Material Upgrade to Abu Sennan Reserves

RNS Number : 3690V

United Oil & Gas PLC

14 April 2021

 

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

14 April 2021

United Oil and Gas plc

("United" or "the Company")

Independent Reserves Report Results - Material Upgrade to Abu Sennan Reserves

United Oil & Gas PLC (AIM: "UOG"), the growing oil and gas company with a portfolio of production, development, exploration and appraisal assets is pleased to provide the following reserves update on the Abu Sennan concession, onshore Egypt (the "Licence").

United holds a 22% working interest in the Licence, which is operated by Kuwait Energy Egypt.

Highlights:

· Independent reserves and resources report, relevant to end 2020, by Gaffney Cline & Associates ("Independent Reserves Report") indicates material increase in reserves at Abu Sennan:

o  24% increase in Abu Sennan Gross 2P Reserves to 16.8 MMboe (15% gas) from 13.5 MMboe at the beginning of 2020, representing a near 200% reserves replacement ratio, before the recent drilling success at the ASH-3 and ASD-1X wells

o  Gross 1P reserves up by 59% to 6.7 MMboe and gross 3P reserves up by 21% to 34.7 MMboe (from 4.2 MMboe and 28.6 MMboe respectively at the beginning of 2020)

· Significant additional growth opportunities evaluated in the report, noting 21 exploration prospects, many with multiple reservoir targets

Reserves

The results of an Independent Reserves Report that was completed on the Abu Sennan concession at the end of 2020 by Gaffney, Cline & Associates, using PRMS definitions for Reserves and Resources, has now become available to United. The comparison with the last reported Reserves as at 31 December 2019 on a Gross Field basis are summarised in Table 1, below.

A summary of the reserves and resource volumes taken from the report is included in the Appendix, and the full Independent Reserves and Resources Report will be available on the Company's website at https://www.uogplc.com/investors/reports-presentations-and-meetings/

The report indicates that gross 2P reserves have increased to 16.8 MMboe (15% gas) compared to 13.5 MMboe at the end of 2019. This is an annual increase of 24%, and given that c. 3.3 MMboe was produced from the Abu Sennan assets during 2020, indicates a reserves replacement ratio for 2020 of 198%. Gross 1P and 3P reserves have also increased, and are up by 59% to 6.7 MMboe and 21% to 34.7 MMboe respectively (from 4.2 MMboe and 28.6 MMboe at the beginning of 2020).

Applying United's 22% working interest to the gross 2P reserves gives 3.7 MMboe, up from 2.97 MMboe at the end of 2019.

The Independent Reserves Report has an effective date of 31^st December 2020, and has not incorporated the results of the successful ASH-3 and ASD-1X wells that were drilled since the start of 2021.

Table 1. Reconciliation of Abu Sennan Reserves as at 31^st December 2020 with Reserves as at 31^st December 2019 on a Gross Field basis

	Gross Field Reserves (MMboe)
	End 2019	Exploration Adds	2020 Production	Revisions	End 2020
Proved (1P)	4.179	0	-3.297	5.773	6.655
Proved + Probable (2P)	13.526	0.134	-3.297	6.391	16.754
Proved + Probable + Possible (3P)	28.589	0.269	-3.297	9.123	34.685

Notes:

1.  Revisions are due to production performance in 2020, the results of wells drilled in late 2019 and 2020, notably ASH-2 and El Salmiya-5, and the maturation of the ASH gas development from Contingent Resources to Reserves.

2.  The exploration add is the AR-G reservoir at El Salmiya; in the 1P case, all potentially recoverable volumes fall beyond the economic limit given the current development plan

3.  Totals may not exactly equal the sum of the individual entries due to rounding

4.  United holds a 22% net working interest in the Abu Sennan concession

Prospective Resources

The report also included an evaluation of 21 exploration prospects located within the Abu Sennan concession, of which the largest has gross best estimate Prospective Resources of 5 MMboe and a 35% chance of success.

United's Chief Executive Officer, Brian Larkin commented:

"It is really pleasing to see the Abu Sennan assets continuing to perform so strongly, and so consistently, with a reserves replacement ratio of over 190% for the second year in a row.

"We remain confident that the Licence has much more to offer, and indeed, these upgraded reserve numbers take no account of the successes already achieved so far during the 2021 drilling campaign. This report significantly increases our understanding of the potential of this asset, pointing to 21 potential exploration targets. With further development drilling due to commence shortly at Al Jahraa, and further development and exploration targets identified across the licence, we are looking forward to further news flow and growth from Abu Sennan, both in the coming months and in the longer-term."

Broker update

The Company is pleased to confirm that Optiva Securities Limited now continues as the Company's sole Broker.

**ENDS**

Jonathan Leather, an Executive Director of the Company, who has over 20 years of relevant experience in the oil and gas industry, has reviewed and approved the information contained in this announcement.  Dr Jonathan Leather is a qualified person as defined in the guidance note for Mining Oil & Gas Companies of the London Stock Exchange and is a member of the Petroleum Exploration Society of Great Britain and the Society of Petroleum Engineers. 

