Key points:
- Union Jack Oil (UJO) shares edged lower on £1m loan repayment.
- The firm announced that Europa Oil had repaid the loan with interest.
- However, investors were largely unimpressed by the news.
The Union Jack Oil PLC (LON: UJO) share price edged lower after announcing that Europa Oil & Gas Holdings had fully repaid the £1,000,000 loan by Union Jack on 9 September 2022, including the accrued interest.
Investors were largely unimpressed by the announcement, which saw UJO shares keep falling, bringing their losses over the past month to 18%. The energy company has seen its shares fall after releasing the Gaffney Cline report.
Also read: The Best Oil Stocks To Buy Right Now.
Therefore, UJO surprised many investors when it released the Gaffney, Cline & Associates Limited report showing that some parts of the resources available at the Wressle field were inaccessible. The report also showed that oi production would plateau at 800 barrels daily for the next five years.
Investors reacted negatively to the news triggering the massive decline in UJO shares seen on the daily chart below. For those wondering what drove UJO shares higher, the company announced on 7 September 2022 that it made its maiden profit in H1 2022.
The markets reacted positively to the news that Union Jack Oil had made a maiden profit of £2,034,086 during the six months to 30 June 2022. The news meant that the company’s activities were profitable and economically sustainable.
However, massive parabolic rallies are usually followed by significant pullbacks, which is why we always advise traders and investors not to chase prices higher. For example, during the parabolic rally in UJO shares, nobody thought that the ensuing pullback would erase almost all of its previous gains.
Another reason for the current trading range in UJO shares was the competent person’s report about the drilling results from the West Newton site, which showed that Union Jack Oil was using the wrong fluids to drill wells at the site.
Instead of using dilute water-based acids to drill the Kirkham Abbey reservoir, the firm should have used oil-based drilling fluid. The news has kept the UJO share price under pressure since late September.
*This is not investment advice.
Union Jack Oil (UJO) share price.
The Union Jack share price edged lower after the repayment of the £1 million loan by Europa Oil.