SP Angel thoughts on Union Jack Oil plc (LON:UJO) today; “Today’s news of the release of its competent persons report (“CPR”) on Wressle is a watershed for the company in that following its release, the company can now report reserves of 0.05mm bbl. This is a momentous occasion, as it not only reports reserves, but also independently confirms Wressle’s commerciality.
However, of more note is the contingent resources, which are reported at 1.53mm bbl (0.13mm bbl net to UJO), which will be reclassified as reserves once a development plan for the Penistone Flags has been accepted by the Oil and Gas Authority (“OGA”).
Tangentially, with the change in the risk profile, the company can now legitimately take on more risk, should it wish to, at the exploration end of its portfolio. Today’s news underlines the fact that the company has stayed true to its stated aim of giving investors exposure to high growth oil and gas exploration, without exposing the company to excessive risk.
As a result of today’s news, we are also upgrading our outlook for Broughton North, which when netted off against the increase in shares results in modest increase in our valuation to $13.7mm (0.70p), of which $1.8mm (0.11p) can be considered Core. Using SPA’s recommendation scale, we reiterate BUY Recommendation.”
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