El Salmiya-5 Well Results

RNS Number : 8303O

United Oil & Gas PLC

03 June 2020

 

3 June 2020+BCL

United Oil & Gas PLC ("United" or the "Company") 

El Salmiya-5 Well Results

Highlights

· Total of over 120m net pay across four hydrocarbon-bearing intervals encountered by El Salmiyah-5 well on Abu Sennan concession - main target potentially materially larger than previously believed

· Flow rates of 4,100 bopd, with 18 mmscf/d gas (c. 8,700 boepd in total) achieved from Kharita Reservoir during well-testing

· United's net production from the Abu Sennan asset as a whole likely to rise to over 2,500 boepd in the coming weeks

United Oil & Gas Plc (AIM: "UOG"), the AIM listed oil and gas exploration, development and production company, is pleased to provide the following update on the El Salmiyah-5 development well ('El Salmiyah-5' or the 'Well') on the Abu Sennan concession, Egypt ("Abu Sennan") in which UOG holds a 22% working interest.  Early analysis of logging and testing suggests that the Well significantly exceeds pre - drill estimates, further building on the success of the last 12 months which has seen UOG's share of production increase significantly.

El Salmiyah-5

El Salmiyah-5 was spudded on 3 February 2020, and reached total depth of 4,400m MD (3,911m TVDSS) on 17 April 2020. The Well was targeting previously undrained reservoirs of the El Salmiyah Field, with the primary focus being the Kharita Formation, and secondary objectives in the Abu Roash C and Abu Roash E. After logging, testing, and completion, the rig was released on 21 May 2020. 

Net pay was encountered in all of the targeted intervals, totalling in excess of 120m for the Well and exceeding pre-drill expectations significantly. The main Kharita target interval was encountered some 16m shallow to prognosis, indicating a larger than expected undrained area updip of the existing wells in the field. This was further supported by the encouraging well-test results, which achieved flow rates of 4,100 bopd, with a further 18 mmscf/d gas (c. 8,700 boepd in total).

W ith further testing planned, it would be premature to draw any further conclusions on the oil volumes associated with the Well. United's expectations are that although the Well may initially be brought onstream close to the headline test rate, in the longer-term, it is likely to be choked back to lower levels for sustainable production through the existing facilities. Production from El Salmiyah-5 is expected to generate solid operating margins even at low oil price levels due to Abu Sennan's low operating costs of around $6.5/bbl.  

Brian Larkin CEO, United Oil & Gas Plc:

"As a development well into a known field, the El Salmiyah-5 well was always expected to encounter hydrocarbons. However, with a headline figure of c. 8,700 boepd achieved on test from the primary target in the Kharita, it is fair to say the results have significantly exceeded our pre-drill expectations.

When coupled with the outstanding result from the ASH-2 well, which was announced in January, and which is still producing at over 3,000 bopd, from a production point of view, the timing of our entry into the Abu Sennan licence could not have been better. The Well result is a further realisation of the value we identified in the licence, and is likely to lead to our net production levels from the licence rising to over 2,500 boepd in the coming weeks -  a significant increase from January 2019, the effective date of the purchase of the asset. Importantly, with operating costs of around $6.5/bbl, this production is highly profitable at today's oil prices.

We firmly believe there is significant additional potential across the Abu Sennan licence - and with further development going ahead to bring gas from the ASH field into production this year, and with a deferred drilling programme ready to be re-instated should market conditions improve, we are looking forward to further activity and newsflow from the asset."

**ENDS**

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Qualified Person's Statement

Jonathan Leather, an Executive Director of the Company, who has over 20 years of relevant experience in the oil and gas industry, has approved the information contained in this announcement.  Dr. Jonathan Leather is a member of the Petroleum Exploration Society of Great Britain and the Society of Petroleum Engineers.

Note: All references to flow rates set out above are gross unless otherwise stated

Glossary:                bopd - barrels of oil per day

                                 boepd - barrels of oil equivalent per day

                                 mmscf - million standard cubic feet per day

United Oil & Gas Plc (Company)
Brian Larkin, CEO	[e-mail]
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish and Felicity Geidt	[phone]
Optiva Securities Limited (Joint Broker)
Christian Dennis	[phone]
Cenkos Securities Plc (Joint Broker)
Joe Nally (Corporate Broking) Derrick Lee and Pete Lynch	[phone] [phone]
Murray (PR Advisor)	[phone]
Joe Heron	[e-mail]
St Brides Partners (Financial PR/IR)
Frank Buhagiar	[phone]

 

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