Union Jack Oil (LSE:UJO) has entered into a £1 million secured term loan agreement with Egdon Resources, providing additional working capital to support the company’s general corporate activities.
The facility has a term of 24 months and is secured against Union Jack’s interests in the Wressle oilfield. The loan carries an annual interest rate of 5% and is expected to be repaid primarily through 60% of the monthly operating free cash flow generated by the field.
Under the terms of the agreement, any month in which Wressle cash flow is insufficient to cover interest payments will result in the unpaid interest being capitalised. The outstanding principal together with any accrued interest will become payable at the end of the loan term.
The financing arrangement also includes a series of covenants restricting the company’s ability to grant additional security, incur further debt or make dividend payments during the life of the facility. In addition, Egdon has been granted rights of first refusal over any proposed sale of Union Jack’s interests in Wressle and will retain its role as field operator until the loan has been fully repaid.
While the new facility strengthens short-term liquidity, Union Jack’s outlook continues to be affected by weaker financial performance, including a significant loss reported in 2025, negative operating cash flow and persistent free cash flow outflows. Technical indicators remain subdued, with the shares trading below key short-term moving averages and momentum measures pointing to ongoing weakness. Although the company maintains a debt-free balance sheet outside this facility, valuation support remains limited due to negative earnings and the absence of dividend payments.
More about Union Jack Oil
Union Jack Oil is an oil and gas exploration, development and production company with assets in both the United Kingdom and the United States. The company holds a 40% interest in the Wressle oilfield licences PEDL180 and PEDL182 in Lincolnshire, one of its key producing assets. Egdon Resources, which operates the field, owns a 30% interest in the licences.
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