It’s Sunday and sentiment is turning on the future of Union Jack, and so it should!
Here we have a UK based company that has moved out of the circle of companies who are regularly disappointing shareholders with placings, into a rare position of profitability, revenue generation and is debt free. Few AIM companies ever achieve this and whilst I am not going to deride the competition, I do think it is reasonable to draw a comparison in an effort to help potential investors understand just why they should be looking at this great little company.
Let me start with UK Oil & Gas (UKOG). Here we have a company who some years ago announced an oil discovery similar in size to Saudi Arabia’s oil reserves. It was described as the ‘Gatwick Gusher’ and drew enormous attention from the stock market. Today, it is the Gatwick Dribble’ and the company has moved from one disaster to the next, even recently announcing their geologists were thumbing up a drilling operation at a location where someone caught a whiff of oil! The shares are nigh on worthless and those who have remained steadfast have seen their investment as good as disappeared down one of their dusters. This has been devastating for the company and its investors.
Then I look at Europa Oil & Gas. Whilst part of a successful JV with Union Jack in the Wressle Well which has kept the lights shining bright for them, their entry into the Irish Sea hasn’t come to fruition and is fraught with uncertainty, they have suffered considerable management set-backs which have resulted in the removal of some and the inability to raise funding. Thus may sound great for shareholders, no more dilution, but how on earth is this company going to survive and prosper just on the Wressle Revenue? They have recently announced a move into Equatorial Guinea. Has anyone thought about how they will be able to progress any developments there without being able to raise cash?
Another is Angus Energy. What was a super gas discovery at Saltfleetby has descended into a debt ridden entity who have recently borrowed bigger to pay off their debt. Gas seems to have dwindled as has their value.
I could go on but it’s all there to see. One company after another descending into financial despondency with no light at the end of the tunnel.
So, back to Union Jack Oil.
*Millions of pounds in the bank
*No debt
*Daily revenue stream
*Quality assets in both the UK & US
*Minimum 3 wells to be drilled in 2024
*Experienced, mature management with own respected geology team
*Permian Basin Mineral Royalties returning revenues
*JV in biggest UK onshore gas discovery in 50 years+
*JV in potentially biggest un-appraised hydrocarbon discovery onshore UK
In view of the oil sector set backs, from the killer Energy Levy Tax, to Net Zero plans, Just Stop oil’s antics etc., it would be more than fair to say that Union Jack has weathered the storms and the recent entry into the US has certainly added a safety net to any further negatives, including the possibility of a Labour government getting in and further destroying the industry
Looking back over the bulletin boards, there has been little or no positivity. With the share price steadily decreasing, long term shareholders just giving up and moving elsewhere, selling on the back of any small increase, non-stop abuse and sheer nastiness towards a management that one can see has been making an effort to turn the fortunes of the company around, it would appear to me that there was little reason for any new investment.
But now, I believe confidence is building, many who were slating the management 24/7 are now less prolific. The hard liners are retreating as even they can see progress and will start to look very foolish maintaining their stance as things turn around. And turn around they will.
In the next few weeks, the company will see the spud of their first US well, the ANDREWS-1 which will, if successful (75% cos) add an attractive additional revenue stream to the Wressle and Keddington income.
Here in the UK, the question is, which will be mobilised first, West Newton or the Penistone Flags at Wressle. With two separate operators, shareholders could see both running in tandem.
Whether the US or the UK, Union Jack Oil now have some exciting assets to be developed this year and I think we will start to see the benefit financially as the share price reacts positively.