REG - Union Jack Oil PLC - Unaudited Results for 6 Months Ended 30 June 2024
23/09/2024 07:00
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RNS Number : 1149F Union Jack Oil PLC 23 September 2024
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
23 September 2024
UNION JACK OIL PLC
("Union Jack" or the "Company")
Unaudited Results for the Six Months Ended 30 June 2024
Union Jack Oil plc (AIM: UJO and OTCQB: UJOGF), a USA and UK focused onshore
oil and gas production, development and exploration company, is pleased to
announce its unaudited results for the Half Year ended 30 June 2024.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
• Net profit of £788,996 (2023: £572,263)
• Gross profit of £1,338,776 (2023: £1,608,973)
• Basic earnings per share 0.74 pence (2023: 0.52 pence)
• Oil revenues £2,338,710 (2023: £3,584,866)
• The Company continues to be debt free
• Post Balance Sheet date, a dividend of 0.25 pence per ordinary
share was paid during July 2024
• Positive set of results confirms the Company is in a strong
position with revenues and profitability being delivered from the UK and USA
• Wressle Competent Person's Report upgrades recoverable Reserves by
263%
· Planning consent received from North Lincolnshire Council ("NLC") for
the further development of Wressle
· Acquired a balanced portfolio of USA Mineral Royalties for
approximately US$1,000,000 generating a 20%+ return on capital invested to
date
· Successful early drilling campaign with Oklahoma, USA based, Reach
Oil & Gas Company Inc ("Reach"), resulting in the discovery of the Andrews
field
· Acquisition of a 45% interest in the Rogers secondary recovery
project
· Moccasin, Taylor and Diana-1 wells planned to be drilled during Q4
2024
· Share trading facility obtained on the OTCQB Venture Market in the
USA
David Bramhill, Executive Chairman, commented: "The Board's confidence in
Union Jack's continued growth is evidenced by the Company's solid and
profitable 2024 Half Yearly financial results, confirming its resilience, both
financially and operationally.
"Union Jack's entry into the USA has to date vindicated the Board's decision
to secure complementary international growth projects, designed to supplement
existing domestic cash flow, without the punitive tax regime now being seen
within the UK.
"The Board is optimistic that in the medium-term, Union Jack will experience
exceptional growth assisted by its expanding portfolio of multiple
cash-generating projects in the UK and USA.
"In the UK, Union Jack remains focused on the continuing development of its
flagship project, Wressle, where the Operator and partners have enterprising,
near-term expansion planned. The Board is of the opinion that, within Wressle,
where planning consent is in place, there remains significant material upside
which will support the Company with revenues for at least another decade. West
Newton and Keddington also continue to rank highly within the Company's
portfolio of UK assets.
"However, it is not difficult to be confident of the opportunities presented
in Oklahoma, the scene of our rapid growth strategy, where we are already
seeing income from our 45% interest in the Andrews field and the start of a
three well drilling campaign, planned for Q4 2024.
"Union Jack's success in the USA, from a standing start in early 2024,
highlights the ease of entry and ability to execute business there, justifying
the Board's decision to seek further growth opportunities internationally to
bolster the Company's flagship production and appraisal assets in the UK.
"The foundations of Union Jack's growth plan in the USA are being laid swiftly
and unhindered.
"The Board has confidence in the significant increase in drilling, appraisal
and development activity now planned in the pursuit of growth from our
balanced UK and USA portfolios where each has the potential for significant
value creation for shareholders. We believe our heightened drilling and
development activity and the expected additional news-flow generated, combined
with effective investor engagement on both sides of the Atlantic, will
continue to attract the ongoing support of our existing shareholders and the
attention of new investors, broadening the appeal of the Company to a wider
audience.
"The future of Union Jack remains bright."
For further information please contact the following:
Union Jack Oil plc info@unionjackoil.com (mailto:info@unionjackoil.com)
David Bramhill
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Joint Broker
Matthew Johnson
Richard Hail
Caroline Rowe
Shore Capital +44 (0)20 7408 4090
Joint Broker
Toby Gibbs
Harry Davies-Ball
Gneiss Energy Limited +44 (0)20 9263 3983
Financial Adviser
Jon Fitzpatrick
Paul Weidman
Harbor Access +1 (475) 477 9402
USA Investor Relations
Jonathan Paterson
In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies,
the information contained within this announcement has been reviewed and
signed off by Graham Bull, Non-Executive Director, who has over 47 years of
international oil and gas industry exploration experience. This announcement
contains certain forward-looking statements that are subject to the usual risk
factors and uncertainties associated with the oil and gas exploration and
production business. While the directors believe the expectation reflected
within this announcement to be reasonable in light of the information
available up to the time of approval of this announcement, the actual outcome
may be materially different owing to factors either beyond the Company's
control or otherwise within the Company's control, for example, owing to a
change of plan or strategy. Accordingly, no reliance may be placed on the
forward-looking statements.
Evaluation of hydrocarbon volumes has been assessed in accordance with 2018
Petroleum Resources Management System (PRMS) prepared by the Oil and Gas
Reserves Committee of the Society of Petroleum Engineers (SPE) and reviewed
and jointly sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), the Society of Petroleum
Evaluation Engineers (SPEE), the Society of Exploration Geophysicists (SEG),
the Society of Petrophysicists and Well Log Analysts (SPWLA) and the European
Association of Geoscientists & Engineers (EAGE).
