TIDMUJO
RNS Number : 3248Z
Union Jack Oil PLC
15 May 2023
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.
15 May 2023
Union Jack Oil plc
("Union Jack" or the "Company")
Final Results for the Year Ended 31 December 2022
Union Jack Oil plc (AIM: UJO), a UK focused onshore hydrocarbon
production, development and exploration company, is pleased to
announce its audited results for the year ended
31 December 2022.
Operational Highlights
-- Approvals for the Wressle Field Development Plan and licences
for the production phase through to 2039 received from the North
Sea Transition Authority ("NSTA")
-- Wressle is currently the second most productive conventional
producing onshore oilfield in the UK
-- ERCE commissioned to review the reserve and resource
potential of the Wressle field through a new Competent Person's
Report ("CPR")
-- Planning for the drilling of additional wells at West Newton
approved by the East Riding of Yorkshire Council ("ERYC")
-- RPS delivered a positive revised CPR on West Newton, where a
horizontal well is planned to be drilled during H2 2023
-- Biscathorpe appeal heard - awaiting decision from the Planning Inspectorate
-- North Kelsey appeal hearing set for June 2023
Financial Highlights
-- Maiden net profit of GBP3,606,624 post tax
-- Oil revenues increased by 340%
-- Basic earnings per share increased by over 485%
-- Cash balances and near-term receivables stand in excess of GBP9,750,000 as at
12 May 2023
-- Debt free
-- Funded for all operational, contracted and planned CAPEX
costs, including budgeted drilling activities for at least the next
12 months
-- Capital Reduction granted for share buy-back programme and
the payment of a 0.8 pence Maiden Special Dividend during December
2022
-- Post period end an Interim Dividend of 0.3 pence declared to be paid July 2023
David Bramhill, Executive Chairman, commented:
"The Company will remain focused on the development of its
flagship projects, Wressle and West Newton, where the respective
Operators and joint venture partners have ambitious appraisal and
development programmes planned.
"I am confident that the news-flow emanating from our balanced
portfolio which contains elements of production, development,
appraisal and exploration, will continue to attract the attention
of shareholders and investors and generate support for the Company
in its pursuit of shareholder value.
"Union Jack is in sound financial health with a robust balance
sheet, continues to be free of debt and has significant cash
reserves with no requirement to raise capital for its planned
operations for at least the next 12 months.
"The future of Union Jack remains bright."
For further information, please contact
Union Jack Oil plc info@unionjackoil.com
David Bramhill
SP Angel Corporate Finance
LLP +44 (0)20 3470 0470
Nominated Adviser and Joint
Broker
Matthew Johnson
Richard Hail
Kasia Brzozowska
Shore Capital +44 (0)20 7408 4090
Joint Broker
Toby Gibbs
Iain Sexton
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 46 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 delighted to present to the shareholders of Union Jack Oil
plc ("Union Jack" or the "Company"), the Annual Report and
Financial Statements for the year ended 31 December 2022.
Growth and progress continued throughout 2022, mainly due to the
elevated cash flow from our flagship development Wressle, where
revenues increased significantly from GBP1,894,875 in 2021, to
GBP8,507,050 in 2022, enabling Union Jack to announce a maiden net
profit of GBP3,606,624 post tax compared to a loss of GBP853,013 in
2021.
Post Balance Sheet cash balances and near-term receivables,
stand in excess of GBP9,750,000 as at 12 May 2023.
The Company is funded for all G&A, OPEX and contracted or
planned CAPEX costs, including any budgeted drilling activities for
at least the next 12 months, without recourse to the Capital
Markets.
The material increase in cash flow during 2022, coupled with a
robust oil price and increased hydrocarbon production, allowed the
Company to seek a Capital Reduction exercise which was granted by
the High Court, during August 2022, enabling the Company to
distribute a Maiden Special Dividend of 0.8 pence per share during
December 2022, totalling GBP900,527, and also introduce a share
buy-back programme, enhancing earnings per share.
In respect of a Dividend Policy, it is our intention to make
payments to shareholders as and when cash balances allow. During
March 2023, the Board declared an Interim Dividend of 0.3 pence per
share, payable during July 2023 and it is the intention to continue
dividend payments based on a proportion of the free cash available
subject to our project obligations being fulfilled.
I am delighted to be able to report that since the Capital
Reduction was granted in August 2022, return of capital by way of
total dividends paid or announced and share buybacks has totalled
GBP1,117,154.
Union Jack's maiden profit, the return of capital, current
record-high cash balances and near-term receivables, all highlight
the achievements of the Company during 2022.
Oil from our flagship project, Wressle, remains free flowing
with zero water cut. Wressle continues to perform in an extremely
positive way and our expectations remain high as we believe there
remains scope for material expansion.
The GaffneyCline report, published during September 2022,
suggested the possibility of a significantly higher reserve than
originally predicted for the Ashover Grit reservoir. On current
performance we find it difficult to dismiss this theory and look
forward to the technical and commercial assessment by ERCE, who
have recently been commissioned to review the reserve and resource
potential of the Wressle field through a new CPR. The results of
this report are expected during June 2023.
Positive results from independent laboratories and consultants
during 2022 and from the data driven information received from the
West Newton discoveries expand our confidence in the success of the
horizontal well currently planned to be drilled during H2 2023.
