Another lacklustre reaction to yet more good news from Union Jack.
The market seems to have little interest in oil stocks right now and one can understand the reluctance when this government is doing all it can to destroy sentiment whilst taxing any profits to the hilt.
However, in Union Jack’s case, there is a good reason for some much needed confidence as they advance their interests in the US. Unlike many companies who are just idling, keeping the lights on with placings, unable to actually raise funds of any worthwhile amount, whereas this company is cash rich, profitable, revenue generating from both its UK and US assets (recently purchased Mineral Royalties) and is making headway on new prospects with the imminent spudding of their first well in Oklahoma.
All of this sets Union jack apart from its peers and whilst some may believe West Newton and Wressle are the only reason to have any faith, I believe we are going to see all the excitement and interest from the US venture. This is where the news flow will be most prominent, where revenues could easily outweigh that of the UK assets and in addition, with only weeks from making a decision to drill a new well and spudding it, the US has none of the restrictions experienced to date over here.
Whilst I do see movement on West Newton and Wressle this year, for me the long term vision is of a number of pump jacks lined up on this licence area in Oklahoma producing oil and gas and Union Jack taking a 45% cut with none of the energy profit levy being applied. To avoid this, one would assume the company would have to set up a separate entity in the US or tie in with Reach Oil maybe. Whatever the outcome, news will be regular I am sure.