CHAIRMAN'S STATEMENT
I am pleased to present this Half Yearly Report for the six months ended 30
June 2024 to the shareholders of the Company.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
• Net profit of £788,996 (2023: £572,263)
• Gross profit of £1,338,776 (2023: £1,608,973)
• Basic earnings per share 0.74 pence (2023: 0.52 pence)
• Oil revenues £2,338,710 (2023: £3,584,866)
• The Company continues to be debt free
• Post Balance Sheet date, a dividend of 0.25 pence per ordinary
share was paid during July 2024
• Positive set of results confirms the Company is in a strong
position with revenues and profitability being delivered from the UK and USA
• Wressle Competent Person's Report upgrades recoverable Reserves by
263%
· Planning consent received from North Lincolnshire Council ("NLC") for
the further development of Wressle
· Acquired a balanced portfolio of USA Mineral Royalties for
approximately US$1,000,000 generating a 20%+ return on capital invested to
date
· Successful early drilling campaign with Oklahoma, USA based, Reach
Oil & Gas Company Inc ("Reach"), resulting in the discovery of the Andrews
field
· Acquisition of a 45% interest in the Rogers secondary recovery
project
· Moccasin, Taylor and Diana-1 wells planned to be drilled during Q4
2024
· Share trading facility obtained on the OTCQB Venture Market in the
USA
The Half Yearly results are positive with the Company remaining in a strong
position, profitable, free of debt and holding a balanced portfolio of
dependable production assets both sides of the Atlantic, complemented with
numerous drilling and development projects.
Dynamic progress has been seen throughout the period under review, especially
in the Company's additional area of focus, the USA, where we have already
tasted success with our first drilling venture and from a standing start built
a balanced asset portfolio.
Cash flow from our dependable flagship development, Wressle, continues to
bolster the Company's robust Balance Sheet and has contributed significantly
to its financial well-being.
Union Jack's operating style has demonstrated durability and dependability
across its key projects, now encompassing both the UK and USA and the prudent
management of its cash resources.
The ERC Equipoise Limited ("ERCE") Competent Person's Report ("CPR") in
respect of Wressle and Broughton North, dated 31 December 2023, announced on 2
January 2024, matched the Company's expectations, demonstrating an impressive
263% increase in 2P Reserves to 2,373 mboe gross. This adds significant
additional value to an already material project within Union Jack's production
and development portfolio in the UK.
The favourable result from the NLC, giving planning consent for the drilling
of two back-to-back wells and the installation of a gas export line, will
allow the production and sale of product from the Penistone Flags formation
and the unlocking of the second phase of the Wressle development, where
considerable reserves remain. The directors, with the technical support of a
recent CPR, believe Wressle will continue to produce hydrocarbons for many
years to come.
We are expecting West Newton, another key onshore project within Union Jack's
portfolio, with impressive Contingent Resources reported within the RPS Group
Limited ("RPS") CPR, to see activity during 2025. This enigmatic project, in
the opinion of the directors, fully deserves its high ranking within the
Company's asset portfolio. Union Jack's technical team has dedicated
considerable time to examining the "hidden" prospectivity within the PEDL183
licence area, having mapped numerous prospects, indicating possible
substantial gas in place, over and above the already discovered Kirkham Abbey
formation resource.
In 2023, a decision was made to seek further growth opportunities in other
jurisdictions, where operations can be executed unhindered and a sensible and
fair tax policy is applied. During the latter part of 2023, Union Jack
commenced discussions with Reach and as a result has assembled a quality
Mineral Royalty portfolio providing a material monthly income, brokered and
managed by Reach. In addition, the Company has, during the period, entered
into a number of drilling and development projects with that company.
The first well drilled on the West Bowlegs Prospect in Oklahoma, Andrews 1-17,
in which the Company holds a 45% working interest was declared a commercial
discovery in May 2024 after penetrating the primary objective, the Hunton
Limestone, one of the main hydrocarbon reservoirs in Oklahoma. This well was
quickly followed by the successful Andrews 2-17. These wells now comprise the
Andrews field, the first of hopefully many future successful production and
development ventures with Union Jack's partners, Reach.
A three well drilling campaign, comprising the Taylor, Moccasin and Diana
wells is planned to be executed during Q4 2024, which will provide a sustained
stream of news flow for the rest of the year and beyond.
Additional information on the Company's leading projects within the UK at
Wressle, West Newton and Keddington, comment on Biscathorpe and North Kelsey,
along with details of its expanding USA portfolio can be found later within
this statement.
To increase the Company's corporate visibility in the USA, in April 2024,
Union Jack's ordinary shares were admitted to trading on the OTCQB Venture
Market (Ticker: UJOGF). The Board believes that dual trading of the Company's
shares on AIM and the OTCQB will provide enhanced investor benefits, which
include easy trading access for investors based in the USA and increased
liquidity, due to a broader geographic pool of potential investors.
Ray Godson, non-executive director since the inception of the Company stepped
down at the Company's Annual General Meeting in June 2024. To prepare for
this, the Company appointed Craig Howie in April 2024, who has assumed Ray's
role as Chairman of the Audit Committee and member of the Remuneration
Committee. Craig is well versed in energy, finance and the business of Union
Jack.
In light of the Company's sound financial position the Board, during the
period, declared a dividend of 0.25 pence per share, paid to qualifying
shareholders in July 2024.
Union Jack hosts a growing and active X (formerly Twitter) account
@unionjackoilplc and remains committed to ensuring the future success of the
Company.
WRESSLE DEVELOPMENT - PEDL180 AND PEDL182 (40%)
Wressle is located in Lincolnshire, on the western margin of the Humber Basin.
The Wressle-1 ("Wressle") discovery was defined on proprietary 3D seismic
data. The structure is on trend with the Crosby Warren oilfield and the
Broughton North Prospect, both located to the immediate northwest and the
Brigg-1 discovery to the southeast. These wells contain hydrocarbons in
several different sandstone reservoirs within the Upper Carboniferous
succession. The majority of the Broughton North Prospect is covered by the
same 3D seismic survey to that of the Wressle field.
