Trading update on two LSE Listed stocks Union Jack Oil Plc and Solo Oil Plc

               

Union Jack Oil Plc

Union Jack Oil Plc is a United Kingdom domiciled oil and gas production and exploration company. The company’s interests include oil and gas assets within the territorial abode of the United Kingdom. It constantly looks for opportunities within this sphere and once identified it proceeds towards drilling and full-scale development of the same. The company currently holds thirteen licenses within three areas of Humber Basin, East Yorkshire and East Midlands. The company’s operations are divided into nine projects namely Biscathorpe, West Newton, Widmerpool Gulf, North Kelsey, Wressle, Keddington, Dukes Wood, Holmwood and Kinklington.

The shares of the company have a listing on the London Stock Exchange, on the Alternative Investment Market (AIM) segment. There the shares trade under the ticker name UJO.

Trading Update

The company  on 11 November 2019 came out with a trading update on the upward revision of reservoir estimates on its West Newton Kirkham Abbey Reservoir.

  • In the statement the company has stated that it had undertook a number of core, geochemical and other technical studies which concluded that a material upgrade be made of the estimates of the liquid hydrocarbons contained in the Kirkham Abbey reservoir in the West Newton project area.
  • The base case estimates of the crude contained in the reservoir is 146.4 million barrels of stock tank oil initially in-place while that of gas is estimated at 211.5 billion cubic feet, initially in-place.
  • The upside estimates of the crude contained in the reservoir is 283.0 million barrels of stock tank oil initially in-place and that of gas is 265.9 billion cubic feet, initially in-place.
  • The new estimates are based on geochemical analysis of the gas and fluid samples, core fluorescence and surface samples, including results obtained from the Pulsed-neutron Raptor tool.
  • A 28-metre core sample through the Kirkham Abbey interval was dug, which yielded the important information of sedimentological and depositional data and that of the core analysis.

Performance at the London Stock Exchange

Price Chart as on 11 November 2019, before the market close (Source: Thomson Reuters)

On 11 November 2019, at the time of writing the report (before the market close, GMT 11.31 AM), UJO shares were trading on the London Stock Exchange at GBX 0.244.

The stock of the company has a 52-week High of GBX 0.38 and a 52-week low of GBX 0.076. The total market capitalization of the company at the time of writing this report was £30.27 million.

Outlook

The current analysis of the West Newton asset of the company by the operator throws up a figure that is a significant increase over the previous estimates of both Oil and gas at the site. The West Newton project is turning out to be one the most vital assets for the company, the project which was previously thought to be only an onshore project is well turning out be one of the most significant hydrocarbon finds of the company.

Solo Oil Plc

Solo Oil Plc is a United Kingdom domiciled Oil and gas exploration and production company. The company is an upstream Oil and gas company with the principal activity being to acquire assets, development of assets and production of oil and gas from those assets. The company though registered in the United Kingdom has its operations in Africa and North America. In Africa the operations of the company are in three locations in Tanzania namely Helium One, Kiliwani North in the Songo Songo Island and Ruvuma PSA in the Mtwara region of the country. In North America the company’s assets are located in Reef Resources in Ontario Canada.

The shares of the company have a listing on the London Stock Exchange, on the Alternative Investment Market (AIM) segment. There the shares trade under the ticker name SOLO.

Trading Update

The company on 11 November 2019 came out with an update on the Ntorya gas field within the Ruvuma PSA and the works related agreements with its venture partner on this project, Aminex Plc.

  • Both Solo Oil Plc and Aminex Plc are geared to push forward the development work on the site which had been halted for a while now due to the Tanzanian government’s review of the licence agreement of all companies working in the country. Now that the situation with the Tanzanian government has reached a conclusion, all related parties are gearing up to resume pending work.
  • Both parties have agreed on a 2020 work and budget programme, which will move forward once approved by the Tanzanian Authorities. Solo Oil has approved a budget of US$1.447 million for 2020 and mostly relates to the maintenance of licence and planning activities. This budget will first be approved by partner Aminex Plc before going to the Tanzanian authorities.
  • The budget figures are however contingent to the granting of the extension of the Mtwara licence for drilling at the Chikumbi-1 well and granting of the Ntorya development licence for the seismic programmes.

Performance at the London Stock Exchange

The stock of the company has a 52-week High of GBX 2.55 and a 52-week low of GBX 1.20. The total market capitalization of the company at the time of writing this report was £15.32 million.

Outlook

The review of all licence agreements of all mineral and oil exploration companies working in Tanzania has had adverse impact on the operations and profitability of companies that have setup operations in that country. Solo Oil Plc’s partner Aminex Plc is one such company, which had to sell a significant stake in its headline asset in order to stay afloat given the situation.

Now that there is much clarity on the licencing situation, everyone is in a hurry to salvage as much of the situation as they can. The company’s present trading update is in this regard.