WTI $65.37 +$1.55, Brent $68.71 +1.66 , Diff -$3.34 +11c, NG $2.96 -1c, UKNG 68.44p +0.44p
Interestingly oil was unchanged last week, both were up around 50 cents and it is flat today. All the usual impacts are still in place, added to those from last week was the Baker Hughes rig count on Friday which showed an increase in units overall of 5 to 453 and in oil was up 8 to 352.
Union Jack Oil
Union Jack has announced its audited results for the year ended 31 December 2020 this morning. I think it is wise to look at the operational news first as to be frank this is where the significant value is located. The company has had highly successful drilling of the West Newton B-1Z conventional appraisal well where initial petrophysical evaluation has demonstrated a gross hydrocarbon saturated interval of at least 118 metres within the Kirkham Abbey formation, West Newton B-1Z and A-2 well tests are imminent and I am confident that they will deliver meaningful results.
Following the successful re-perforation of the Ashover Grit formation at Wressle, oil is free flowing and the Wressle-1 well has been placed on continuous production test and is awaiting a proppant squeeze, the company has in a canny move, made a further 12.5% interest acquisition in PEDLs 180 and 182, containing the Wressle discovery, bringing Union Jack’s holding to 40%.
Elsewhere the company has been moving to hoover up ‘loose’ interests in the periphery of its portfolio, purchase of a 35% interest in the producing Keddington Oilfield PEDL005(R) has been acquired, bringing Union Jack’s interest to 55%, as well as completion of the purchase of a further 15% interest in PEDL253 containing the Biscathorpe Prospect bringing Union Jack’s interest to 45% during January 2021.
And in a smart move that reminded me of the old Forties units sale Union Jack has purchased a 2.5% royalty interest in the North Sea Claymore Piper and Scapa oilfields with maybe more to come, this is a very wise use of funds that will return substantial amounts for shareholders.
Financially UJO is robust, with Increased revenue of £158,004 (2019: £136,959) leading to an operating loss of £1,883,893 (2019: £1,705,198), ‘primarily as a result of higher administrative costs due to additional technical work in respect of West Newton, Wressle, Biscathorpe and Keddington’.
The company has a cash balance in excess of £5.7 million at 1 May 2021, not including loan receivables and royalty accruals of over £1 million due during 2021 and 2022 and net assets increased by 35% to over £18 million from £13 million in 2019. UJO is fully funded for all current development and well testing commitments which is highly comforting and it remains debt free.
David Bramhill, Executive Chairman, commented:
“My confidence in respect of Union Jack’s future remains highly positive.
“The Company, during 2020 and to date, has advanced its key projects, executed drilling, development and appraisal activity, supported by technical evaluation and analysis provided by our own highly competent technical team, that has resulted in an accretion in the Company’s asset value and provided greater clarity on the next steps towards commerciality.
“I have no doubt even in these unprecedented times, that given our attractive projects, we will achieve our goal of increasing production materially and becoming a significant, principally onshore mid-tier UK producer in due course. In the meantime, I am confident that the news stream arising from the ongoing progress at our ventures, will vindicate our optimism.
“Union Jack’s wider asset portfolio continues to be well balanced with the relevant components of production, development, appraisal and discovery.
“The Company remains in sound financial health, with a robust balance sheet, continues to be debt free, with ample cash reserves to fund its well testing and planned development commitments, offering shareholders ongoing and significant scope for growth.
“The future of Union Jack remains bright.”
I have commented many times recently on how UJO is coming to the fore in the UK onshore areas in which it operates. I strongly believe that West Newton is the jewel in this crown with news to come this summer and with increased holdings in Wressle, Keddington and Biscathorpe all adding to value as will the North Sea units there is further upside. One way and another I think that Investors in Union Jack are going to have a highly rewarding summer.
IOG has announced that, as operator of its joint venture with CalEnergy Resources, it has awarded the Phase 1 Duty Holder contract for Installation and Pipeline Operator, as well as facilities operations and maintenance (O&M), to ODE Asset Management (ODE AM).
Working closely with IOG’s in-house operations team, ODE AM will be responsible for delivering safe, efficient and cost-effective production operations from the JV’s Phase 1 offshore infrastructure in the UK Southern North Sea (SNS), including the Blythe and Southwark platforms, the Thames Pipeline and the associated subsea connector lines.
ODE AM will also provide O&M and integrated services for Phase 1, including the onshore control room at the Bacton Gas Terminal, travel, training and crew for offshore activities, emergency response, warehousing and quayside support, and all associated regulatory interface and compliance. The contract has mechanisms to incentivise ODE AM to maximise operating efficiencies and an appropriate risk-reward formula for performance against agreed criteria.
Andrew Hockey, CEO of IOG, commented:
“We are pleased to award this contract to ODE AM, who have a well-established Duty Holder and O&M track record in Southern North Sea gas projects including Babbage and Tolmount. Their focus on safe, efficient and cost-effective operations will be integral to our low opex and low carbon intensity production model. We look forward to continuing our collaboration with ODE AM as we ramp up pre-operations and commissioning activities ahead of First Gas in late Q3 this year.”
There is no surprise with the appointment of ODE AM as it is well known to IOG through its wider Group work on other projects and is also undertaking engineering, procurement, construction and installation activities for the ongoing recommissioning of the JV’s onshore Thames Reception Facilities at Bacton.
IOG is now giving up to date information on a weekly basis and all is going well by the looks of it as the run-in to first gas in Q3 2021 approaches, the share price has made significant step changes in an upward direction for a while and I expect these to continue for some time.
On Saturday in the Prem Burnley lost 0-4 to Leeds, the Saints beat Fulham 3-1 and the Seagulls and the Hammers drew 1-1. On Sunday the Eagles beat the Villa 3-2, Spurs beat Wolves 2-0, the Baggies were well unlucky to lose 1-2 to Liverpool and the Toffees lost 0-1 to the Blades.
In the FA Cup final the Foxes beat Chelski 0-1 although it was a bit nerve racking when Chelski ‘scored’ right at the end until VAR yet again changed the decision and broke a few hearts.
And Rombauer won the Preakness at 12-1.