Since the proppant squeeze and coiled tubing operations conducted during
August 2021, Wressle has established itself as Union Jack's flagship project
with initial production rates far exceeding original expectations. Wressle has
generated revenues in excess of US$20,000,000 net to Union Jack before taxes,
allowing the Company to be self-sustaining for almost three years without
recourse to external funding from the capital markets. To date, over 650,000
barrels of high-quality oil have been produced and sold from Wressle.
During the period, Wressle produced on constrained flow an average of 472 bbls
of oil per day (Union Jack net 188 bbls of oil per day) with a water cut of
23.6%, an oil price of US$83.46 and site downtime of 11 days.
There was no negative impact on exchange as Wressle income, paid in US$ is
being used to partly fund our USA operations.
During December 2023, the Joint Venture partnership received the results of a
CPR compiled by ERCE for Wressle and the Broughton North Prospect.
The highlights of this report are as follows:
• 263% increase in 2P Reserves
• Reclassification of 1,883 million barrels of oil equivalent
("mboe") of Penistone Flags Contingent Resources to 2P Reserves
• 59% upgrade to the Ashover Grit and Wingfield Flags Estimated
Ultimate Recoverable
• 23% upgrade to Broughton North Prospective 2U Resources
Wressle Gross Oil and Gas Reserves (mboe)
Category Gross Reserves
1P 2P 3P
2016 CPR 303 655 1,356
Added - - -
Produced to 30 June 2023 (519) (519) (519)
Revisions 258 354 403
Reclassified 864 1,883 3,647
2023 CPR 906 2,373 4,887
Reserves Change 199% 263% 261%
Note: One barrel of oil equivalent ("boe") is equal to 5,714 standard cubic
feet ("scf") of natural gas.
Broughton North Gross Oil and Gas Prospective Resources (mboe)
Category Gross Unrisked Prospective Resources
1U 2U 3U
2016 CPR 180 494 1,156
Added - - -
Produced to 30 June 2023 - - -
Revisions 33 114 376
Reclassified - - -
2023 CPR 213 608 1,532
During September 2024, planning consent was granted by the NLC supporting the
next phase of the Wressle field development. The consent allows for the
extension of the Wressle well site that will accommodate the drilling of two
new wells, Wressle-2 and 3, an upgrade of production facilities, including
fluid storage tanks, separator system, surface pump and associated bunds.
In addition, the positive decision allows for the development and production
of the material gas reserves contained within the Penistone Flags and Ashover
Grit reservoirs. Gas processing will be sourced and commissioned and a
600-metre underground gas pipeline will be installed, linking the Wressle
production site to the national gas grid.
The planning application submitted to the NLC by the Operator, Egdon Resources
U.K. Limited was supported by a raft of technical assessments that included
the following reports: Landscape and Visual; Ecology Appraisal; Biodiversity
Net Gain Assessment; Transport Assessment and Construction Management Plan;
Lighting and Noise Assessment, Air Quality Impact Assessment; Archaeology and
Cultural Assessment; Statement of Community Involvement; Hydrological Risk
Assessment and Flood Risk Assessment.
The positive planning permission at the Wressle Project represents a
significant domestic production growth opportunity for Union Jack and provides
economic and environmental benefits compared to imports on which the UK is
becoming increasingly reliant.
The Board believes that Wressle, in which the Company holds a material
interest, will continue to deliver significant revenues for at least the next
decade and look forward to the remainder of 2024 and beyond with enthusiasm.
WEST NEWTON DEVELOPMENT - PEDL183 (16.665%)
PEDL183 is located onshore UK, north of the River Humber, in proximity to the
town of Beverley, East Yorkshire. The licence area is within the western
sector of the Southern Zechstein Basin.
Union Jack entered into a farm-in during 2018, with Rathlin Energy (UK)
Limited ("Rathlin") as the Operator, and since that time the West Newton A-2
("WNA-2") and West Newton B-1Z ("WNB-1Z") drilling programmes have yielded
substantial hydrocarbon discoveries within the Kirkham Abbey formation.
The table below notes the West Newton gross unrisked technically recoverable
sales volumes as calculated by independent engineers RPS Group Limited ("RPS")
in late 2022.
Category Gross Technically Recoverable
Gas (bcf) Liquids (mbbl)
1C 99.7 299.4
2C 197.6 593.0
3C 393.0 1,178.9
Throughout 2022 and 2023, data collected during drilling operations and well
testing, which included core, oil and gas samples, wireline log and well test
records, were analysed by independent laboratories Core Lab, Applied Petroleum
Technology ("APT") and RPS. The results of these analyses, in conjunction with
internal evaluations, have been invaluable in informing the upcoming programme
of work and future drilling plans.
Laboratory reports confirm that the hydrocarbon-bearing Kirkham Abbey
reservoir is extremely sensitive to aqueous fluids and that previous drilling
of the West Newton wells with water-based mud had created near well-bore
damage through the creation and migration of very fine rock fragments,
affecting the natural porosity and permeability of the formation, which in
turn had a detrimental effect on its ability to flow. Further analyses have
concluded that the use of dilute water-based fluids, including dilute acids,
during completion and well testing operations would have also affected the
flow characteristics of the Kirkham Abbey reservoir.
These tests indicate that by drilling and completing the Kirkham Abbey
reservoir with oil-based fluids, damage to the oil and gas reservoir should be
minimised.
A feasibility study has been completed by independent energy consultants CNG
Services Limited on a single well development and gas export plan. The scope
of the West Newton feasibility study was to determine the technical and
economic viability of a single well development, with production processed
from a modular plant and a pipeline from the WNA site to the National
Transmission System at an existing above-ground installation.
Commercial gas production could be brought to market within months of a
successful production test, resulting in a materially reduced capital
investment programme, providing significant early cash flow, whilst additional
activity is carried out on the further development of the West Newton project.
