Union Jack Oil - A brief look.

Good afternoon.


Today I'm going to have a brief look at Union Jack Oil (UJO) an AIM listed company that has become popular recently among bulletin board traders. 


To cut to the chase, Union Jack Oil are expected to announce the results of their "Wressle-1 conventional exploration well - PED180." in July following groundwork completion and the mobilisation of rigs.


For those of you who don't know, The Wressle Prospect is located on the margin of the Humber Basin (close to the currently producing Crosby Warren oil field and the Brigg-1 oil discovery).


"The gross mean Prospective Resource volumes at Wressle, as calculated by independent consultants, Molten Limited ("Molten"), are estimated to be 2.13 million barrels of oil."


Now, let's have a look at some numbers produced by the independent consultants:


What does this mean?


Well, if the consultants are correct (and they probably will be pretty close) this could translate into a petty hefty discovery! Let us use a very crude and grotesque fifty percent discount to account for costs, (even though in reality there will probably be farm-outs for a percentage of the resource), this could be a resource currently worth $112,890,000 or about £66,405,882. Rather bizarrely this method of value calculation is often about about right (yes, even though it doesn't account for discounted value projections, inflation, costing changes, etc). 


Even if we take this horribly basic method of resource valuation as vaguely accurate, we can see that against the current market capitalisation of the company (£2.93m - accounting for the last placing to institutions), Union Jack Oil could well see an astronomical rise in its share price. 


I shall therefore be buying shares prior to July while the market is a bit quieter.


Good luck traders and do your own due diligence,

The Masked AIM Trader.