TIDMUOG
RNS Number : 8368T
United Oil & Gas PLC
27 July 2022
United Oil & Gas PLC / Index: AIM / Epic: UOG / Sector: Oil
& Gas
27 July 2022
United Oil & Gas Plc
("United" "the Group" or the "Company")
Half-year 2022 Trading and Operations Update
United Oil & Gas Plc (AIM: "UOG"), issues the following
trading and operational update in respect of the half-year to 30
June 2022. This is in advance of the Group's half-year results
which are expected to be released in September 2022. The
information contained herein has not been audited and may be
subject to further review and amendment. A shareholder call will
take place this morning, details are below.
Brian Larkin, CEO commented:
"United has delivered a solid financial and operational
performance in the first half of 2022 supported by the high
realised oil price and good cash collections including the receipt
of portfolio management proceeds following strategic divestments.
Production in Egypt has been in-line with expectations, and the
fully funded work programme continues with the AJ-14 development
well currently drilling. We look forward to building on the
progress made in the first-half through the completion of the 2022
drilling programme in Egypt, which includes the ASH-4 development
well and an exciting exploration well targeting c.8 mmbbls gross
mean recoverable resources. In the UK, we look forward to the
completion of the independent contingent resources report on the
Maria discovery and in Jamaica the farmout campaign continues
supported by the higher oil price environment and improved industry
sentiment towards quality exploration opportunities."
1H 2022 Operational summary
-- 1H 2022 Group working interest production averaged 1,552
boepd in line with full-year guidance of 1,500-1,650 boepd with oil
constituting circa 85% of average production
-- Active Egypt work programme including a five-well 2022
drilling campaign which commenced in January 2022:
- ASD-2 development well encountered over 25 metres of net pay
and started production end-March
- ASV-1X exploration well; although no hydrocarbons flowed on
test, evidence for the migration of hydrocarbons into the area of
the licence has de-risked this element of the petroleum system at
this location
- Third well of the 2022 programme, AJ-14, commenced drilling on the Al Jahraa field end-June
- Significant increase in the interpreted in-place volumes on
the ASH field following improvement to the subsurface imaging from
seismic reprocessing
-- Zero - Lost Time Incident Frequency rate and Fatal Accident
Frequency rate. No environmental spills, Restricted Work Incidents
or Medical Treatment Incidents
-- Jamaica licence extension granted; Initial Exploration Period will run to 31 January 2024
1H 2022 Financial summary
-- Group revenue for the first half of 2022 is expected to be approx. $10m(1) (1H 2021:$10.2m)
-- The average realised oil price per barrel from Egypt achieved
was approx. $105.5/bbl (1H 2021:$63.1/bbl), representing a discount
to Brent of circa $2.37/bbl (1H 2021:$1.95)
-- Cash balances as at 30 June 2022 were approx. $3.8m (1H 2021:$2m)
-- Cash collections in the six-month period were approx. $9m (1H 2021:$8.2m)
-- Cash capital expenditure was approx.$2.9m
(1) 22% working interest net of Government Take
1H 2022 Corporate summary
-- Appointment of Peter Dunne, as Chief Financial Officer , effective from 5 May 2022
-- United terminated the sale and purchase agreement with
Quattro Energy Limited to sell its UK Central North Sea Licences;
P2480 and P2519 (Maria & Zeta)
-- Agreement signed with Anasuria Hibiscus UK Ltd for $2.5m in
relation to the Crown milestone payment, with $1.5 million received
in 1H 2022 and the remainder due prior to year-end.