GaffneyCline Associates, an international petroleum consultancy, has compiled
a Carbon Intensity Study in respect of the gas resource at West Newton,
resulting in an AA Rating for its potential gas and upstream production.
Union Jack believe that, in these environmentally aware times, investors will
consider investments in companies and projects that support a transition to a
low-carbon economy, West Newton being a prime example. As part of the
Company's ongoing strategy in respect of the environment going forward, it is
committed to being transparent in respect of its projects and on how its
Carbon Management Practice is implemented.
The Joint Venture partners continue to plan the most efficient and economic
method to convert the impressive West Newton Contingent Resource into a viable
hydrocarbon development within an acceptable time frame.
During May 2024, the North Sea Transition Authority extended the PEDL183
licence for a further three years following the agreement of a future work
programme.
A future West Newton development will benefit from being located in an area
that provides access to substantial local infrastructure and could deliver
significant volumes of onshore, low-carbon sales gas into the UK's energy
market.
KEDDINGTON - PEDL005(R) (55%)
The Keddington oilfield is located along the highly prospective East Barkwith
Ridge, an east-west structural high on the southern margin of the Humber
Basin.
A technical review by the Operator has confirmed that there remains an
undrained oil resource located on the eastern side of the Keddington field.
Planning consent for further drilling is already in place, presenting an
opportunity to increase production via a development side-track from one of
the existing wells.
To facilitate confirmation of the target definition and well design planning,
re-processing of legacy 3D seismic data has been completed.
Modelling indicates that infill drilling is forecast to improve recovery from
the Keddington field by between 113,000 to 183,000 barrels of oil, depending
on the reservoir permeability model selected and the combination of infill
targets.
The sub-surface location of a step-out well has been finalised and it is
planned to drill the well, where planning consent is already granted, when the
Operator deems appropriate.
Currently, a material upgrade of the production equipment and site
modifications at Keddington is ongoing, the result of which is expected to
increase efficiency and production rates going forward. Works are expected to
be completed and production reinstated during late Q4 2024, adding a further
increase to Union Jack's revenue stream.
BISCATHORPE - PEDL253 (45%)
PEDL253 is situated within the proven hydrocarbon fairway of the South Humber
Basin and is on-trend with the Keddington oilfield and the Saltfleetby
gasfield.
While drilling the Biscathorpe-2 well, there were hydrocarbon shows, elevated
gas readings and sample fluorescence observed over the entire interval from
the top of the Dinantian to the total depth of the well, with 68 metres being
interpreted as being oil-bearing.
Independent consultants APT also conducted analyses, confirming a hydrocarbon
column of 33-34 degrees API gravity oil, comparable with the oil produced at
the nearby Keddington oilfield.
Further evaluation of the results of the Biscathorpe-2 well, together with the
reprocessing of 264 square kilometres of 3D seismic, indicate a potentially
material and commercial hydrocarbon resource that remains to be appraised.
The Operator has assessed, in accordance with the PRMS Standard, a gross Mean
Prospective Resource of 2.55 mmbbl. The overlying Basal Westphalian Sandstone
has the potential to add gross Mean Prospective Resources of 3.95 mmbbl.
Economic modelling demonstrates that the Westphalian target is economically
robust, especially in the current oil price environment. Commercial screening
indicates break-even full cycle economics of US$18.07 per barrel.
The successful planning appeal decision has been overturned following a
judicial review and the planning inspectorate is arranging a new appeal
process.
The ramifications of the nationally publicised judgement of the UK Supreme
Court in June 2024 of the "Finch" case obviously continue to hinder the
Company's desire to drill and confirm the view of Union Jack's technical team
who believe that Biscathorpe remains one of the largest unappraised
conventional onshore discoveries within the UK.
NORTH KELSEY - PEDL241 (50%)
North Kelsey is a conventional oil exploration prospect on trend with, and
analogous to, the Wressle oilfield which lies approximately 15 kilometres to
the northwest. The prospect has been mapped from 3D seismic data and has the
potential for oil in four stacked Upper Carboniferous reservoir targets.
The Operator estimates that gross Prospective Resources range from 4.66 (P90)
to 8.47 (P10) mmbbl.
On behalf of the Joint Venture, the Operator is having the seismic data
independently re-processed from which a drilling decision will be made in
respect of future activity and planning applications.
OTHER UK LICENCE INTERESTS
Union Jack has interests in a number of other non-core projects, namely
PEDL118 (Dukes Wood), PEDL203 (Kirklington), PEDL201 (Widmerpool Gulf) and
PEDL209 (Laughton).
These licence interests have all been fully impaired and are at various stages
of relinquishment with the exception of Dukes Wood where the geothermal upside
potential is being investigated.
Fiskerton Airfield (EXL294) is currently shut in. Longer term potential for
the site is to manage produced water through the existing water injection well
on site and also for potential geothermal repurposing.
UNITED STATES OF AMERICA STRATEGIC GROWTH AND EXPANSION PLAN
During December 2023, for numerous reasons, including the punitive Energy
Profit Levy of 35% imposed on profits generated within the UK, the Board
commenced the execution of a plan to seek growth opportunities in
jurisdictions with more sympathetic views towards the hydrocarbon industry,
without compromising global environmental objectives and the aim of achieving
net zero by 2050.
To this end, Union Jack has, from a standing start in late 2023 and early
2024, assembled an attractive and growing portfolio of cash-generating Mineral
Royalties, located in the Permian Basin and Eagle Ford Shale, Texas and Bakken
Shale, North Dakota, USA, all operated by major producers.
Union Jack's strategic partnership with Reach has also offered Union Jack an
opportunity to access a wider inventory of drill-ready prospects and projects
in Oklahoma.