Additional information on our leading projects at Wressle and
West Newton, and overviews on Biscathorpe, Keddington and North
Kelsey can be found later within this statement.
The results for 2022 are highly positive with the Company being
in a strong financial position and a balanced work programme of
potentially further transformational development and drilling to
look forward to.
Further information can be found on our website
www.unionjackoil.com, presenting detailed technical information on
our projects, designed to inform shareholders and attract new
investors to the Company. In addition, Union Jack hosts an active
twitter account @unionjackoilplc.
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 producing
Crosby Warren oilfield and the Broughton oil discovery, both to the
immediate northwest and the Brigg-1 discovery to the southeast.
These wells all contain hydrocarbons in several different sandstone
reservoirs within the Upper Carboniferous succession.
Since the proppant squeeze and coiled tubing operations
conducted during August 2021, Wressle has established itself as
Union Jack's flagship project with production rates far exceeding
original expectations.
Wressle continues to produce oil under natural flow and
associated gas at high rates with zero water cut from the Ashover
Grit reservoir. To date, over 400,000 barrels of high-quality oil
have been produced and sold from Wressle.
During the past 12 months, a programme of improvements and
upgrades to Wressle site facilities has been successfully carried
out. The implementation of a two-stage gas utilisation scheme is
being progressed which will enable the oil production to be
increased.
The Ashover Grit gas is being utilised for electricity
generation on-site and will be exported at a later date. The diesel
generator has been replaced by three gas microturbines which were
installed and commissioned during early 2023. The second phase of
the programme will see the installation of a separate gas engine to
generate and export approximately 1.4 MW of electricity into a
local private power network. A later stage of the gas monetisation
will focus on gas export from the undeveloped reservoirs that hold
significant contingent hydrocarbon resources and are awaiting
production in due course.
The performance of the Ashover Grit reservoir during 2022 has
been nothing short of exceptional. During September 2022, the
Company published the results of a report, commissioned by Union
Jack and compiled by GaffneyCline, in respect of the potential
upside at Wressle which provided commentary on the reserve and
resource volumes.
The highlights of this report are as follows:
-- Ashover Grit Speculative Deeper Oil-Water Contact assessment
indicates a potentially significant increased estimate of STOIIP
("Stock Tank Oil Initially in Place") of 10.12 million barrels of
oil ("mmbbl") and a recoverable resource of 2.43 mmbbl
-- The Wressle-1 well also indicated additional hydrocarbon
potential within the Santon Sandstone, where GaffneyCline has
estimated a Contingent Resource being present
During the second half of 2022, the Operator re-processed the 3D
seismic data over the field. This data has been interpreted and
mapped with the objective of identifying reservoir targets for
drilling an additional well/wells at the earliest opportunity,
subject to receipt of regulatory approvals.
A new CPR, considering all oil and gas bearing horizons has been
commissioned, incorporating the new field interpretation and
production performance data. The results of this report are
expected during June 2023.
The management of Union Jack believes that the Company holds a
material interest in a project that will continue to deliver
significant revenues for at least the next decade and more.
WEST NEWTON APPRAISAL PEDL183 (16.665%)
PEDL183 is located in the East Riding of Yorkshire, north of the
River Humber, encompassing 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") 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.
Throughout 2022, 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
CoreLab, Applied Petroleum Technology ("APT") and RPS Group Limited
("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.
The 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 of very fine rock fragments, affecting the natural
porosity and permeability of the formation which had a detrimental
effect on its ability to flow. Further analyses have determined
that the use of dilute water-based acids during well testing would
have also affected the flow characteristics of the Kirkham Abbey
reservoir.
These tests indicate that by drilling the Kirkham Abbey
reservoir with an oil-based drilling fluid, damage to the oil and
gas reservoir should be minimised.
The Operator, Rathlin Energy, has made applications to the
Environment Agency ("EA") for use of oil-based drilling fluids
within the hydrocarbon bearing Permian section for both the West
Newton A and B sites.
Analyses by APT of numerous oil and gas samples recovered from
the West Newton wells during testing, along with evaluation of mud
gases measured during drilling utilising a proprietary software
package, indicates that the Kirkham Abbey reservoir is
predominantly gas (primarily methane 90% plus ethane 5%) with
associated light condensate.
RPS has modelled wells extending up to 1,500 metres horizontally
through the Kirkham Abbey reservoir. These wells have a much
greater likelihood of encountering significant sections of the
naturally fractured reservoir, enhancing its productive
capability.
In preparation for a decision on the potential development of
the West Newton discoveries, the Operator submitted revised
planning applications for the development of West Newton to the
ERYC. This was approved by the ERYC Planning Committee by a vote of
ten to one during March 2022.
A revised CPR was compiled by RPS during 2022, evaluating the
resources of PEDL183 as of 30 June 2022, ("Effective Date").
The results of the CPR were very encouraging, highlighting:
-- Kirkham Abbey Best Case Gross Unrisked Contingent Technically
Recoverable Sales Gas is estimated to be 197.6 billion cubic feet
("bcf")
-- Geological Chance of Success of Kirkham Abbey horizontal well estimated to be 85.5%
-- Gross NPV10 risked value of Kirkham Abbey Contingent Gas
Resource as at Effective Date of US$396.1 million post tax
-- Substantial additional Prospective Resource figures for
Ellerby, Spring Hill and Withernsea prospects
In the preparation of the CPR, RPS adopted the Petroleum
Resource Management System ("PRMS") standard.
