Key points:
- Union Jack Oil (UJO) shares rallied 17% on the maiden dividend news.
- The firm also unveiled a share buyback program to return cash to investors.
- Investors cheered the news. Are UJO shares a buy? Read on to find out.
The Union Jack Oil PLC (LON: UJO) share price rallied 17% after declaring its maiden special dividend while at the same time unveiling a share buyback program and confirming the details of its capital allocation and distribution policy.
The UK-focused onshore oil and gas company revealed that 2022 had been a busy year in terms of its financial performance and that following a thorough review of its capital requirements and business operations, its management board decided to return cash to shareholders in the form of a special dividend and a share buyback program.
Also read: Best Oil Stocks To Buy Right Now.
Union Jack Oil noted that the above decision was made possible by the High Court’s 30 August 2022, allowing the company to reduce its capital holdings, combined with shareholders’ approval of a share buyback program during the Annual General Meeting (AGM) held in June 2022.
The company revealed that it would be paying a 0.8p special dividend to shareholders on record as of Friday, 18 November 2022, with the shares going ex-dividend on Thursday, 17 November 2022, on the London Stock Exchange. The total amount paid out as a special dividend is £902,927.
UJO will also embark on a share buyback program, buying shares in the open market but has not clarified if it has set aside a specific amount for use in buying back shares. The shares bought back will be kept in the company’s treasury and will not have voting rights.
The company noted that market conditions would inform its share buybacks, including trading volumes and prices. In addition, UJO’s capital allocation and distribution policy will also play a central role in determining when it shall conduct the share buybacks.
Investors cheered the news fueling a rally in UJO shares. So, would I buy UJO shares? The short answer is yes. The company does not have any debt and is a massive cash generator. However, I would wait for a break above 30.0p before buying.
*This is not investment advice.
The Union Jack Oil (UJO) share price.
The Union Jack Oil (UJO) share price rallied 17.05% to trade at 29.55p, rising from Friday’s closing price of 25.20p.