Of particular note is the initial drilling success of the Andrews 1-17 and
2-17 wells at West Bowlegs, Oklahoma, USA, where high-quality oil and gas is
already being sold to market, providing sustainable cash flow and an
additional revenue stream for Union Jack complementing that received from the
Company's established and profitable enterprise within the UK.
During the period and post Balance Sheet date, Union Jack entered into several
new ventures, described in detail within this overview, all of which contain
significant upside if successful.
The Taylor, Moccasin and Diana wells in which the Company holds material
interests, scheduled to be drilled during Q4 2024, provide an enviable period
of activity for the Company and I look forward to reporting on progress in due
course.
MINERAL ROYALTIES
Union Jack has acquired six quality Royalty packages, all brokered by the
Company's Oklahoma based agent and adviser, Reach.
The attractions of USA Royalties include:
• Exposure to active and productive basins and some of the largest
operators in the USA
• Monthly income with no development or operating costs
• Owned in perpetuity, with no forward liabilities or obligations
• Royalties are estimated to have a long economic life, in some cases
more than 26 years and an Internal Rate of Return of over 20%
The Royalty investments where Union Jack holds proxy interests in 165 wells
are delivering a consistent, safe and attractive income stream. Return on
investment to date, equates to 20%+ on a capital investment of approximately
US$1,000,000.
The Royalties portfolio assembled to date is summarised below:
• Cronus Unit, containing a 25 well package in the Permian Basin,
Midland County, Texas, (effective date December 2023); the property is
comprised of nine Chevron and 16 XTO (a subsidiary of Exxon) operated wells
• COG Operating LLC (a subsidiary of ConocoPhillips) operated Powell
Ranch Unit, consisting of 15 wells in the Permian Basin, Upton County, Texas
(effective date November 2023); the property is comprised of seven horizontal
and eight vertical wells
• Occidental operated Palm Springs Unit, containing 10 horizontal
wells in the Permian Basin, Howard County, Texas (effective date January 2024)
• Bakken Shale, a diversified 96 well interest package, located in
Dunn, McKenzie and Williams Counties, North Dakota. Quality operators include
Burlington Resources, Continental and Hess (effective date March 2024)
• Permian Basin, an eight well producing unit, located in Howard and
Borden Counties, Texas. Operated by Vital Energy Inc, a quoted, Permian Basin
focused entity, based in Tulsa, Oklahoma (effective date March 2024)
• Eagle Ford Shale, a nine producing horizontal well package, located
in DeWitt County, Texas, operated by ROCC Operating (effective date March
2024)
The Royalties also provide additional upside as new wells are drilled and
completed on the properties at no cost to Union Jack. Chevron, one of the
operators, has publicly stated its commitment to expanding activities in the
Permian Basin.
The operators associated with the Royalties are all major producers, ranking
highly in the S&P Global (formerly Standard & Poor's), Fitch, and
Moody's credit ratings.
Given the attractions of the current Royalty portfolio, the Company intends to
materially expand the number of royalty packages it holds during 2025.
ANDREWS FIELD, OKLAHOMA
The Andrews field located in Seminole County, Oklahoma, within the West
Bowlegs area, comprises of the 1-17 and 2-17 wells drilled and completed
during May and August 2024, respectively.
The primary target for both wells was the Hunton Limestone ("Hunton"), one of
the main hydrocarbon reservoirs in Oklahoma. The Hunton is unconformably
overlain by the main oil-prone source rock, the Woodford Shale and is in an
excellent position for the migration of oil.
ANDREWS 1-17 WELL (45%)
· Andrews 1-17 declared a commercial discovery and following completion
of a gas pipeline oil and gas are now being sold to the market
· Since being placed on restricted and periodic test production during
late May 2024, the Andrews 1-17 well has produced 7,052 barrels of
high-quality, ultra-light oil with a gravity of approximately 46 degrees API
and additionally 6,407,000 cubic feet of gas since early August 2024
· Water produced from the Andrews 1-17 is being transported via a
recently laid pipeline to the Coker injector well to rebuild reservoir
pressure in the Rogers and S&M production wells, providing considerable
savings on OPEX costs at Andrews-1 and allowing eventual production
optimisation
ANDREWS 2-17 WELL (45%)
· Andrews 2-17 declared a commercial discovery and following completion
of a gas pipeline oil and gas are now being sold to the market
· Well perforated in the Hunton and completed early August 2024
· Andrews 2-17 is now on test production and pumping high-quality,
ultra-light up to 50 degrees API gravity oil (condensate is 52 degrees API),
significantly with no water
· The well produces naturally, due to a gas expansion drive
· Since being placed on restricted and periodic test production in
early August 2024, the Andrews 2-17 well has produced 1,014 barrels of oil and
3,656,000 cubic feet of gas
· First oil and gas already being sold to market
· Production rates remain variable whilst a stable flow rate is
established
FARM-IN AND DRILLING OF THE TAYLOR WELL, OKLAHOMA (45%)
Union Jack has agreed to acquire from Reach a 45% working interest in the
Taylor well, planned to be drilled back-to-back with the Moccasin well during
Q4 2024.
Taylor is an untested 3D seismic supported Hunton Remnant prospect with
secondary targets in the Misener and Wilcox sands.
· Analogue case indicates robust economics on success
· Wilcox structures to the north and east of Taylor were prolific in
the 1920s, producing in the thousands of barrels of oil per day
· Acreage includes Taylor Hunton Prospect, two Wilcox structures and
Misener field with possible infill location
· Operator estimated 40% geological chance of success
· Going forward, the costs of further wells will be based on an
unpromoted 45% working interest
· Costs will be paid from existing cash resources
Historically, there have been several regional high-profile producing fields
such as North East Tibby (1,600,000 bbls oil), Gray (6,000,000 bbls oil) and
West Burnett (1,200,000 bbls oil).
