Union Jack Oil Reports £7M Net Loss Amid Strategic Shift to USA Drilling

Union Jack Oil final results: a £7,029,350 loss, but the real story is the USA pivot

Union Jack Oil’s 2025 results are a classic case of ugly headline, more nuanced detail. The company moved from a £649,213 profit in 2024 to a £7,029,350 net loss in 2025, while oil and gas revenues fell to £2,489,507 from £3,929,722.

That is clearly a poor year on paper. But the big driver was not a collapse in the producing business alone – it was a hefty £5,181,707 impairment linked to Biscathorpe, North Kelsey and the Sark well, alongside a strategic shift towards faster-moving US assets.

Union Jack Oil 2025 key figures: revenue down, impairments up, debt still nil

Metric	2025	2024
Oil and gas revenues	£2,489,507	£3,929,722
Gross profit	£691,001	£1,968,101
Net profit/(loss)	(£7,029,350)	£649,213
Basic earnings/(loss) per share	(5.68)p	0.61p
Cash and cash equivalents	£1,460,847	£2,527,831
Total assets	£19,083,850	£23,846,105
Total equity	£16,831,972	£21,870,751

The good news is simple enough: Union Jack remains debt free. In a small-cap oil and gas name, that matters. It gives management more room to absorb a bad well, cut costs, and back the projects they think can generate the next leg of growth.

Why Union Jack Oil made a loss in 2025: impairments did most of the damage

The loss was driven mainly by write-downs rather than day-to-day trading alone. An impairment is an accounting hit that says an asset is worth less than previously thought.

Union Jack impaired:

• Biscathorpe by £3,944,104
• North Kelsey by £534,805
• Sark by £702,798

That totals £5,181,707, and it explains most of the swing into the red. Biscathorpe and North Kelsey were hit by the ongoing mess of UK planning, regulation and tax uncertainty. Sark, in Oklahoma, was simply not a commercial success.

My take: this is painful, but probably better taken in one go than dragged out over several years. The UK write-downs look like management admitting reality rather than pretending delayed projects still deserve full value on the balance sheet.

Union Jack Oil USA strategy: Oklahoma drilling is now the main growth engine

This RNS leaves little doubt about management’s priorities. The company says the “successful transition of focus to the USA” is expected to drive further growth, and the operational review backs that up.

Union Jack says it has drilled five wells with Reach Oil and Gas and delivered an 80% success rate. That is a strong early scoreline, although investors should remember small sample sizes can flatter or punish quickly in drilling.

Oklahoma assets are producing, and that matters

• Moccasin 1-13 is currently producing approximately 48 bopd gross and has produced circa 23,000 barrels to date.
• Andrews Field has produced and sold over 100,000,000 cubic feet of gas and around 10,000 barrels of oil.
• Taylor 1-16 is producing up to 15 bopd.
• Crossroads was drilled in May 2026 and awaits testing.

There is also a potentially attractive future well, Diana-1, where Union Jack has a 75% interest. The company notes that typical wells in the Wilzetta Fault play can produce around 250 bopd and provide payback within three months. That is Reach’s geological neighbourhood, not a guarantee for Diana-1, but it shows why management likes the area.

For retail investors, this is the core investment case now. The company wants quicker-cycle US projects with clearer regulation and better tax economics than the UK.

Wressle still carries the UK business – and it remains very important

Even with the US push, Wressle is still the key UK cash generator. During the period, it produced an average of 297 bopd on constrained flow, net 119 bopd to Union Jack.

Wressle has generated revenues of more than US$24,000,000 net to Union Jack before taxes, and over 800,000 barrels have been produced and sold from the field to date. That is real operating history, not just hopeful geology.

The bigger prize is still ahead. The field has 2P reserves – meaning proved plus probable recoverable volumes – of over 2,300,000 boe gross according to ERCE. Management says Wressle could support revenues for at least another decade, assuming approvals come through for the next phase.

That approval risk is the catch. Wressle looks valuable, but UK onshore energy projects remain slow and politically awkward.

West Newton and Keddington offer upside, but UK delays remain the drag

West Newton still looks interesting on paper. Union Jack’s 16.665% interest covers a discovery with 2C technically recoverable volumes of 197.6 bcf of gas and 593.0 mbbl of liquids, based on the 2022 CPR figures quoted in the RNS.

The February 2026 permit variation for reservoir stimulation at WNA-2 is a genuine step forward. If that work fixes the historic well-bore damage issues, West Newton could become more than just a long-running promise.

Keddington also improved in 2025 after site upgrades, with production resuming in June 2025. More than 8,750 barrels have been produced and sold to date since restart, and modelling suggests infill drilling could add between 113,000 and 183,000 barrels of oil.

So there is still value in the UK portfolio. The issue is pace. Investors have heard plenty of good technical language before. What they need now is execution.

Cash, cost cuts and funding: is Union Jack Oil financially comfortable?

Comfortable is probably too generous. Stable enough for now is fairer.

Cash fell to £1,460,847 from £2,527,831, while operating cash flow was an outflow of £669,594. The company also spent on intangible assets and property, plant and equipment, leading to a total net cash decrease of £1,066,984.

That said, Union Jack raised £2,000,000 before expenses in July 2025, remains debt free, and says its forecasts support going concern through at least 31 May 2027. Management has also started a cost reduction programme expected to cut G&A by around £500,000 per annum, with more cuts under review.

That is sensible and necessary. When revenues are under pressure and exploration risk is rising, lower overheads are not optional.

What this Union Jack Oil RNS means for retail investors in 2026

This was a bad set of statutory results, no point dressing that up. Revenue fell, cash fell, and the company booked a very large loss.

But I do not think this RNS is purely negative. It shows a company abandoning weaker UK positions, taking the accounting pain, and leaning harder into US drilling where it believes projects can move faster and pay back sooner.

The bull case is straightforward:

• Wressle continues to generate material revenue
• The balance sheet has no debt
• US drilling has delivered early commercial wins
• Cost cuts should help protect cash

The bear case is just as clear:

• 2025 financial performance was weak
• Cash resources are lower
• Exploration still carries failure risk, as Sark showed
• UK assets remain exposed to delays and policy frustration

Overall, this looks like a transition year rather than a collapse year. The numbers are rough, but the strategic message is coherent. For shareholders, the next big question is whether Oklahoma can deliver enough successful wells and cash flow to make the 2025 clean-up worth it.

Key things to watch after these Union Jack Oil final results

• Crossroads testing results in Oklahoma
• Further drilling updates with Reach
• Wressle regulatory approvals and development progress
• West Newton stimulation work and any flow outcomes
• Cash preservation and whether the £500,000 annual cost saving is delivered

If the US portfolio keeps landing commercial results, investors may look through the 2025 loss. If not, the impairment-heavy year will look less like a reset and more like a warning shot.