WEST NEWTON GROSS UNRISKED TECHNICALLY RECOVERABLE SALES
Category Gross Technically Recoverable
---------
Gas Liquids
(bcf) (mbbl)
--------- -------------- ----------------
1C 99.7 299.4
-------------- ----------------
2C 197.6 593.0
-------------- ----------------
3C 393.0 1,178.9
-------------- ----------------
Note: Net data for Union Jack can be calculated by applying its
16.665% economic interest to the above gross data.
WEST NEWTON GEOLOGICAL CHANCE OF SUCCESS
Asset Source Rock Charge Migration Reservoir Trap Seal Geological
COS
------------- ------------ ------- ---------- ---------- ----- ----- -----------
West Newton 1.00 1.00 1.00 0.90 0.95 1.00 0.855
------------ ------- ---------- ---------- ----- ----- -----------
A future West Newton development will benefit from being located
in an area that provides access to substantial regional
infrastructure and could deliver significant volumes of onshore
low-carbon sales gas into the UK's energy market.
Domestically produced natural gas is, and will remain, a
much-needed part of the energy mix as the UK seeks to reduce its
reliance on imported products.
Union Jack looks forward to the drilling of a 1,500 metre
horizontal well at the earliest opportunity and unlocking the
significant potential of the Greater West Newton project.
KEDDINGTON PEDL005(R) (55%)
The producing 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.
Subject to finalising the sub-surface location, it is planned to
drill the well, where planning is already granted, in late
2023.
BISCATHORPE PEDL253 (45%)
PEDL 253 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 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 material and potentially commercial viable
hydrocarbon resource remaining to be appraised.
Subject to a favourable planning appeal decision a side-track
well is planned, targeting the Dinantian Carbonate where 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 to be US$18.07
per barrel.
During November 2021, a planning application for a side-track
drilling operation, associated testing and long-term production was
refused by the Lincolnshire County Council Planning Committee,
despite being recommended for approval by the planning
officers.
The Joint Venture partners are awaiting a decision from the
Planning Inspectorate, where an appeal was heard in October
2022.
Union Jack's technical team believe that Biscathorpe remains one
of the largest unappraised conventional onshore discoveries within
the UK.
PEDL241 NORTH KELSEY (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 3-D 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 to 8.47 mmbbl.
During August 2022, the Operator submitted an appeal on behalf
of the Joint Venture, against the refusal of an extension of time
to the existing planning permission by Lincolnshire County Council
to enable the drilling and testing of a conventional exploration
well at the North Kelsey site.
An Inspector has been appointed and the Joint Venture has been
informed the appeal will be conducted as a two day hearing in
mid-June 2023, the result of which, is expected within a few
months.
OTHER LICENCE INTERESTS
Union Jack has interests in a number of other non-core projects,
namely PEDL118 (Dukes Wood), PEDL203 (Kirklington), PEDL201
(Widmerpool Gulf), PEDL181 (Humber Basin) and PEDL209
(Laughton).
These licence interests have all been fully impaired and are at
various stages of relinquishment with the exception of Dukes Wood
and Kirklington where the geothermal upside potential is being
investigated.
Fiskerton Airfield (EXL294) is currently shut-in whilst awaiting
a workover programme to reinstate production. 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.
The Company has decided to fully impair the value of Fiskerton
Airfield at a cost of GBP416,606. This decision was made as
production was not covering costs and substantial work and capital
expenditure was required on the existing production equipment.
PIPER CLAYMORE COMPLEX ROYALTY UNITS (2.5%)
During May 2023, the Management negotiated price and terms of
condition for the sale of the Company's 2.5% interest in the
Claymore Area Royalty Agreement. The Company has subsequently
disposed of this asset with full payment received.
This transaction is a post period end event.
CORPORATE AND FINANCIAL
The 12 month period under review has seen the Company become a
cash generating and profitable entity, with a strong balance sheet
and a clear focus on the development of its flagship assets.
Union Jack remains debt free and has cash balances and near-term
receivables in excess of GBP9,750,000 as at 12 May 2023. We are
funded for all operational, CAPEX and drilling costs for at least
the next 12 months.
Revenues from oil sales of GBP8,507,050 (2021: GBP1,894,875)
reported for the period have had a material effect on the Income
Statement, resulting in the Company being able to report a maiden
net profit of GBP3,606,624 (2021: loss GBP853,013).
Basic Earnings per share of 3.20 pence were reported versus a
loss per share of (0.83 pence) in 2021.
Given the strong and improved cash position of the Company
during 2022, a decision was made by the Board to undertake a
Capital Reduction exercise to enable the payment of a cash dividend
and activate a share buy-back programme. During August 2022, the
High Court granted the Capital Reduction. A maiden Special Dividend
of 0.8 pence per share was made to shareholders during December
2022. Post period end, during March 2023, the Company announced an
Interim Dividend of 0.3 pence per share to be paid during July
2023.
The Company also commenced a share buy-back programme in October
2022, which has continued during 2023. Post period end, as at 12
May 2023, a total of 3,050,000 shares have been bought and are held
in Treasury. Shares held in Treasury, increase the Earnings Per
Share, hold no voting rights and are not entitled to a dividend
payment.