FARM-IN AND DRILLING OF THE MOCCASIN WELL, OKLAHOMA (45%)
Union Jack has agreed to acquire from Reach a 45% working interest in the
Moccasin well which is planned to be drilled back-to-back with the Taylor
well.
Moccasin is an untested 3D seismic supported Hunton and Wilcox structure with
secondary targets in Pennsylvanian Channel Sands and Base Pennsylvanian
Unconformity Sand.
· Analogue case indicates robust economics on success
· Operator assesses a high chance of finding movable hydrocarbons in
the Base Pennsylvanian and an approximate 50% chance of success in other
target zones
· Structure lies close to the Woodford Shale, the main source for light
oil across the region
· Costs will be paid from existing cash resources
The Moccasin structure is a compressive feature associated with the regional
Wilzetta fault. This strike-slip fault was active through the Ordovician to
early Carboniferous periods and is responsible for several large oil
accumulations. In the area of the planned Moccasin well, a deviation in the
fault has caused compressive forces forming numerous dome and fault structures
which have led to proven prolific oilfields such as the adjacent North-East
Shawnee and North-West Redhill fields that have produced more than 6,000,000
barrels of oil.
WILZETTA DIANA-1 FOOTWALL FOLD DRILLING PROJECT, OKLAHOMA (75%)
Union Jack has an agreement with Reach to drill the Diana-1 well, to test a
Footwall Fold Prospect within the Wilzetta Fault play, following the drilling
of the Taylor and Moccasin wells.
· Main Wilzetta Fault zone target is underlain by a deeper structure
that will also be tested with a high-impact well with estimated recoverable
oil in excess of 200,000 barrels of oil
· High-relief compressional fold with a large reverse fault
· Prospect mapping supported by recently reprocessed 3D seismic data
· The prolific Wilzetta Fault plays are the site of numerous oilfields
across central Oklahoma with nearby analogue production from:
- North East Shawnee field, three miles south of the Diana-1 well
location, which has produced more than 5,800,000 barrels of oil to date
- West Belmont field, which has produced more than 580,000 barrels
of oil to date
- Arlington field, ten miles north-east of Diana-1, which has
produced more than I,800,000 barrels of oil to date
· Costs will be paid from existing cash resources
ROGERS SECONDARY RECOVERY PROECT, OKLAHOMA (45%)
The Rogers enhanced oil recovery project is located approximately two
kilometres from the Andrews 1-17 discovery well and includes plans to
significantly increase delivery from Rogers and S&M, two legacy production
wells.
Base-case secondary recovery volumes calculated by the Operator suggest that
up to a further 124,000 barrels of oil can be recovered. The Company believes
the project economics are highly attractive indicating future gross revenues
at prevailing oil prices of approximately US$7.5 million, and an IRR
approaching 80%.
Water production sourced from nearby wells will be injected into the Coker
injector well to rebuild reservoir pressure and increase hydrocarbon
production from Rogers and S&M wells.
The directors believe the Rogers project offers an excellent strategic and
locational fit within the Company's portfolio and will help provide
operational synergies and increase production and revenues.
EAST SHAWNEE 3D SEISMIC ACQUISITION PROGRAMME, OKLAHOMA (37.5%)
The East Shawnee 3D seismic acquisition programme is designed to identify
further prospects along the Wilzetta Fault, also known as the Seminole Uplift.
Reach is currently completing permitting with the landowners, clearing lines
for a vibration source during September and will commence seismic acquisition
in early October 2024.
The objective of this 3D seismic acquisition programme is to generate
prospects to be drilled during the 2025 drilling campaign.
USA CORPORATE PROGRESS
Since the commencement of activities in the USA to date, Union Jack has made
significant progress in building a cash-generating hydrocarbon venture and
establishing a new corporate "North American brand" complementing the
Company's already successful oil production and development business in the
UK.
The Board is delighted with the rapid progress made in the year-to-date and
Union Jack is already generating and banking oil and gas revenues from the
Andrews field where payback is expected on its initial investment within six
months.
The directors believe the balanced portfolio assembled in a short period of
time represents excellent progress.
During April 2024, Union Jack's ordinary shares were admitted to trade on the
OTCQB Venture Market in the USA under the ticker UJOGF. The Company believes
that dual trading of its ordinary shares on the OTCQB and the AIM Market of
the London Stock Exchange will, in time, provide enhanced investor benefits.
Also in early April 2024, Harbor Access (website: harbor-access.com), a
proactive North American based Investor Relations Group, was appointed to
represent Union Jack and assist with increasing visibility and facilitating a
better understanding of the Company in the USA financial markets.
During Q4 2024, the Company intends to appoint a USA based stockbroker to
reinforce its recent initiatives in establishing a North American investor
base.
CORPORATE AND FINANCIAL
The six-month period under review has seen Union Jack remain a cash-generating
and profitable entity. The Company retains a strong Balance Sheet and a clear
focus on the development of its flagship assets both in the UK and the
opportunity infused USA, where a balanced portfolio of Mineral Royalties along
with profitable production, development and exploration assets have already
been assembled.
The rationale for the USA ventures, guided by both Reach's and Union Jack's
very able technical teams, has already been validated by the success of the
Andrews' drilling campaign.
Non-executive director Ray Godson made the decision to step down from the
Board of Union Jack at the AGM, held in June 2024. Ray, since the conception
of the Company, was an exemplary director and we all wish him an enjoyable
retirement. Craig Howie joined the team at Union Jack as an independent
non-executive director. Craig, appointed on 22 April 2024, has over 20 years
of city and advisory experience, especially within the oil industry and is
well known within his peer group in respect of his knowledge of oil
enterprises, both junior and major.
