Union Jack Oil offers compelling value opportunity – broker

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Union Jack Oil PLC (LON:UJO) presents a compelling value opportunity, according to stockbroker SP Angel, which repeated a ‘strong buy’ recommendation.

With a target price of 176p the stockbroker see some 400% upside to the current price of 34.37p.

Commenting on Monday’s financial results statement SP Angel analyst Sam Wahab highlighted that the company is well-funded and debt free.

“Bucking the trend of its E&P peer group, 2020 was a year of considerable operational progression for Union Jack,” the analyst said. “The company successfully advanced its key projects, executing drilling, development and appraisal activity, notably at its flagship West Newton field.”

Wahab added: “With several near-term valuation catalysts including a well testing programme of the WNB-1Z and WNA-2 wells and a refreshed CPR, we remain of the view that Union Jack’s share price represents compelling value.”

Union Jack, in its results statement, told investors it remains ‘highly positive’ as it looks to its future prospects.

“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,” executive chairman David Bramhill said.

In terms of financial results, the company said revenue increased to £1.58mln, from £1.36mln. The company reported an operating loss of £1.88mln as a result of higher admin costs amid technical work at the West Newton, Wressle, Biscathorpe and Keddington assets.

Union Jack noted that as of May 1 it had £5.7mln of cash – not including £1mln loan receivables and royalty accruals due in 2021 and 2022 – and it highlighted that it remains fully funded for all current development and well testing commitments. It remains debt free.

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