Firstly, the company is not obliged to pay a dividend. The company IS obliged however to create value for shareholders.
This is now obviously being engineered with the entry into the United States, something that has substantially increased the chances of success for Union Jack as the UK seems intent on destroying any future for UK oil, onshore and offshore.
Today’s announcement confirming a divi is a small reward for shareholders, and by small, I would expect something in the range of .03p, an amount not likely to have any financial impact on the cash position of the company who’s priority is to create value through the share-price.
A dividend is great but investors want to see 50p, 75p or £1.00 even and anyone expecting a penny is, I am quite sure, going to be very disappointed. It is quite obvious that the cash in bank is going to be considerably less than the £9M previously announced. The company has bought mineral royalties, it is drilling a well, it needs to retain funding for West Newton, the Penistone Flags, possibly Keddington etc., whether these assets are developed this year or not the company is obliged to ensure the funding is ready and available
David Bramhill’s shrewdness has been responsible for the envious position the company and its shareholders now find themselves in and ensuring the future ‘remains bright’ will rely on this canny man continuing to keep a tight hold of the reins.
So, forget any chance of a big dividend, Union Jack is still a very small business and spending the cash by investing in new and exciting prospects is what will return the best value for shareholders.
If the Andrews-1-17 well meets or betters estimates, I feel we could see additional drilling and more wells this year. And why not? Cheap, quick and with the knowledge the oil is there and easily accessible, it would make complete sense to exploit it.
Then we could see larger and more regular dividends. In the meantime, let’s get back up to 30p and more!
