Union Jack Oil PLC (LON: UJO) share price plunged 11% after opening higher on the latest project update showing additional oil discoveries at its West Newton A and B sites.
The British oil and gas exploration company confirmed a thick reservoir development at the Kirkham Abbey formation, having measured over 75 metres at the WNA-1 well and 66.5 metres at the WNA-2 well.
The oil firm extracted liquid hydrocarbons to the surface at each of the three wells and forwarded them for further analysis.
The West Newton A-1 well was confirmed to have 41 degrees API oil, while the WNA-2 well had a light oil condensate measuring 44 API, with further ongoing analysis. The WNB-1z well also had liquid hydrocarbons similar to those found in WNA-2.
Investors initially cheered the news, as evidenced by UJO shares opening higher than yesterday’s closing price, but the mood quickly turned sour, and the shares fell to new lows.
UJO’s share price has been falling since late August as the company faces a significant challenge in the form of getting approvals for the expansion of its current wells at its West Newton and Wressle projects.
The oil company's planning application to expand the West Newton A well site was rejected by the East Riding of Yorkshire Council Planning Committee, leaving the firm unable to continue its expansion plans.
The company recently raised £3 million from investors via a share placement and intends to use the proceeds to fund development works at its Wressle oil field. The company intends to expand the current production capacity of 884 barrels of oil equivalent daily.
Investors will be watching the company’s moves to see if it can get the necessary approvals to expand its West Newton A and B sites and its Wressle oil field going forward.
UJO shares are headed towards the long-term support level at 15p, where I expect them to bounce given that the level has held since the company IPO’s in August 2013. UJO shares have never traded below this level, which is where I would be looking for aggressive bullish trades.
Meanwhile, attempting to buy UJO shares at current prices is like trying to catch a falling knife. You could be rewarded immensely once the shares start moving higher, or you could be burned as the shares continue falling.
*This is not investment advice. Always do your due diligence before making investment decisions.
Union Jack Oil share price.
Union Jack Oil shares fell 10.98% to trade at 18.23p, falling from its opening price of 20.48p, after closing Tuesday’s session at 19.50p.
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