I would be remiss not to mention the Energy Profits Levy of 25%
introduced in May 2022 by the Chancellor and subsequent increase to
35% in 2023. Union Jack has a development and drilling programme
planned for the remainder of 2023 and beyond. The tax breaks
available for future investment in our projects provides an
effective cushion to help mitigate this unfair and punitive tax on
smaller energy companies.
I take this opportunity to thank our shareholders for their
continued support, as well as my co-directors and advisers, all who
continue to support the development and growth of the Company.
OUTLOOK
My confidence at the close of 2022 has been vindicated by the
Company's excellent 2022 financial results, confirming its
transformation, both financially and operationally.
The Board is of the opinion that within the Wressle development
there remains significant material upside which will support the
Company with revenues for at least another decade.
I also look forward to the drilling of a horizontal well at West
Newton. Independent technical analyses have concluded that using
extended horizontal development wells and oil-based muds should
maximise hydrocarbon productivity. Encouragingly, the results from
West Newton to date, signal a potentially highly valuable onshore
project with resources comparable to those usually reported
offshore. A significant onshore domestic gas resource as indicated
at West Newton has the potential to become an important transition
fuel in helping the UK achieve its 2050 Net Zero targets.
The Company will remain focused on the development of its
flagship projects, Wressle and West Newton, where the respective
Operators and joint venture partners have ambitious appraisal and
development programmes planned.
I am confident that the news-flow emanating from our balanced
portfolio which contains elements of production, development,
appraisal and exploration, will continue to attract the attention
of shareholders and investors and generate support for the Company
in its pursuit of shareholder value.
In closing, Union Jack is in sound financial health with a
robust balance sheet, continues to be free of debt, has significant
cash reserves with no requirement to raise capital for its planned
operations for the foreseeable future.
The future of Union Jack remains bright.
David Bramhill
Executive Chairman
12 May 2023
STRATEGIC REPORT FOR THE YEARED 31 DECEMBER 2022
BUSINESS REVIEW
Union Jack Oil plc is a UK registered company, focused on the
exploration and future development of the hydrocarbon project
interests held by the Company.
A review of the Company's operations during the year ended 31
December 2022 and subsequent to the date of this report is
contained in the Chairman's Statement and this Strategic
Report.
The profits for the year amounted to GBP3,606,624 (2021: loss
GBP853,013).
The profit for the year includes impairments to Property, Plant
and Equipment of which total costs are GBP478,584 (2021:
GBP156,995). These impairments are in relation to PEDL118,
GBP33,718 (2021: GBP67,598), PEDL203, GBP28,260 (2021: GBP83,057)
and EXL294, GBP416.606 (2021: GBPnil).
The profit for the year includes impairments to Intangible
Assets of which total costs are
-GBP3,028 (2021: GBP6,340). These impairments are in relation to
a reverse impairment to PEDL181, -GBP5,306 and an impairment to
PEDL201, GBP2,278.
Administrative expenses, excluding impairment costs, amounted to
GBP1,665,174 (2021: GBP1,740,962). This decrease is largely due to
lower share based costs for share options.
Cash and cash equivalents at year end amounted to GBP7,155,100
(2021: GBP5,977,541).
Total oil revenue contributing assets at year end amounted to
GBP26,361,337 (2021: GBP24,472,708).
Non-current assets at year end amounted to GBP17,157,286 (2021:
GBP16,392,416).
Intangible Assets totalled GBP9,134,006 (2021:
GBP8,525,373).
Tangible Assets totalled GBP5,666,212 (2021: GBP7,575,525).
Of the assets figures above, the net effect is an increase
overall consisting of an increase to Intangible Assets of
GBP608,633 from investment in projects; Investments of GBP260,525,
from a revaluation of shares held; Other Receivables, being the
deferred tax asset of GBP1,805,005; and Current Assets of
GBP1,123,759 being due to increased oil revenues. There has also
been a decrease in Tangible Assets of GBP1,909,313 largely through
the calculated depreciation of the producing assets.
The Company's Income Statement reports revenue of GBP8,507,050
(2021: GBP1,894,875) in respect of production income from Wressle,
Keddington oilfield and the Fiskerton Airfield oilfield.
The directors have recommended a payment of an interim dividend
of 0.3 pence, payable during July 2023.
In January 2022, the Company announced a summary of the results
of an analysis of the bottom hole pressure data acquired from the
Wressle-1 well during December 2021. The interpretation was
completed by ERCE, an independent energy consultancy, on behalf
of
the Wressle Joint Venture partners. Results demonstrated the
significant potential of the Wressle-1 well and the production
rates that could be achieved once the surface facilities are
optimised and a gas monetisation scheme is in place.
During January 2022, the Company announced the intention of the
Operator of PEDL253, Biscathorpe, to appeal against the refusal of
planning permission by Lincolnshire County Council, for a side
track drilling operation, associated testing and long-term oil
production. This appeal was heard during October 2022 by the
Planning Inspectorate, the result of which is expected during
2023.
During March 2022, planning for the extension for PEDL241, North
Kelsey, was refused by the Lincolnshire County Council. The Joint
Venture Partners have lodged an appeal to be heard by the Planning
Inspectorate.