-- Completion and receipt of proceeds in relation to the sale of
UOG Italia Srl to Prospex Energy for EUR2.2m plus EUR0.1m working
capital adjustment
-- Directors' purchases increase total directors' shareholding
to 5.32% of issued share capital (post-period)
Outlook
-- Full year 2022 production guidance remains unchanged at 1,500-1,650 boepd
-- Full year 2022 capital expenditure guidance remains unchanged at $7.2m
-- Strong balance sheet, cashflows and disciplined approach to capital allocation:
- Production leveraged to high oil price with 1H average
realised oil price per barrel of c.$105.5/bbl
- Continued focus on G&A and operating costs
- Portfolio positioned to continue to deliver material cash flow into the future
-- A resilient portfolio of upside opportunities including near
term production increases and near field exploration targets,
development opportunities in addition to potentially high impact
exploration:
- Egypt; Cash generative production and active work programme
o Fully funded active Egypt work programme continues, with the
AJ-14 development well currently drilling
o Two further wells scheduled to be drilled in 2H:
-- ASH-4 development well, targeting 2.2 mmbbls gross
recoverable resources from the prolific AEB reservoir
-- Exploration well ASF-1X with pre-drill target of c. 8 mmbbls
gross recoverable resources
- UK; Commercialisation options
o Low-cost work programme on the Maria licence with reservoir
evaluation and rock physics analysis
o Independent contingent resources report expected Q3/Q4 2022
ahead of assessing commercialisation options
- Jamaica; Long term upside
o Farmout campaign continues to be supported by the higher oil
price environment and improved industry sentiment towards
exploration opportunities
o Number of companies currently conducting detailed technical
evaluations of the opportunity
-- Continued evaluation of M&A opportunities with
strengthened balance sheet to support growth strategy
Operations Update
Egypt, Abu Sennan licence (22% working interest)
First half (1H) 2022 Group working interest production averaged
1,552 boepd (1,290 bopd oil and 262 boepd gas). Second quarter (Q2)
2022 production averaged 1,537 boepd (1,313 bopd oil and 224 boepd
gas). 1H and Q2 production was line with full-year 2022 production
guidance of between 1,500-1,650 boepd, which remains unchanged. The
full-year guidance includes production from the current wells and
contributions from two 2022 development wells, AJ-14 (currently
drilling) and ASH-4 (location optimised on recently reprocessed
seismic data). No production additions have been included for 2022
exploration wells.
2022 Egypt work programme
The 2022 approved work programme consists of five firm wells
(three development and two exploration wells) and eight
workovers.
The drilling programme commenced in late January 2022 with the
ASD-2 development well. The well encountered over 25.5 metres of
net pay and was brought onstream less than six days after
completion.
The second well, the ASV-1X exploration well, spud on the 14
April. The well was put on test, and although no hydrocarbons
flowed, evidence for the migration of hydrocarbons observed in the
ASV-1X structure has helped de-risk this element of the petroleum
system in this area of the licence and will assist in optimising
future well targets.
The third well, the AJ-14 development well, spud on 21 June and
drilling is expected to take approx. 60 days.
Two further wells are planned for this year, including an ASH
development well, and the ASF-1X exploration well.
The ASH-4 development well location has now been optimised from
the recently completed reprocessing of the seismic data. This
reprocessing has significantly improved the quality of the
subsurface imaging over the ASH field, has increased the
interpreted in-place volumes on the field (from 17 to 22 mmboe
gross according to operator estimates), and has helped to identify
at least seven additional potential development well locations.
Based on the latest interpretation of this reprocessed data, the
ASH-4 development well, targeting 2.2 mmbbls gross recoverable oil,
has been prioritised and is planned as the fourth well in the 2022
campaign.
The ASF-1X exploration well will be the fifth and final well in
the 2022 drilling campaign. This well will target un-risked mean
recoverable resources estimated by United at approx.8 mmbbls gross
in the Alam El Bueib and Abu Roash reservoirs to the south-west of
the ASH field.
Six workovers have so far been completed on the Abu Sennan
licence in 2022, including the installation of two Electrical
Submersible Pumps on the ASH field.
Jamaica, Walton Morant licence (100% working interest)
The farm-out campaign continues as the Company looks for an
investment partner(s) to unlock the vast potential in this
opportunity. The campaign has been supported by the two-year
extension to the Initial Exploration Period which was granted by
the government of Jamaica in January this year, and by the higher
oil price environment and improved industry sentiment that has been
observed since the start of 2022. The Initial Exploration period
runs to 31 January 2024 with low-cost technical studies continuing
to progress and a number of parties currently conducting detailed
technical evaluations.
