Union Jack set for maiden profit as Wressle revenue hits $8m

Union Jack Oil announced on Monday that “material landmark” net revenues of $8m (£6.63m) have been achieved from the Wressle hydrocarbon development within licences PEDL180 and PEDL182 in North Lincolnshire, on the western margin of the Humber Basin.

The AIM-traded firm holds a 40% economic interest in the development, with the company reporting that the well was continuing to produce under natural flow, with zero water cut.

It said it was still cash flow positive as a company, covering all general and administrative, operational and contracted or planned capital expenditure costs, including any drilling activities for at least the next 12 months.

As at 24 July, cash balances and short-term receivables stood at more than £9.15m, while the board confirmed that a maiden profit would be posted for the unaudited half-year ended 30 June.

To date, due to Union Jack's current capital expenditure programme, the recently-introduced Energy Profits Levy of 25% was not expected to be material to the firm, the board added, as it remained debt-free.

“The revenues of in-excess of $8m from the Wressle development continue to bolster the company's balance sheet,” said executive chairman David Bramhill.

“Since the last production update published during June, another impressive production performance from the Wressle-1 well has been recorded and the trend remains positive.

“Cash balances are expanding significantly on a monthly basis, and we are funded for costs, including any drilling activities for at least the next 12 months.”

Bramhill said the Gaffney Cline report continued to be updated and upgraded to reflect increased production rates, and also incorporate other ongoing positive reservoir modelling and production profiling exercises into its final analysis.

“Since Gaffney Cline commenced their report, oil production at Wressle has increased by circa 45% and accordingly, their report is being updated to reflect these new positive developments and is now using a reference date of 30 June.

“In addition, Gaffney Cline are compiling three illustrative production scenarios for the Wressle oilfield, indicating average oil production plateaus for the low, medium and high cases, showing the conceptual production curves in each case for the remaining planning period of 13 years.”

Gaffney Cline had also been instructed to comment on any possible untapped resources at the Wressle-1 well that may be present, David Bramhill added.

“The report is currently being finalised and the results will be announced in due course.”

At 1232 BST, shares in Union Jack Oil were up 2.24% at 21.47p.

Reporting by Josh White at Sharecast.com.