- Union Jack Oil shares barely reacted to news of $7 million in revenues.
- The oil company’s shares are up over 108% this year amid high oil prices.
- UJO shares are currently trading sideways. Will, they keep rising?
- Read on to find out.
The Union Jack Oil PLC (LON: UJO) share price barely moved despite the oil company reporting that it had achieved a significant revenue milestone from its Wressle oil field of US$7 million. As a result, UJO shares spiked high briefly before coming back down and slightly up at writing.
Also read: The Best Oil Stocks To Buy Right Now.
There are several reasons why the UJO share price did not move as much as expected on such a positive announcement. One of the key reasons could be the windfall tax proposed by the British government on UK oil and gas companies.
The law could significantly affect Union Jack Oil’s profits if passed, given that all of its operations are in the UK. Therefore, investors may be now adopting a wait-and-see approach toward the energy company.
Another factor that could have contributed to today’s muted market reaction is that UJO shares are already up 108.3% in 2022, driven higher by the rally in oil prices that has lifted the shares of most oil companies. Therefore, the markets could have already priced in UJO’s positive announcement.
Looking at today’s announcement, we can see that UJO owns a 40% stake in the Wressle project, which has so far generated revenues worth US$7 million for the firm. In addition, the well continues to generate approximately 750 barrels of oil daily, way above initial estimates of 500 bopd.
Union Jack oil had cash balances and short-term receivables of over £8,400,000 as of 20 June 2022. The oil company expects to report its first profit during the six months ended 30 June 2022 and is debt-free.
UJO shares have been trading sideways since early April, indicating that the bullish trend has lost its initial momentum. Before buying, I would wait for a break from the sideways trading range. However, a break to the downside could lead to losses.
*This is not investment advice. Always do your due diligence before making investment decisions.
UJO share price.
The Union Jack Oil share price spiked 3.82% higher to trade at 28.55p, rising from Friday’s closing price of 27.50p.