Union Jack Oil (LON:UJO) has issued an update on its significant Wressle asset, in which it holds a 40% interest. Currently, Wressle is producing at a gross rate of 780 barrels per day (bbl/d) with no water cut, maintaining the strong production levels previously reported. This consistent performance is a positive development for Union Jack, ensuring a steady cash flow from Wressle.
Zeus Capital have produced a report on the company in which it states the cumulative net revenues generated by Union Jack from Wressle now stand at US$16.0 million, representing an increase from the US$15.0 million reported in early May. Additionally, the company holds £9.2 million in cash and short-term receivables, along with £2.3 million in liquid investments, including its stake in Egdon Resources (LON:EDR). These financial resources, combined with the cash flows from Wressle and recent proceeds from the sale of the Claymore Area royalty interest, provide Union Jack with a solid financial position to execute its planned work programs.
Regarding ongoing development activities at Wressle, the installation of micro turbines for internal gas utilization was completed earlier this year, contributing to oil production. Plans are underway to install additional power generation infrastructure, aiming to achieve local power export of 1.4 megawatts (MW) and the potential for broader gas export thereafter. While this infrastructure is expected to generate revenue, its primary purpose is to increase oil production. In the second half of 2023, Union Jack intends to seek clearances to drill a second production well, which could further bolster the current production rate of 780 bbl/d or even drive overall growth.
An upcoming Competent Persons Report (CPR) for Wressle is anticipated, which will incorporate production data, additional field analysis by the joint venture, and future plans. This report will provide further insights into the asset’s performance and development prospects.
In summary, the consistent production from Wressle contributes to Union Jack’s cash flows and serves as a key asset for the company. The ongoing development program at Wressle continues to provide operational news flow, highlighting the significance of this asset for Union Jack. Looking ahead, investors can expect further updates on the progress of Wressle and its continued contribution to the company’s overall performance.
Conclusion: Union Jack Oil maintains a portfolio of onshore assets in the UK, with steady progress being made in their respective work programs. The successful production commencement at the Wressle field in 2021 has resulted in gross production rates of 780 bbl/d, generating £5.6 million in EBITDA for Union Jack in 2022. As gas monetization is progressively upgraded throughout 2023, there is the potential for higher production rates, especially with the potential drilling of a second production well. Wressle’s substantial revenues provide valuable resources for Union Jack that can be utilized in other areas. Additionally, Union Jack holds a 16.7% interest in the West Newton asset, where significant volumes have been discovered, and plans for a new horizontal test well are in progress. The company is also pursuing side-track drilling from the Biscathorpe-2 well and an exploration well on North Kelsey, subject to planning appeals. With its healthy cash position of £8.7 million and ongoing cash flows, Union Jack is well-funded for its current operations.
