AIM-listed United Oil & Gas, the full-cycle oil and gas company with a portfolio of production, development, exploration and appraisal assets, has issued the following trading and operations update summarising recent operational activities, providing trading guidance in respect of the half year to 30 June 2023. This is in advance of the Company's half year results which will be released in September. The information contained herein has not been audited and may be subject to further review and amendment.
Egypt, Abu Sennan (22% non-operated working interest, operated by Kuwait Energy Egypt)
H1 2023 Production
Oil production from the Abu Sennan Licence in H1 2023 averaged 1,051 bopd (net to United's 22% working interest) with an additional 93 boepd net gas. The exit rate from the quarter was 1,011 bopd net, plus 111 boepd net gas.
2023 Work Programme
Two development wells, ASH-8 and ASD-3, were drilled in the first half of the year. Both of these wells were successful and came onstream in March and May respectively.
In parallel to the development drilling, a number of workovers have also been completed, and have enhanced production from existing wells through low-cost interventions. Further workovers are planned as we continue through the second half of 2023.
After producing for a number of months at rates in excess of 2,800 bopd (616 bopd net), production from the ASH-8 well is now declining. This is in line with expectations and the performance of the other production wells in the ASH Field. Based on our previous experience of the field, the impact of the decline is expected to be partially mitigated by the installation of artificial lift in the well during H2, and by continued production-enhancing workover activity across the Abu Sennan Licence.
Additional drilling in H2 2023 has now been agreed by the JV partners and is expected to commence in September. An exciting exploration prospect, ASM, lying to the south of the prolific ASD Field has been approved for exploration drilling, and following on from the success of ASH-8, an additional target within the ASH Field has been identified for further appraisal. Further details on the timing and order of the H2 drilling programme will be announced in due course.
UK Central North Sea, Maria Discovery, Licence P2519 (100% working interest)
On 18 May United announced it had agreed to grant a further extension of the long stop date of the Asset Purchase Agreement (the 'APA') with Quattro for the sale of the Company's interest in the Maria licence to 31 July to provide sufficient time for Quattro to meet the funding requirement under the APA. The parties have agreed that a further extension may be required for all conditions precedent to be met to allow completion of the sale, namely regulatory approvals to enable the transfer of funds to United, and the licence assignment to Quattro. The Company understands that Quattro have appointed a Canadian broker, Research Capital Corporation, and plan to conduct a marketing and accelerated book build process in July, primarily targeting Canadian based investors. Although there is no guarantee that the sale will complete, United continues to believe that the sale to Quattro on the current agreed terms remains the best option for United to realise value for its shareholders.
UK Onshore, Licence PL090 (26.25% non-operated working interest, operated by Egdon Resources UK Ltd)
Licence PL090 contains the shut-in Waddock Cross Field, situated in the onshore Wessex Basin, UK. Work continues on securing planning and permitting consents, finalising the site facilities and well designs, ahead of a potential 2024 drilling campaign. Although Waddock Cross remains non-core to United, there is clearly value within this asset, and United will continue to evaluate all the options for realising this potential, including the option of participating in a well in 2024.
Jamaica, Walton Morant Licence (100% working interest)
The farm-out campaign remains a key focus for United, as we seek to take this potentially transformational project forward into the next phase of the Licence. In order to do so, a commitment to drill a well will need to be made by end January 2024.
We have continued to engage with potential partners to participate alongside us in drilling this exploration well, and earlier in the year, a deadline for indicative offers had been set for the end of H1. We are encouraged by the number and quality of companies that are in the process of completing their evaluations, and as they have requested additional time, we have agreed to extend the deadline. Additional updates will be provided in due course.
1H 2023 Financial Summary
Revenues for the first half of the year are expected to be $6.4m (2022 H1 $9.8m), with the average realised oil price per barrel from Egypt achieved of approximately $78 (2022 H1 $105). Our cash balance as at 30 June was approximately $0.55m (2022: $3.8m) and whilst cash collections in the period remained strong at $7m (2022 H1 $8.7m), the continued impact of the macro-economic challenges affecting the Egyptian economy has resulted in increasing difficulty and foreign exchange cost to repatriate funds from our Egyptian operations. Although we have received USD payments in H1 and successfully repatriated funds directly, we have also incurred significant additional foreign exchange costs when translating EGP to USD for working capital needs. Notwithstanding these short-term challenges due to reduced USD liquidity in Egypt, we continue to manage our working capital position across the group.
United Chief Executive Officer, Brian Larkin commented:
'We have had a strong start to the first half of the year from our Egyptian drilling programme with two successful development wells coming onstream and positive results from our low cost workover programme. We are cognisant of the short term challenges in Egypt and with this in mind are delighted to continue drilling in the second half, initially targeting one exploration and one appraisal well In this highly prospective licence. We look forward to announcing further details in due course.
'In parallel, we remain focused on securing a partner in Jamaica for this potentially transformational licence and we are delighted to have multiple quality potential partners advancing their evaluation of the project. We look forward to the remainder of the year and updating our shareholders on our progress.'
Source: United Oil & Gas
