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Shares of Union Jack Oil PLC (LON: UJO) plunged 6% after the British onshore oil mining company called a shareholders meeting to confirm the consolidation of its current share capital to boost its share price.
The company’s board is proposing to issue one share for every 200 shares, which could see its share price surge above 30p if shareholders approve the proposal at the AGM scheduled for March 10, 2021.
Markets seemed unimpressed with the proposal given today’s decline, and it remains to be seen if the firm’s shareholders, most of whom are retail investors, will agree with the board to boost the price of their shares.
Union Jack has issued several updates this year relating to the West Newton project, which was granted a screening option after applying to expand the West Newton A site.
The company also recently acquired an additional 15% stake in the Biscathorpe project from Humber Oil & Gas for £500,000 ($676 775), bringing its stake in the project to 45%.
The board argues that its current projects' value is not accurately reflected in the company’s stock price and that consolidation would raise its investment profile, making it more attractive to a wider audience.
Investors should monitor the stock as we await the likely consolidation given that the shares are trading near a support level, which could signal a rally if it holds and the price reverses.
Union Jack Oil share price.
Union Jack Oil shares fell 6.02% to trade at 0.156p, dropping from today’s opening price of 0.166p.
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