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Union Jack Placing, Hmmmm - Buy

By HotStockRockets | Friday 3 March 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

So another keep the lights on placing eh? As it happens no although the market has (wrongly) taken it that way. Union Jack Oil (UJO) already had a comfortable cash balance. So why raise a gross £1.4 million at 0.135p?

Union Jack stresses that it is fully funded for its existing commitments, which include the drilling of the Biscathorpe-2 and Holmwood-1 conventional exploration wells, intends to utilise the proceeds of the Placing to increase its interests in existing licences within the Company's portfolio. Union says : "Management are working towards concluding these acquisitions in the near term."

We suspect that it may be looking to increase its stake in Wressle where it will, we are 99% confident,  overcome the planning glitch.

Union Jack will be cashflow positive in a material way by early 2018 and is fully funded to that point. The shares are 0.13p-0.15p valuing the company at c£6 million. That does not discount the cashflow potential here and the, now, very strong balance sheet.

We expect a re-rate on the back of news about either the acquisition or victory on the Wressle planning battle. Drilling elsewhere could add further spice. Buy.

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