Key points:
- Union Jack Oil (UJO) shares edge 5.34% higher on operations update.
- The company has hit the £10 million revenue mark at its Wressle oilfield.
- Investors had a muted reaction as UJO shares attempted to recover.
The Union Jack Oil PLC (LON: UJO) share price edged 5.34% higher after revealing that it had hit the US$10,000,000 crucial milestone in revenues from the Wressle oil field in North Lincolnshire, in which it owns a 40% stake.
The company noted that it had exercised 4 million warrants at 2.5p each to acquire 4 million ordinary shares in Egdon Resources plc, which operates the Wressle Development. As a result, Union Jack’s stake in the company rose to 17 million shares, representing 3.13% of Edgon’s total issued share capital.
Also read: Best Oil Stocks To Buy Right Now.
Investors cheered the announcement, as evidenced by the rally in UJO shares. However, I expected a stronger reaction, which did not materialise as investors are used to the oil and gas company’s positive releases.
UJO shares are currently attempting to rally after a massive selloff from mid-September on news that the company was using the wrong drilling methods at its Wressle development oilfield. However, investors are still recovering from the selloff, hence, today’s muted reaction.
Union Jack Oil noted that its stake in Edgon Resources was now worth £909,500 as of the close of business on 3 October 2022. Furthermore, the oil company noted that production at Wressle continued naturally with zero water cut.
The oil company had cash balances and short-term receivables worth over £10 million yesterday, with revenues from the start of the year standing at over £6.846 million. The firm’s initial figures indicated it remained profitable in the just-ended Q3.
David Bramhill, Union Jack Oil’s Executive Chairman, commented: “The revenues of in excess of US$10,000,000 from the Wressle development continue to bolster the Company’s Balance Sheet. Since the last production update, another impressive production performance from the Wressle-1 well has been recorded, this encouraging performance continues, and the outlook remains positive.”
Would I buy UJO shares? The short answer is yes. The company has a market capitalisation of £33.39 million, yet it has over £10 million in cash and other significant cash-generating assets.
*This is not investment advice.
Union Jack Oil (UJO) share price.
The Union Jack Oil share price edged 5.34% higher to trade at 30.55p, rising from Monday’s closing price of 29.00p.
