H1 2021 Trading Statement and Operational Update

RNS Number : 3690G

United Oil & Gas PLC

26 July 2021

 

United Oil & Gas PLC / Index: AIM / Epic: UOG / Sector: Oil & Gas

26 July 2021

United Oil and Gas plc

("United" or "the Company")

H1 2021 Trading Statement and Operational Update

United Oil & Gas PLC (AIM: "UOG"), the growing oil and gas company with a portfolio of production, development, exploration and appraisal assets, issues the following trading and operational update in respect of the half year to the end of June 2021. This is in advance of the Group's Interim Results which are expected to be released in early September 2021. The information contained herein has not been audited and may be subject to further review and amendment.  

United Chief Executive Officer, Brian Larkin commented:

"Through execution of our planned work programme, the first half of 2021 has produced exceptional operational and financial success. In addition, we have created significant new opportunities as well as reinforced the balance sheet strength of the Company.

"In particular, our Egyptian assets continue to perform beyond expectations, with production averaging 2,730 boepd; consistent with full year guidance range of between 2,500 to 2,700 boepd. Further, through our H1 drilling programme, we have not only been able to increase production, but also identify new growth opportunities within the licence. Based on this success, we are delighted to be drilling a further exploration well on the licence shortly and are actively working with Joint Venture Partners to agree the optimum long-term strategy for the development of the licence's potential.

"The outlook for the business remains encouraging and we remain well positioned for further success".

Operational Highlights:

· Q2/21 Group working interest production averaged 2,937 boepd, yielding a H1/21 average of 2,730 boepd,  ahead of H1 guidance of 2,300 to 2,500 boepd and in line with full-year guidance of between 2,500 and 2,700 boepd

o  This represents an uplift of 17% compared to H2 2020, when production averaged 2,340 boepd, and has been driven by the drilling and workover success on the ASH Field, as well as the exploration success at ASD-1X

· Highly successful H1 drilling campaign, with the Abu Sennan Licence continually performing above the company's expectations

o  ASH 3 - Significant success at the ASH-3 Development Well which came onstream at a gross rate of over 4,000 boepd on 5th March (880 boepd net to United)

o  ASD1-X - Commercial discovery announced on 4th May, with gross rates of over 1,200 bopd achieved on test. Development lease approval and commencement of production occurred on 26^th May, with the well averaging over 600 bopd (132 bopd net to United) to the end of June

o  Al Jahraa 8 Development Well (post period end) encountered over 40m of net oil pay across three different reservoir units. Preliminary results indicate over 30m of net pay in the Upper and Lower Bahariya reservoirs, significantly above pre-drill expectations.

o  ASH-1ST2 workover completed during May increased production from the well from 200 bopd to over 1,200 bopd (256 bopd net to United)

· As previously noted, an additional fully funded exploration well (ASX-1X) has now been added to the drilling schedule, following the significant success of the 2021 drilling campaign

· In Jamaica, our work on updating the regional source rock story and quantifying the basin-wide potential was completed in Q1, and the formal farm-out campaign for the Walton Morant licence commenced in early April, with a number of companies currently conducting evaluations

o  The Walton Morant Licence contains over 2.4 billion barrels unrisked mean prospective resources identified across the licence area. The high-impact Colibri prospect alone contains mean prospective resources of 406 mmbbls

· In Italy, in early April the  Government granted Environmental approval for the development of the Selva natural gas field concession - a key milestone on the road to achieving first gas

Financial Update

· Revenue for the first half of 2021 is expected to be c. $10.3m-10.5* million,

· Realised oil price of c. $63.10/bbl

· Group Cash Balance of c. $2.0 million at 30 June 2021

· Total Cash Collections of c. $8.2 million

· Cash Capital Expenditure of c. $3.0million

o  c. $2.2 million invested in the Abu Sennan drilling campaign and workover activities

o  c. $0.2 million invested in our Jamaican, Italian and UK assets

* 22% working interest net of Government Take

2021 Guidance

· Group working interest production in Egypt for the full year is forecasted to average between 2,500 and 2,700 boepd, reflecting the continued good performance from Abu Sennan and the drilling successes that were achieved in H1 2021

· Group Cash Capital Expenditure for the full year is forecasted to be $7.2 million, fully funded from existing operations

o  c. $6.5 million to be invested in Egypt with four wells, five workovers, and facilities upgrades

o  c. $0.7 million to be invested in our Jamaican, Italian and UK assets

· Discussions are continuing with partners on the 2022 drilling programme and the longer-term plans for accessing the significant long term upside reserves and production potential of Abu Sennan.

· A milestone payment of $2.85m relating to the divestment of  licence P2366 containing the Crown discovery  is due from Anasuria Hibiscus UK Ltd ("AHUK"), within 7 days of approval of the Marigold field development plan by the UK Oil and Gas Authority ("OGA")

o  The OGA has requested that AHUK work with Ithaca Energy Limited ("Ithaca"), holder of Licence P2158 Block 15/18b, which is adjacent to the Marigold field and contains the Yeoman discovery, to propose a common development solution for the resources found in both licences. Ithaca and AHUK have agreed to jointly develop the reserves in Marigold and Yeoman.

o  A decision on the development concept is expected to be made during the third quarter, at which point an update on the field development plan submission and guidance on anticipated receipt of  the Crown disposal milestone payment will be provided. 

Outlook:

· As we continue to build on the success of the Abu Sennan asset , we will work to progress the Jamaican farm out process whilst optimising further value from the portfolio.

· Our balance sheet and income remain strong, and we maintain  a disciplined approach to capital allocation, ensuring all ongoing operations continue to be funded by operating cashflow.

Glossary:

bbl - barrel

boepd - barrels of oil equivalent per day

mmbbls - million barrels

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR") as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

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]
Murray (PR Advisor)	[phone]
Joe Heron	[e-mail]
Camarco (Financial PR/IR)
Billy Clegg James Crothers	[phone] [e-mail]

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, Italy 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 https://www.uogplc.com/ 

 

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