UK Central North Sea, P2480 (Zeta) and P2519 (Maria) licences
(100% working interests)
Licence P2519 includes Blocks 15/18e and 15/19c and covers an
area of circa 225 km(2) . The licence contains the existing Maria
discovery. United estimated as part of its licence application that
Maria holds circa 6 mmboe mid-case recoverable resources. Good
progress is being made with the low-cost technical studies
commitments on the licence, and an independent contingent resources
report is scheduled for Q3/Q4 2022 before commercialisation options
are assessed.
The Zeta exploration prospect (Licence P2480) has now been
relinquished. As an exploration target, Zeta did not offer the same
near-term potential as the Maria Discovery, and the decision was
taken not to progress into the next phase of the licence.
Financial Update
Revenues
Group Revenues for the six month period ending 30 June 2022 are
expected to be circa. $10 million (1H 2021 $10.2 million), with
increased commodity prices offsetting reduced average production.
The entire revenue for the Group is generated from our 22% interest
in the Abu Sennan concession in Egypt and is stated after
accounting for government entitlements under the production sharing
contract. The 1H 2022 average realised oil price per barrel
achieved was $105.5/bbl (representing a discount to Brent of circa
$2.37/bbl).
Cash
The company entered the year with cash balances of
circa.$400,000. The cash balance as at 30 June 2022 was circa. $3.8
million, which reflects the strong cash collections in 1H of $8.7
million, proceeds from divestments of non-core assets and the
improved working capital position. The impact of recent global
macroeconomic volatility has resulted in both a devaluation of the
Egyptian Pound and restrictions on outgoing US Dollar transfers by
the Central Bank of Egypt, which have made it challenging to
repatriate cash from Egyptian operations.
We have received USD remittances and have successfully
repatriated funds as recently as mid-July. The Group continues to
actively manage its working capital position to support our
business operations.
Cash Expenditure
The Group continues to engage in an active work programme across
our portfolio of assets with forecast cash capital expenditure for
2022 of $7.2 million of which $2.9 million was incurred in 1H 2022,
including $2.7 million on the drilling programme in Egypt and
workover activity in addition to $0.2 million on Jamaica and UK
assets.
Events today
Management is hosting a shareholder call at 1100 BST today.
Investors that wish to participate in the event, please click on
this link to register https://bit.ly/3ROwY5x
Confirmation email with the details of the dialling in process
will be sent to your email address.
A presentation will be available today on www.uogplc.com.
ENDS
This announcement contains inside information for the purposes
of Article 7 of Regulation 2014/596/EU which is part of domestic UK
law pursuant to the Market Abuse (Amendment) (EU Exit) regulations
(SI 2019/310).
Glossary:
bopd - barrels of oil per day | boepd - barrels of oil
equivalent per day
mmbbls - million barrels of oil |
Enquiries
United Oil & Gas Plc (Company)
Brian Larkin, CEO brian.larkin@uogplc.com
Sharan Dhami, Head of IR sharan.dhami@uogplc.com
& ESG
Beaumont Cornish Limited
(Nominated Adviser)
Roland Cornish | Felicity
Geidt +44 (0) 20 7628 3396
Tennyson Securities (Joint
Broker)
Peter Krens +44 (0) 020 7186 9030
Optiva Securities Limited
(Joint Broker)
Christian Dennis +44 (0) 20 3137 1902
Camarco (Financial PR)
Georgia Edmonds | James +44 (0) 20 3757 4983 |
Crothers uog@camarco.co.uk
Notes to Editors
United Oil & Gas is a high growth oil and gas company with a
portfolio of low-risk, cash generative production, development,
appraisal and exploration assets across Egypt, UK and a high impact
exploration licence in Jamaica.
The business is led by an experienced management team with a
strong track record of growing full cycle businesses, partnered
with established industry players and is well positioned to deliver
future growth through portfolio optimisation and targeted
acquisitions.
United Oil & Gas is listed on the AIM market of the London
Stock Exchange. For further information on United Oil and Gas
please visit www.uogplc.com
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END
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