During March 2022, planning for the drilling of additional wells
and production at West Newton A site was approved by the East
Riding of Yorkshire Council. Separately, permission was granted for
a time extension to allow further exploratory drilling at West
Newton B site.
During March 2022, settlement of GBP2,083,333 for the
consideration payment of a 25% interest in PEDL180 and PEDL182 was
made to Calmar LLP.
In July 2022, 150,000 new ordinary shares were issued for cash
at a price of 22 pence per ordinary share, raising GBP33,000 before
expenses of nil, by way of exercising options.
The enlarged issued share capital following the issue of the new
ordinary shares described above is 112,865,896 ordinary shares of 5
pence each and 831,680,400 deferred shares of 0.225 pence each.
The approval of a Capital Reduction exercise in August 2022, was
granted by the High Court of Justice. The Capital Reduction created
additional reserves to the value of GBP21,553,557 providing
flexibility to deliver shareholder returns in the form of dividends
and/or share buy-backs.
During December 2022, a maiden dividend of 0.8 pence per
ordinary share was paid to qualifying shareholders (2021:
GBPnil).
FUTURE DEVELOPMENTS
The directors intend to continue with the Company's stated
strategy, reviewing the licence interests held in respect of future
viability, any potential impairment indicators that may arise
during the year and adjusting immediately to any changes that may
be required in the operation of the licence interests held.
The Company holds a number of key, quality project interests,
namely, Wressle, West Newton, Biscathorpe, Keddington and North
Kelsey, where development, appraisal and exploration plans are in
place for the future benefit of stakeholders and the Company.
KEY PERFORMANCE INDICATORS
In the past, reporting traditional Key Performance Indicators
(KPIs) were deemed inappropriate for the Company. Performance was
measured by monitoring exploration costs and ensuring sufficient
funds were available to meet project commitments.
These Financial Statements for the year end 31 December 2022,
show a full year's production from Wressle and focus has now
changed showing traditional KPIs and not E&E expenditure.
The Board are extremely pleased with the business performance of
the Company and note the significant positive financial figures
reported within the KPI table.
These figures have been enhanced by a material increase in
production at Wressle and firm oil prices.
During the year, the Company has also achieved profitability,
paid a maiden dividend and commenced a share buy-back programme
with a view to increasing earnings per share.
Further events which took place after the Balance Sheet date are
described in note 7.
Key Performance Indicators For the Year Ending For the Year Ending
31 December 2022 31 December 2021
GBP GBP
Revenues 8,507,050 1,894,875
-------------------- --------------------
Total Comprehensive Income/(Loss) 3,777,124 (798,593)
-------------------- --------------------
Cash and cash equivalents 7,155,100 5,977,541
-------------------- --------------------
Net Current Assets 8,425,761 5,689,689
-------------------- --------------------
Total Equity 23,005,231 20,205,347
-------------------- --------------------
INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2022
Notes 31.12.22 31.12.21
GBP GBP
==================================== ======= ============ ============
Revenue 8,507,050 1,894,875
Cost of sales - operating costs (1,143,967) (377,153)
Cost of sales - depreciation (2,125,425) (735,160)
Cost of sales - Net Profit Interest
payment (137,179) -
Gross profit 5,100,479 782,562
------------------------------------ ------- ------------ --------------
Administrative expenses (excluding
impairment charge) (1,665,174) (1,740,962)
Impairment (475,556) (156,995)
Total administrative expenses (2,140,730) (1,897,957)
Operating profit / (loss) 2,959,749 (1,115,395)
Finance income 86,586 112,611
Royalty income 42,444 149,771
------------------------------------ ------- ------------ --------------
Profit / (loss) before taxation 3,088,779 (853,013)
Taxation 517,845 -
Profit / (loss) for the financial
year 3,606,624 (853,013)
------------------------------------ ------- ------------ --------------
Attributable to:
Equity shareholders of the Company 3,606,624 (853,013)
------------------------------------ ------- ------------ --------------
Earnings / (loss) per share - -
Basic (pence) 2 3.20 (0.83)
Diluted (pence) 2 3.16 (0.83)
------------------------------------ ------- ------------ --------------
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2022
31.12.22 31.12.21
GBP GBP
======================================= ========= =========
Profit / (loss) for the financial year 3,606,624 (853,013)
Items which will not be reclassified
subsequently
to profit or loss
Other comprehensive profit
Profit on investment revaluation 170,500 54,420
--------------------------------------- --------- ---------
Total comprehensive profit / (loss)
for the financial year 3,777,124 (798,593)
--------------------------------------- --------- ---------
BALANCE SHEET
AS AT 31 DECEMBER 2022
Notes 31.12.22 31.12.21
GBP GBP
====================================== ========= ============= =============
Assets
Non-current assets
Exploration and evaluation
assets 4 9,134,006 8,525,373
Property, plant and equipment 5 5,666,212 7,575,525
Investments 552,043 291,518
Deferred tax asset 1,805,025 -
-------------------------------------- --------- ------------- ---------------
17,157,286 16,392,416
Current assets
Inventories 28,038 8,829
Loan receivables - 1,028,110
Trade and other receivables 2,020,913 1,065,812
Cash and cash equivalents 7,155,100 5,977,541
-------------------------------------- --------- ------------- ---------------
