oil production facilities at Wressle that has achieved rates from the Ashover Grit reservoir of 884 barrels of oil per day on a significantly restricted choke setting, with high wellhead flowing pressure and with zero water cut. They will also progress a gas to power revenue stream at the Wressle project facility, drill the planned side-track well on Biscathorpe in 2022, which the Company believes to be one of the UK’s largest onshore un-appraised conventional hydrocarbon targets and for project contingency and general working capital.
In making its ongoing commitment to fund its core projects, the Board has decided not to pursue the acquisition of a further 25% interest in the Claymore Piper Complex Royalty Units that was previously disclosed in the Interim Results released on 13 September 2021.
UJO has to a certain extent been punished by its own and partners success at Wressle as the production facilities are being upgraded to handle the significant amount of oil being produced on a daily basis with revenues up in line with those production numbers.
In these matters I think that UJO’s David Bramhill has been doing a brilliant job at Wressle and in where UJO is positioned right now, the market has not given anything like enough credit for this and the shares are below the highs from the spring, before the huge revenue surge from the field.
Whether the market mistook the fact that the company was fully funded for the existing programme and not effectively forever may be to their own chagrin, right now the shares are very cheap as shown by the multi times oversubscription.
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