Revenues of £2,338,710 (2023: £3,584,866) for the period continued to have a
positive effect on the Income Statement, resulting in the Company being able
to report a gross profit of £1,338,776 (2023: £1,608, 973), and net profit
of £788,996 (2023: £572,263).
Trade and other receivables include £1,000,000 cash on long term deposit.
Basic Earnings per share of 0.74 pence were reported (2023: 0.52 pence).
Since the commencement of the Company's dividend policy and share buy-back
programme, over £3,000,000 has been returned to shareholders.
The Company retains its policy of returning cash to shareholders when deemed
appropriate, taking into consideration its financial requirements going
forward.
In view of the Company's sound financial position and the additional income
received since the year end from the Royalty portfolio, during May 2024, the
Board declared a dividend of 0.25 pence per ordinary share, paid to qualifying
shareholders during July 2024.
The Company holds 6,300,000 ordinary shares in Treasury which increase the
Earnings Per Share, hold no voting rights and are not entitled to a dividend
payment.
I take this opportunity to thank our shareholders for their continued support,
as well as my co-directors and advisers, all of whom continue to contribute
towards the development and growth of the Company.
OUTLOOK
The Board's confidence in Union Jack's continued growth is evidenced by the
Company's solid and profitable 2024 Half Yearly financial results, confirming
its resilience, both financially and operationally.
Union Jack's entry into the USA has to date vindicated the Board's decision to
secure complementary international growth projects, designed to supplement
existing domestic cash flow, without the punitive tax regime now being seen
within the UK.
The Board is optimistic that in the medium-term, Union Jack will experience
exceptional growth assisted by its expanding portfolio of multiple
cash-generating projects in the UK and USA.
In the UK, Union Jack remains focused on the continuing development of its
flagship project, Wressle, where the Operator and partners have enterprising,
near-term expansion planned. The Board is of the opinion that, within Wressle,
where planning consent is in place, there remains significant material upside
which will support the Company with revenues for at least another decade. West
Newton and Keddington also continue to rank highly within the Company's
portfolio of UK assets.
However, it is not difficult to be confident of the opportunities presented in
Oklahoma, the scene of our rapid growth strategy, where we are already seeing
income from our 45% interest in the Andrews field and the start of a three
well drilling campaign, planned for Q4 2024.
Union Jack's success in the USA, from a standing start in early 2024,
highlights the ease of entry and ability to execute business there, justifying
the Board's decision to seek further growth opportunities internationally to
bolster the Company's flagship production and appraisal assets in the UK.
The foundations of Union Jack's growth plan in the USA are being laid swiftly
and unhindered.
The Board has confidence in the significant increase in drilling, appraisal
and development activity now planned in the pursuit of growth from our
balanced UK and USA portfolios where each has the potential for significant
value-creation for shareholders. We believe our heightened drilling and
development activity and the expected additional news-flow generated, combined
with effective investor engagement on both sides of the Atlantic, will
continue to attract the ongoing support of our existing shareholders and the
attention of new investors, broadening the appeal of the Company to a wider
audience.
The future of Union Jack remains bright.
David Bramhill
Executive Chairman
23 September 2024
Unaudited income Statement
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Notes Six Months Six Months Year
ended
ended
ended
30 June 2024 Unaudited
30 June 2023 Unaudited
31 December 2023
£
£
Audited
£
Revenue 2,338,710 3,584,866 5,065,679
Cost of sales - operating costs
(723,910) (213,989)
(527,425) (1,297,439)
(1,118,794)
Cost of sales - depreciation
(62,035)
(151,029)
(463,782)
Cost of sales - Net Profit Interest payment
(184,259)
Gross profit 1,338,776 1,608,973 3,298,844
Administrative expenses (854,882) (925,077) (2,057,506)
(excluding impairment charge)
(2,100)
(30,201)
(56,829)
Impairment
Total administrative expenses (856,982) (955,278) (2,114,335)
Operating profit 481,794 653,695 1,184,509
Finance income
81,582
42,231
141,672 35,142
Other income
120,268
70,000
Profit before taxation 683,644 765,926 1,361,323
Taxation-
105,352
(193,663)
(502,234)
3
Profit for the period / year 788,996 572,263 859,089
Attributable to: 788,996 572,263
Equity shareholders of the Company
859,089
Earnings per share - - -
Basic (pence)
Diluted (pence) 2 0.74 0.52 0.79
0.74
0.51
0.79
2
Unaudited Statement of Comprehensive Income
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Six Months Six Months Year
ended
ended
ended
30 June 2024 Unaudited
30 June 2023 Unaudited
31 December 2023
£
£
Audited
£
Profit for the period / year 788,996 572,263 859,089
Items which will not be reclassified (404,114) 267,727 44,984
subsequently to profit
(Loss) / profit on investment revaluation - - (170,386)
Taxation
Total comprehensive profit
for the period / year
384,882 839,990 733,687
Unaudited Balance Sheet
AS AT 30 JUNE 2024
Notes As at As at As at
30 June 2024 Unaudited
30 June 2023 Unaudited
31 December 2023
£
£
Audited
£
Assets 12,842,734 9,312,335 10,905,630
Non-current assets
6,015,108
4,688,927
5,888,456
Exploration and evaluation assets
125,998
937,783
530,112
Property, plant and equipment
212,190
1,849,928 106,838
Investments
Deferred tax asset
19,196,030 16,788,973 17,431,036
Current assets 12,035 27,622 21,313
Inventory 2,068,177 2,674,289
1,525,954
Trade and other receivables
3,148,939
6,280,609
5,198,303
Cash and cash equivalents
5,229,151 8,982,520 6,745,570
Total assets 24,425,181 25,771,493 24,176,606
Liabilities
Current liabilities
Trade and other payables 489,212 1,104,700 389,523
Non-current liabilities
Provisions
Deferred tax liability 1,654,342 1,717,206 1,890,337
-
638,219 -