9,204,051 8,080,292
Total assets 26,361,337 24,472,708
-------------------------------------- --------- ------------- ---------------
Liabilities
Current liabilities
Trade and other payables 778,290 2,390,603
-------------------------------------- --------- ------------- ---------------
Non-current Liabilities
Provisions 1,700,069 1,876,758
Deferred tax liability 877,747 -
-------------------------------------- --------- ------------- ---------------
2,577,816 1,876,758
Total liabilities 3,356,106 4,267,361
-------------------------------------- --------- ------------- ---------------
Net assets 23,005,231 20,205,347
-------------------------------------- --------- ------------- ---------------
Capital and reserves attributable
to the Company's equity shareholders
Share capital 6 7,514,576 7,507,076
Share premium - 21,528,077
Share-based payments reserve 712,634 638,586
Treasury reserve (214,227) -
Accumulated profit / (deficit) 14,992,248 (9,468,392)
-------------------------------------- --------- ------------- ---------------
Total equity 23,005,231 20,205,347
-------------------------------------- --------- ------------- ---------------
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Accumulated
(deficit)
Share-based Treasury /
Share Share payment reserve retained
capital premium reserve GBP earnings Total
GBP GBP GBP GBP GBP
========================= ========== ============= =========== ========== =========== ===========
Balance at 1 January
2022 7,507,076 21,528,077 638,586 - (9,468,392) 20,205,347
Profit for the financial
year - - - - 3,606,624 3,606,624
Other comprehensive
profit - - - - 170,500 170,500
------------------------- ---------- ------------- ----------- ---------- ----------- -----------
Total comprehensive
profit
for the year - - - - 3,777,124 3,777,124
Contributions by and
distributions to owners
Exercise of share
options 7,500 25,500 (19,368) - 19,368 33,000
Capital reduction - (21,553,577) - - 21,553,577 -
Dividends - - - - (900,527) (900,527)
Expiry of warrants - - (11,098) - 11,098 -
Treasury Share - - - (214,227) - (214,227)
Share-based payments - - 104,514 - - 104,514
Total contributions
by and
distributions to owners 7,500 (21,528,077) 74,048 (214,227) 20,683,516 (977,240)
------------------------- ---------- ------------- ----------- ---------- ----------- -----------
Balance at 31 December
2022 7,514,576 - 712,634 (214,227) 14,992,248 23,005,231
------------------------- ---------- ------------- ----------- ---------- ----------- -----------
Balance at 1 January
2021 6,825,258 19,522,379 411,467 - (8,669,799) 18,089,305
Loss for the financial
year - - - - (853,013) (853,013)
Other comprehensive
profit - - - - 54,420 54,420
------------------------- ---------- ------------- ----------- ---------- ----------- -----------
Total comprehensive
loss
for the year - - - - (798,593) (798,593)
Contributions by and
distributions to owners
Issue of share capital 681,818 2,318,182 - - - 3,000,000
Share issue costs - (312,484) - - - (312,484)
Share-based payments - - 227,119 - - 227,119
Total contributions
by and distributions
to owners 681,818 2,005,698 227,119 - (798,593) 2,116,042
------------------------- ---------- ------------- ----------- ---------- ----------- -----------
Balance at 31 December
2021 7,507,076 21,528,077 638,586 - (9,468,392) 20,205,347
------------------------- ---------- ------------- ----------- ---------- ----------- -----------
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2022
31.12.22 31.12.21
GBP GBP
====================================== =========== ===========
Cash flow from operating activities 5,811,734 (646,726)
--------------------------------------- ----------- -----------
Cash flow from investing activities
Purchase of intangible assets (712,935) (2,277,224)
Purchase of property, plant and
equipment (2,852,254) (1,022,055)
Fixed term deposit (1,000,000) -
Loan advanced (1,000,000) -
Loan repaid 2,000,000 -
Purchase of Investments (100,000) (100,000)
Sale of investments 6,772 -
Interest received 105,996 67,016
--------------------------------------- ----------- -----------
Net cash used in investing activities (3,552,421) (3,332,263)
--------------------------------------- ----------- -----------
Cash flow from financing activities
Proceeds on issue of new shares 33,000 3,000,000
Cost of issuing new shares - (312,484)
Dividends paid (900,527) -
Treasury shares (214,227) -
Net cash (used in) / generated
from financing activities (1,081,754) 2,687,516
--------------------------------------- ----------- -----------
Net increase / (decrease) in
cash and cash equivalents 1,177,559 (1,291,473)
--------------------------------------- ----------- -----------
Cash and cash equivalents at
beginning of financial year 5,977,541 7,269,014
--------------------------------------- ----------- -----------
Cash and cash equivalents at
end of financial year 7,155,100 5,977,541
--------------------------------------- ----------- -----------
Notes to the Financial Statements
for the year ended 31 December 2022
1 ACCOUNTING POLICIES
Basis of Preparation
This financial information does not constitute full statutory
financial statements but is derived from accounts for the year
ended 31 December 2022 which are audited. This announcement is
prepared on the same basis as set out in the statutory financial
statements for the year ended 31 December 2022. While the financial
information included in this announcement has been prepared in
accordance with the recognition and measurement criteria of UK
adopted international accounting standards (IFRS), this
announcement does not in itself contain sufficient information to
comply with IFRS.
The Auditor's Report for the year ended 31 December 2022 was
unqualified.
