Shares in Union Jack Oil surged by over 20% in early trading on Friday after the company announced it had secured a drilling permit for its Rex-2 well in Oklahoma. The AIM-listed oil and gas investor said the permit from the Oklahoma Corporation Commission allows it to proceed with drilling at the site, which targets the Hunton Limestone formation.
By midday, the stock was trading at around 22p, up from Thursday's close of 18p, valuing the company at approximately £25m. The jump marks one of the largest single-day gains for the stock this year and has caught the attention of small-cap investors.
The Rex-2 well is part of Union Jack's broader US portfolio, which includes interests in Kansas and Oklahoma. The company has been steadily building its presence in the region, viewing it as a lower-risk, high-return opportunity compared to its UK onshore assets. Analysts at Shore Capital noted that the permit removes a key regulatory hurdle and could lead to production by the end of the year.
For UK investors and pension holders with exposure to AIM-listed smaller companies, the move underscores the potential volatility and upside in the oil and gas sector. However, the stock remains highly speculative, and the company's overall production profile is modest. Union Jack also holds interests in the UK's Wressle oil field, which continues to generate steady cash flow.
The broader market context saw the FTSE 100 flat on the day, while the FTSE 250 edged up 0.2%. Energy stocks were mixed, with Brent crude trading near $78 per barrel. Union Jack's surge was a standout in an otherwise subdued session for small-cap energy plays.
Source: Union Jack Oil PLC RNS