A previous adventure in royalties by the company a few years ago was reported as returning a pretty impressive uplift to the original investment, which could certainly have been far greater had there not been such an uprising from a number of shareholders, most who likely had little understanding of them anyway, causing a back track on the proposed investment size.
However, this next venture seems to have attracted little opposition, if any, and quite extraordinarily, has already returned an impressive 10% of the original investment of £677,235 in less than two months.
Some may not realise that these Mineral Royalties also provide additional upside as new wells are drilled and completed on these properties at no cost to the company whatsoever.
Chevron, one of the associated operators, has publicly stated their commitment to expanding activities in the Permian Basin which is seeing an exciting revival and looking to be the ‘in’ area for drilling by a number of majors over the coming years.
The Permian Basin is a large sedimentary basin located in western Texas and southeastern New Mexico, in the United States. It is one of the most prolific oil and natural gas producing regions in the country, with significant reserves and production. The basin has been actively drilled since the early 20th century and continues to be a major hub for oil and gas exploration and production.
For Union Jack, this particular asset looks to be a shrewd move into the US and one which will reward shareholders as those revenues strengthen the company bank balance.
My thoughts are that this year we will see many corners being turned by this unique little AIM oiler that, unlike many of its competitors, has a substantial bank balance, is profitable and revenue generating, which ensures shareholders will not be subjected to unexpected fund raisers. Few AIM companies can boast as much.