The full Annual Report along with a Notice of Annual General
Meeting ("AGM") will be distributed to shareholders on, or around,
23 May 2023 and now be available on the Company's website
www.unionjackoil.com .
Going Concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement and the Strategic Report.
The directors' forecasts demonstrate that the Company will meet its
day-to-day working capital and share of estimated drilling costs
over the forecast period being at least 12 months from the sign-off
of these financial statements.
There are a number of risks to the Company's working capital
position, which have been identified by the directors and its
independent advisor, OGA, namely: (i) timing of incurred costs;
(iii) scope of work programmes undertaken; and (iii) realised oil
price.
The impact of those risks on the Company's working capital
position has been assessed under a range of differing scenarios,
with the most adverse, given the current operating environment and
stage of development that the Company's assets are at, being
identified as being the basis for evaluating the impact for the
Going Concern assessment using the worst case "stress test."
The Company has sufficient funding to meet planned expenditures
and a level of contingency. Taking account of the risks, the stress
test shows that the Company is able to operate within the level of
funds currently held at the date of approval of these financial
statements.
The directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
2 EARNINGS Per Share
The Company has issued warrants and options over ordinary shares
which could potentially dilute the basic earnings per share in the
future.
Basic earnings per share is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
At 31 December 2022, the Company had no warrants in issue (2021:
30,373) and 3,050,000 (2021: 3,200,000)
options in issue.
These warrants and options have been taken into account when
calculating the diluted earnings per share.
Earnings per share 2022 2021
Pence Pence
----------------------------- ---------------- ------------ ---------- ---------
Profit / (loss) per share from continuing operations
- Basic 3.20 (0.83)
- Diluted 3.16 (0.83)
------------------------------------------------------------- --------- ----------
The profit / (loss) and weighted average number of ordinary
shares used in the calculation of profit/(loss) per share are as
follows:
2022 2021
GBP GBP
------------------------- --------------- ------------ ----------- ---------
Profit/ (loss) used in the calculation of total
basic and diluted profit / (loss
per share 3,606,624 (853,013)
-------------------------------------------------------- ---------- ----------
Number of shares 2022 2021
--------------------------------------------------- ---------------- ----------
Weighted average number of ordinary shares
for the purposes of basic
and diluted profit / (loss) per share
- Basic 112,706,307 102,628,722
- Diluted 114,132,334 102,628,722
--------------------------------------------------- ------------ --------------
The Company has 831,680,400 (2021: 831,680,400) deferred shares.
These have not been included within the calculations of basic
shares above on the basis that IAS 33 defines an ordinary share as
an equity instrument that is subordinate to all other classes of
equity instruments. Any residual interest in the assets of the
Company would not currently, on liquidation, go to the deferred
shareholders, hence they are not currently considered subordinate.
These deferred shares have not been taken into account when
calculating the diluted loss per share as their impact was
anti-dilutive.
The Company issued 150,000 new ordinary shares during the year
(2021: 13,636,364).
3 RECONCILIATION OF Profit / LOSS TO CASH GENERATED FROM OPERATIONS
31.12.22 31.12.21
GBP GBP
------------------------------ ----------------- ------------- --------- ----------
Profit for the year 3,606,624 (853,013)
Depletion of producing assets 2,125,425 735,160
Impairment of intangibles 475,556 156,995
Share-based payments 104,514 227,119
Amortisation / depreciation 20,248 -
Loss on disposal of shares 3,203 -
Finance income (86,586) (112,611)
Royalty income (42,444) (149,771)
------------------------------------------------ -------- -------------- -----------
6,206,540 3,879
------------------------------------------------ -------- -------------- -----------
(Increase) in inventories (19,209) (8,829)
(Increase) in trade and other receivables (1,708,982) (550,868)
Increase / (decrease) in trade and
other payables 1,333,385 (90,908)
------------------------------------------------ -------- -------------- -----------
Cash generated from / (used in) operations 5,811,734 (646,726)
------------------------------------------------ -------- -------------- -----------
Income taxes paid - -
------------------------------------------------ -------- -------------- -----------
Net cash flows from operating activities 5,811,734 (646,726)
------------------------------------------------ -------- -------------- -----------
4 INTANGIBLE assets
31.12.22
Exploration and 31.12.22 31.12.22 31.12.21
evaluation Royalty Total Total
GBP GBP GBP GBP
------------------------ ---------------- -------- --------- ---------
Cost
At 1 January 8,450,460 93,610 8,544,070 6,134,717
Transfer to development
and production assets - - - (18,092)
Costs incurred in
the year 616,106 - 616,106 2,427,445
------------------------ ---------------- -------- --------- ---------
At 31 December 9,066,566 93,610 9,160,176 8,544,070
------------------------ ---------------- -------- --------- ---------
Depreciation and
impairment
At 1 January 6,340 12,357 18,697 -
Amortisation charge
for the year - 10,501 10,501 12,357
Costs impaired (3,028) - (3,028) 6,340
------------------------ ---------------- -------- --------- ---------
At 31 December 3,312 22,858 26,170 18,697
------------------------ ---------------- -------- --------- ---------
Net book value
At 31 December 9,063,254 70,752 9,134,006 8,525,373
At 1 January 8,444,120 81,253 8,525,373 6,134,717
------------------------ ---------------- -------- --------- ---------
Additions to exploration and evaluation costs represent
exploration and appraisal costs incurred in the year in respect of
unproven properties and provisions recognised for decommissioning
and restoration liabilities.
