Oil production from the Wressle field in north Lincolnshire helped boost annual revenue by 349% for Union Jack, the company said today.

It also announced its first annual profit and record high cash balances.

In accounts published this morning, Union Jack said revenue from oil sales was more than £8.5m in the year to December 2022. This compared with £1.89m in 2021.

The company’s annual net profit was £3.61m, up from a loss in 2021 of £0.853m.

The Wressle field is currently the second biggest onshore oil producer in the UK.

In February 2023 (the most recent figures available) it produced 5.36% of the UK onshore total, after Wytch Farm in Dorset (76.9% of the UK onshore total).

But Union Jack’s annual report said oil production from Wressle was expected to increase with a scheme to use, rather than flare, gas from the field. A limit on the volume of flared gas has restricted the amount of oil that can be extracted.

A new competent person’s report (CPR) on the Wressle field is expected in June 2023.

The company’s executive chairman, David Bramhill, said:

“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.”

Company finances

Union Jack remained debt-free in 2022 and reported cash of £7.155m, up from £5.977m in 2021.

Mr Bramhill said:

“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 company distributed its first dividend to shareholders in December 2022 (0.8p per share). Another dividend of 0.3p is expected in July 2023, Union Jack said.

It has also introduced a share buy-back programme. At 12 May 2023, more than 3m shares have been bought and held in treasury, Union Jack said.

Windfall tax

The annual report also criticised the government’s energy profits levy, known as the windfall tax.

The tax was introduced in May 2022 on profits from oil and gas production.

It contains an investment allowance loophole, created to encourage further oil and gas exploration.

Mr Bramhill said:

“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.

Other sites

West Newton: Union Jack confirmed that the Kirkham Abbey reservoir at West Newton in East Yorkshire was predominantly gas (90% methane and 5% ethane), with associated light condensate. A horizontal well is planned for the second half of 2023 at the West Newton-B site. Union Jack said it:

“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: Union Jack said there was “undrained oil resource” on eastern side of the field. A sidetrack well is planned for later 2023.

Biscathorpe: Decision awaited from planning inspectorate from appeal hearing in October 2022

North Kelsey: Hearing planned for mid June 2023

Fiskerton Airfield: Shut in awaiting a workover programme to reinstate production. Union Jack impaired its share of the value of the licence at £416,606

Dukes Wood and Kirklington: being assessed for geothermal potential

AGM

Union Jack’s annual meeting is at 11am on 22 June 2023 at The Bristol Hotel, Prince Street, Bristol BS1 4QF

Key figures

Year ending 31 December 2022

Revenue from oil sales: £8,507,050 (2021: £1,894,875)

Operating costs: £1,143,967 (2021: £377,153)

Total comprehensive income: £3,777,124 (2021: loss of £789,593)

Cash and cash equivalents: £7,155,100 (2021: £5,977,541)

Profit: £3,606,624 (2021: loss of £853,013)

Cash balances and near term receivables: above £9,750,000 at 12 May 2023

Non-current assets: £17,157,286 (2021: £16,392,416)

Net current assets: £8,425,761 (2021: £5,689,689)

Basic earnings per share: 3.20p (2021: 0.83p loss)

Admin expenses, excluding impairment: £1,665,174 (2021: £1,740,962)