Union Jack Oil eagerly awaits promising results from West Newton appraisal
The AIM-listed, small cap company Union Jack Oil (LON:UJO) released its 2018 financial results earlier this week, cheering up shareholders and showcasing promising prospects. In an exclusive interview with oil & gas PR guru Stefania Barbaglio, Union Jack Executive Chairman David Bramhill comments on UJO’s journey and its strategy to build a successful, sustainable, UK-focused onshore hydrocarbon production and development business.
He talked about UJO’s key projects and how they could dramatically change the future of the Company.
With the release of its results, Union Jack has established itself as one of the AIM-listed rising stars in the oil & gas sector. Beyond increasing the proven hydrocarbon reserves and prospective resources of its projects, UJO’s revenue has increased by 250%, standing currently with a cash balance in excess of £2.5million.
David is a very down-to-earth leader. Union Jack has a conservative, safe tried-and-tested approach to its strategy. In terms of financial results and funding for operations, David says: “We are prepared for new prospects.”
The Company is fully funded, debt-free and undertaking an exciting drilling campaign at West Newton 2 appraisal well in the licence PEDL183. PEDL183 is located onshore in the UK, and contains the West Newton A-1 gas discovery, operated by Rathlin Energy, where, according to a 2017 Deloitte CPR, there is in excess of 189 bcfe of 2C Contingent Resources within the Kirkham Abbey Shoal Gas formation, with considerable further potential prospective resource upside for oil within the deeper Cadeby Reef formation.
UJO’s encouraging results could eventually be magnified by the upcoming results of West Newton basin, one of the UK’s highest impact onshore projects. The well has more than a 70% probability of gas and oil outcome: success here could lead to the delivery of a major onshore gas development of which the value of the investment would be Company-changing and effectively transform Union Jack’s future.
“West Newton is a vast and recent discovery. Any results even smaller than the original projections can still be life-changing for Union Jack Oil and the shareholders. 189 bcf is a massive amount of gas,” highlights David Bramhill.
In addition to the West Newton well, UJO owns two other onshore assets in the UK: Wressle Discovery and Biscathorpe wells.
Operations on Wressle are on hold until the hearing for the company to obtain planning permission, which is set to take place later in the year. Commercial production at Wressle could transform UJO into a material cash-generating oil production company and provide net cash flows of circa US$3.5 million per annum in the current oil price environment.
Biscathorpe remains suspended for a potential future side-track once the Joint Venture Partners have received new sub-surface model integrating re-processed 3D seismic data.
Despite the disappointment on the first drilling attempt, Biscathorpe, in the opinion of Union Jack`s management, remains one of the UK’s largest onshore un-appraised conventional hydrocarbon prospects.
Commenting on Biscathorpe, David Bramhill comments: “Over a century ago, Henry Ward Beecher, the American social reformer and speaker quoted ‘One`s best success comes after one’s greatest disappointments’. Biscathorpe’s structure is more complicated than what we expected and this is the risk inherent with oil & gas operations.”
Now is the time to invest in oil companies:
Even though there has been a significant push towards clean energy to reduce carbon emissions, and sales of electric cars are increasing all over the world, giving the impression that fossil fuels are no longer a profitable market, market analysts believe that oil companies are a good bet for investors: they say it is too early to run away from oil and gas companies.
Oil analysts are confident that we may be close to another oil boom over the coming years. “Investors would be wiser to purchase oil assets at a discount in anticipation of a medium-term price boom,” said Bob McNally, president of consulting firm Rapidan Energy Group and a former energy advisor to President George W. Bush and to CNN Business.
While sales of electric cars are growing, electric vehicles still represent a small portion of total car sales; the majority of vehicles still run on fossil fuels. It is also important to note that fuel is not the only use for oil. Indeed, demand is up for petrochemicals used to create plastics, and the International Energy Agency estimates that petrochemicals will account for the biggest source of oil demand growth through to 2030.
As a result, because of underinvestment in those projects, oil supply may decrease, causing prices to go up and driving up oil stocks along the way.
“Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies,” IEA Executive Director Fatih Birol said in a statement. “But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner energy technologies to change course. Whichever way you look, we are storing up risks for the future.”
The tide seems to be changing, though: after three years of decline, investment in oil, gas and coal supplies went back up in 2018, signalling an interesting market move back towards fossil fuels.
Union Jack’s Chairman leaves his message to potential investors and those looking into Union Jack: “Investing is always risk. But if people choose to invest in Union Jack, they would be investing in quality projects. They would also be dealing with a very transparent company. We have a great technical team; I am very proud of my team.”
References:
Annual Report Year End 31 December 2018
Come and talk to UJO chairman David Bramhill in person at an exclusive investor presentation. Union Jack Oil will be presenting at the next Cassiopeia Investor Symposium on June 27th in Central London. For more information, please email info@cassiopeia-ltd.com.