The directors have reviewed whether there were any potential
indicators for impairment evidence for each of the assets. If an
indicator was identified, the directors considered the potential
value of the projects and licences. The directors have also
considered the likely opportunities for realising the value of
licences and have concluded that the likely value of each
exploration area is individually in excess of its carrying amount.
There was a reverse impairment for 2022 of GBP5,306 with regard to
PEDL181 (2021: GBP6,340), and an impairment of GBP2,278 with regard
to PEDL201 (2021: GBP2,136).
Included in the above intangible asset additions during the year
are amounts arising in relation to changes in decommissioning and
restoration provisions.
Intangible assets (less any impairment) comprise amounts
capitalised as follows:
31.12.22 31.12.21
GBP GBP
----------------- ---------------------- --------------- ----------
West Newton PEDL183 5,689,647 5,184,442
Biscathorpe PEDL253 3,045,506 2,992,694
North Kelsey PEDL241 328,101 266,984
Royalty 70,752 81,253
----------------------------------------- -------------- ---------
9,134,006 8,525,373
---------------------------------------- -------------- ---------
5 PROPERTY, PLANT AND EQUIPMENT
31.12.22 31.12.22 31.12.22 31.12.21
Development and Equipment Total Total
production GBP GBP GBP
GBP
----------------------------- ---------------- ---------- --------- ----------
Cost
At 1 January 8,707,703 - 8,707,703 6,698,650
Transfer from exploration
and evaluation assets - - - 18,092
Additions 587,904 116,539 704,443 1,990,961
---------------------------- ----------------- ---------- --------- ----------
At 31 December 9,295,607 116,539 9,412,146 8,707,703
---------------------------- ----------------- ---------- --------- ----------
Depreciation and
impairment
At 1 January 1,132,178 - 1,132,178 246,363
Depreciation charge
for the year 2,125,425 9,747 2,135,172 735,160
Costs impaired 478,584 - 478,584 150,655
---------------------------- ----------------- ---------- --------- ----------
At 31 December 3,736,187 9,747 3,745,934 1,132,178
---------------------------- ----------------- ---------- --------- ----------
Net book value
At 31 December 5,559,420 106,792 5,666,212 7,575,525
At 1 January 7,575,525 - 7,575,525 6,452,287
---------------------------- ----------------- ---------- --------- ----------
Development and Production assets comprise amounts capitalised
as follows:
31.12.22 31.12.21
GBP GBP
Wressle PEDL180/182 4,695,402 6,176,515
Fiskerton Airfield EXL294 - 373,582
Keddington PEDL005(R) 864,018 1,025,428
5,559,420 7,575,525
---------------------------- ------------- ---------
The Board has assessed the Development and Production assets as
at 31 December 2022 and has identified indicators of impairment as
set out in IAS36 Impairment of assets in respect of PEDL118 Dukes
Wood, PEDL203 Kirklington and EXL294 Fiskerton Airfield,
respectively. This impairment amounts to a total of GBP478,584
(2021: GBP150,655). The total impairment charge for these assets
was PEDL118, GBP33,718 (2021: GBP67,598), PEDL203, GBP28,260 (2021:
GBP83,057) and EXL294 GBP416,606 (2021: GBPnil).
There were no indicators for impairment on any other assets.
6 SHARE CAPITAL
Allotted and issued: Class Nominal 31.12.22 31.12.21
Number value GBP GBP
112,865,896 Ordinary 5p 5,643,295 5,635,795
(31 December 2021: 112,715,896)
831,680,400 Deferred 0.225p 1,871,281 1,871,281
(31 December 2021: 831,680,400)
----------------------------------- -------- ------------ ----------- ---------------------
Total 7,514,576 7,507,076
----------------------------------- -------- ------------ ----------- ---------------------
Ordinary shares hold voting rights and are entitled to any
distributions made on winding up. Deferred shares do not hold
voting rights and are not entitled to distributions made on winding
up.
Allotments during the year
In July 2022, 150,000 new ordinary shares were issued for cash
at 22 pence per share, raising approximately GBP33,000 by way of
exercised options by Raymond Godson, non-executive director.
7 EVENTS AFTER THE BALANCE SHEET DATE
The following events have taken place after the year end:
During March 2023, the Board declared an interim dividend of 0.3
pence per ordinary share, with a London Stock Exchange ex-dividend
date of Thursday 6 July 2023, a record date of Friday 7 July 2023
and payment date of Friday 28 July 2023.
The share buy-back programme has continued and since 1 January
2023 to 12 May 2023 a total of 2,350,000 ordinary shares were
purchased and placed in Treasury. The number of ordinary shares
held in Treasury as at
12 May 2023, is 3,050,000.
During May 2023, the Management negotiated price and terms of
condition for the sale of the Company's 2.5% interest in the
Claymore Area Royalty Agreement. The Company has subsequently
disposed of this asset with full payment received.
8 COPIES OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS
The 2022 Annual Report and Financial Statements will be posted
to shareholders on, or around, 23 May 2023 and are now available on
the Company's website www.unionjackoil.com .
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END
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(END) Dow Jones Newswires
May 15, 2023 02:00 ET (06:00 GMT)
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