There’s a lot of news expected to drop, from Union Jack Oil (LON: UJO), over the next few weeks. All eyes and ears are zeroing in on the West Newton drill (16.665%) gas (PEDL183). Which I can confirm has now been classed as a ‘tight hole’. A tight drill is basically an order to keep news on the drills progress confidential. Least they disclose some thing to the market accidentally.
Make no mistake this isn’t an exploration well. It’s probably going to come in on the gas side and most market watchers expect gas to be hit and announced within the next 7-14 days. When that happens then it’s a question of how big is it?
What I do know for sure is that a big gas discovery will not remain in the hands of the partners/operator it’ll probably be bought by one of the Major players such as Centrica or Perenco who respectively operate the major UK gas terminals located at Easington, Dimlington. I know that because I have been told that by several ‘Real’ market analyst’s. Of course there’s also the question of the The Cadeby Reef/Slope Deposit and oil/gas further down in structure/s with a geological Chance of Success of 26%. However if the gas comes in then the Chance Of Success (COS) on oil/gas within Cadeby/Slope will increase. *(Best Estimate of 43.7 MMboe of Prospective Resource Source)
How high can the share-price (SP) rise? Well if I knew that then I’d be clairvoyant. The truth is that no one knows. But I’d expect, at the very least, a doubling from where it currently sits. Could actually rise several hundred percent depending on the news. However even though I personally think it’s nailed on that a gas discovery will be announced, there’s always risk involved. Recall the Biscathorpe wailing and gnashing of the teeth when blame for a poor result and several million years of geology resulted in disgusting abuse of one of their major share-holders. ‘Caveat Emptor’
Some thing could go disastrously wrong. This is why you’ll never get an O&G CEO coming out stating 100% confidence in success. So bear that in mind. There’s always risk.
Furthermore I believe that the operator, Raithlin, are actually drilling ahead of schedule, so expect news earlier than the 40 day marker. It’s a Company maker for UJO.
Nota Bene: The Author does not hold any shares in Union Jack Oil.