Total liabilities 2,143,554 3,460,125 2,279,860
Net assets 22,281,627 22,311,368 21,896,746
Capital and reserves attributable 4 7,514,576 7,514,576 7,514,576
to the Company's equity shareholders
712,634 712,634 712,634
Share capital
Share-based payment reserve (1,736,700) (1,748,079) (1,736,700)
Treasury reserve 15,791,117 15,832,237
15,406,236
Accumulated profit
Total equity 22,281,627 22,311,368 21,896,746
Unaudited Statement of Cash Flows
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Six months Six months Year
ended
ended
ended
30 June 2024 Unaudited
30 June 2023 Unaudited
31 December 2023
£
£
Audited
£
Cash flow from operating activities 418,574 2,178,691 1,984,019
Cash flow from investing activities (2,220,938) (304,596) (1,814,716)
Purchase of intangible assets
(328,582)
(366,224) (766,424)
Purchase of property, plant and equipment
-
227,272 227,272
Disposal of assets
-
(1,000,000)
-
Fixed term deposit
-
(118,013)
(770,173)
Purchase of investments
-
-
883,725 141,672
Sale of investments
81,582
42,231
Interest received
Net cash used in investing activities (2,467,938) (1,519,330) (2,098,644)
Cash flow from financing activities - - (319,699)
Dividends paid
-
(1,533,852)
Treasury shares (1,522,473)
Net cash generated from - (1,533,852) (1,842,172)
financing activities
Net decrease in
cash and cash equivalents
(2,049,364) (874,491) (1,956,797)
Cash and cash equivalents 5,198,303 7,155,100 7,155,100
at beginning of period / year
Cash and cash equivalents 3,148,939 6,280,609 5,198,303
at end of period / year
Notes to the Unaudited Financial Information
FOR THE SIX MONTHS ENDED 30 JUNE 2024
1 Accounting Policies
Basis of Preparation
These financial statements are for the six month period ended 30 June 2024.
The information for the year ended 31 December 2023 does not constitute
statutory financial statements as defined in section 434 of the Companies Act
2006.
A copy of the statutory financial statements for that period has been
delivered to the Registrar of Companies. The Auditor's Report was not
qualified, did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying the report and did not
contain statements under section 498(2) or (3) of the Companies Act 2006.
The interim financial statements for the six months ended 30 June 2024 are
unaudited.
The interim financial information in this report has been prepared in
accordance with International Financial Reporting Standards ("IFRS") applied
in accordance with the provisions of the Companies Act 2006.
The financial statements have been prepared under the historical cost
convention. The principal accounting policies have been consistently applied
to all periods presented.
Significant Accounting Policies
The accounting policies and methods of computation followed in the interim
financial statements are consistent with those as published in the Company's
Annual Report and Financial Statements for the year ended 31 December 2023.
The Annual Report and Financial Statements are available from the Company
Secretary at the Company's registered office, 6 Charlotte Street, Bath BA1 2NE
or on the Company's website www.unionjackoil.com.
Going Concern
The directors have, at the time of approving the half yearly financial
statements, a reasonable expectation that the Company has adequate resources
to continue in operational existence for the foreseeable future and continue
to adopt the going concern basis of accounting.
2 Profit per Share Attributable to the Equity
Shareholders of the Company
Basic profit per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
Basic profit per share Six months Six months Year
ended
ended
ended
30 June 2024
30 June 2023
31 December 2023
pence
pence
pence
Profit per share from continuing operations
- Basic
- Diluted 0.74 0.52 0.79
0.74
0.51
0.79
The profit and weighted average number of ordinary shares used in the
calculation of basic earnings per share are as follows:
Six months Six months Year
ended
ended
ended
30 June 2024
30 June 2023
31 December 2023
£
£
£
Profit used in the calculation of total 788,996 572,263 859,089
basic and diluted earnings per share
Number of Shares Six months Six months Year
ended
ended
ended
30 June 2024
30 June 2023
31 December 2023
Weighted average number of ordinary
shares for the purposes of basic and
diluted earnings per share
- Basic
- Diluted
106,565,896 110,000,979 108,268,772
106,565,896 111,350,979 108,531,272
Treasury Shares
As at 30 June 2024, the Company held 6,300,000 of its ordinary shares in
treasury. These shares are not included in the earnings per share calculation.
There are no current plans to cancel these shares.
3 Taxation
Consistent with the year-end treatment, current and deferred tax assets and
liabilities have been calculated at tax rates which were expected to apply to
their respective period of realisation at the period end. The Energy Profits
Levy for the year 2023 has been increased to 35% and the CAPEX relief
decreased to 129%. OPEX relief remains at 100%.
4 Share Capital
At 30 June 2024, there were 112,865,896 ordinary shares of a nominal value of
5 pence in issue.
At 30 June 2024, there were 831,680,400 deferred shares of 0.225 pence nominal
value in issue.
5 Events after the Balance Sheet Date
On 26 July 2024, a dividend of 0.25 pence per ordinary share of Union Jack was
paid to shareholders. Treasury Shares held by the Company did not qualify for
this dividend.
During August 2024, the Andrews 2-17 well was declared a commercial discovery
and brought into production.
During September 2024, the NLC granted planning consent for the further
development at Wressle.
6 Related party transactions
Charnia Resources (UK), an unincorporated entity owned by Graham Bull,
non-executive director, received from the Company the sum of £60,115 during
the period under review in respect of consulting fees. £12,000 was
outstanding at the end of the period.
Jayne Bramhill, spouse of David Bramhill, received from the Company the sum of
£6,000 during the period under review in respect of IT maintenance and
administration costs.
7 Copies of the Half Yearly Report
A copy of the Half Yearly Report is now available on the Company's website
www.unionjackoil.com.
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