Positive outcome at Wressle
Union Jack’s bullish position on Wressle has been validated by the recent grant of planning consent for the project, and represents another key share price catalyst for the Company ahead of a potentially transformational year ahead in our view. Wressle is slated to come onstream this Summer contributing c.US$3m of annualised revenues net to the Company. After taking operating costs into consideration, SPA est. US$8-10/bbl, such revenues would propel Union Jack into a material cash generating oil production company. We reiterate our STRONG BUY rating and 0.70p TP.
Wressle coming onstream would generate c.US$3m per annum net Following the much-publicised discovery in 2014, Wressle-1 flowed both oil and gas from three separate reservoirs, the Ashover Grit, the Wingfield Flags and the Penistone Flags. The flow test from Zone 3a also confirmed the presence of an oil column below the gas leg in Zone 3 of the Penistone Flags. The well flowed at a combined constrained rate of 710boepd from the three main intervals. Now that planning consent has been granted, the joint venture partners will initially focus on developing the Ashover Grit formation. In line with the approval, the partners will constrain output to 500bopd gross, therefore 137.5bopd net to Union Jack’s interest. The robust economics of the project suggests that Wressle is value accretive down to US$35/bbl oil.
Union Jack Oil plc (LON:UJO) is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector.
