Union Jack Outshines the Competition

Union Jack Oil, contrary to the beliefs of just a small number of people who have nothing better to do than post negative, misleading and in many cases inaccurate and ill-formed comments on the bulletin boards, is in every way going to outweigh its AIM listed peer companies in the onshore UK sector.

The past few years have not been easy for this little oiler, what with planning refusals, appeals and challenges to positive outcomes. One could reasonably assume that the future of small oilers who are not producing is written on the wall. Even those like Union Jack who are lucky enough to have a strong revenue stream from Wressle have had their legs cut from beneath them with the energy profits levy and the potential removal of right’s to further licence approvals.

However, unlike their peer companies, Union Jack has chosen to utilise their substantial cash reserves to enter the United States, drill their first well, which is already generating commercial rates, whilst also investing in a substantial Mineral Royalties package that is also providing the company with additional revenue streams.

It is not difficult for anyone with an understanding of this industry that what the management are aiming for here is to sustain a strong income stream whilst building a new asset portfolio in a country that shows favour and understands the need for home produced fossil fuels.

With considerably lower taxes, the value of a barrel of oil in the USA is far greater than the UK and the costs to drill the wells required to make a success of this venture far, far less than the millions required over here.

People ask why no institutional investors are showing any interest in Union Jack? Would you gamble your clients money on any UK oiler when it is common knowledge that even when they get permission to drill, that doesn’t mean they get permission to produce. Even if they do, that permission is immediately challenged by activists. Years and years of appeals and objections with no guarantee of success!

This management has made an excellent decision moving their operations outside of this backward looking country whilst they have the cash to do so. They are not sitting around waiting and hoping for the rights to drill or the rights to produce. They are aggressively targeting a drilling and production program with their joint venture partners Reach Oil and Gas. The first well was planned, drilled and put into production within just a few months.  A second well is already in the planning phase.

There have been questions asked over why the company has not yet released the Andrews-1-17 flow rates and accusations they are as low as 20 bopd. When one looks at the fact they have stated quite clearly they are testing, cleaning up and in the process of installing permanent production facilities to optimise flow rates, the various ‘accusations’ are as ludicrous as the people who make them.

The site facilities we are seeing installed via the images on X are not indicative of a small amount of oil. The average rates of nearby wells are in the 150 barrels per day range. Why would this be any different, why would management declare a ‘major success’?

Union Jack is going to do extremely well in 2024 and beyond. This will be down to a shrewd, experienced management who are doing what needs to be done and I support their decisions 100% .

Whilst the share price remains far below expectations, I fully expect a re-rate this year to the 50p+ levels and this is in line with many analyst estimates.

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