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 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

Glossary:   '1P'  means Proved Reserves

'2P'  means Proved plus Probable Reserves

    '3P'  means Proved plus Probable plus Possible Reserves

    Bscf  means Billion Cubic Feet

boe  means Barrels of oil equivalent

  bbl, bbls  means barrel, barrels

 bbl/d means barrels per day

M  means thousand

MM  means million

NPV  means net present value

PRMS  means the 2018 Petroleum Resource Management System (SPE)

SPE  means Society of Petroleum Engineers

'Prospective Resources'  means those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. They are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.

'Proved Reserves'  means those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulation - Proved reserves can be categorized as developed or undeveloped

'Probable Reserves'  are  those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves

'Possible Reserves'  are those unproved reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves. In this context, when probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable plus possible reserves

United Oil & Gas Plc (Company)
Brian Larkin, CEO	[e-mail]
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish and Felicity Geidt	[phone]
Optiva Securities Limited Broker
Christian Dennis	[phone]
Murray (PR Advisor)
Joe Heron	[phone] [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 and development assets across Egypt, UK, Italy and a high impact exploration licence in Jamaica.

Led by an experienced management team with a strong track record of growing full cycle businesses and partnered with established industry players, the Company 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/ 

Appendix: Summary from Year End 2020 Reserves and Resources, Abu Sennan, Egypt, prepared for United Oil & Gas plc, April 2021

Note that United's policy is to quote working interest volumes, whereas GaffneyCline quotes net economic entitlement under the PSC that governs the asset.

Summary

The Abu Sennan concession is governed by a Production Sharing Contract (PSC).  Seven development licences cover the eight fields that have already been discovered and put into production.  An exploration licence covers the rest of the concession area.  Oil and gas Reserves are attributed to six of the eight fields (two are no longer producing).  Prospective Resources are attributed to a number of exploration Prospects that have been identified within the concession area.  No Contingent Resources are currently identified.

Reserves Summary

The oil and gas Reserves attributable to UOG in Abu Sennan as at 31^st December 2020 are shown in Table 1.  The Reserves shown in Table 1 are expressed as a total in barrels of oil equivalent (boe) in Table 2.  Gas volumes are converted to oil equivalent volumes using a conversion factor of 5.0 Mscf/boe (commensurate with the high calorific content of the gas).

Table 1 : Summary of Reserves
as at 31^st December 2020

(a) Oil

Status	Gross Field (MBbl)			WI (%)	Net Entitlement (MBbl)
	Proved	Proved + Probable	Proved + Probable+ Possible		Proved	Proved + Probable	Proved + Probable+ Possible
Developed	5,825	10,657	16,173	22.0	545	997	1,512
Undeveloped	0	3,532	11,851		0	330	849
Total	5,825	14,189	28,023		545	1,328	2,361

(b) Gas

Status	Gross Field (Bscf)			WI (%)	Net Entitlement (Bscf)
	Proved	Proved + Probable	Proved + Probable+ Possible		Proved	Proved + Probable	Proved + Probable+ Possible
Developed	4.15	9.35	19.47	22.0	0.39	0.87	1.82
Undeveloped	0.00	3.48	13.84		0.00	0.33	1.08
Total	4.15	12.83	33.31		0.39	1.20	2.90

Notes:

1.  Gross Field Reserves are 100% of the volumes estimated to be commercially recoverable from the asset under the intended development plan.

2.  Net Entitlement Reserves are UOG's net economic entitlement under the PSC that governs this asset.

3.  Totals may not exactly equal the sum of the individual entries due to rounding.

Table 2 : Summary of Reserves as at 31^st December 2020
Expressed in Oil Equivalent Volumes (Mboe)

Status	Gross Field (Mboe)			WI (%)	Net Entitlement (Mboe)
	Proved	Proved + Probable	Proved + Probable + Possible		Proved	Proved + Probable	Proved + Probable + Possible
Developed	6,655	12,527	20,066	22.0	623	1,172	1,876
Undeveloped	0	4,227	14,618		0	396	1,065
Total	6,655	16,754	34,685		623	1,568	2,941

Note:

1.  The Reserves shown in this Table are the sum of the oil and gas Reserves shown separately in Table 1, gas volumes being converted to oil equivalent volumes using a conversion factor of 5.0 Mscf/boe.

2.  Totals may not exactly equal the sum of the individual entries due to rounding.

A summary of changes in Gross Field Reserves (in boe) since 31^st December 2019 is shown in Table 3. 

Table 3 : Reconciliation of Reserves as at 31^st December 2020
with Reserves as at 31^st December 2019

Case	Gross Field Reserves (Mboe)
	End 2019	Exploration Adds	2020 Production	Revisions	End 2020
Proved	4,179	0	-3,297	5,773	6,655
Proved + Probable	13,526	134	-3,297	6,391	16,754
Proved + Probable + Possible	28,589	269	-3,297	9,123	34,685

Notes:

1.  Revisions are due to production performance in 2020, the results of wells drilled in late 2019 and 2020, notably ASH-2 and El Salmiya-5, and the maturation of the ASH gas development from Contingent Resources to Reserves.

2.  The exploration add is the AR-G reservoir at El Salmiya; in the 1P case, all potentially recoverable volumes fall beyond the economic limits given the current development plan.

3.  Totals may not exactly equal the sum of the individual entries due to rounding.

A breakdown of the Gross Field Reserves to the individual field and reservoir level is shown in Table 4. 

Table 4 : Field and Reservoir Level Breakdown of Reserves
as at 31^st December 2020

Field	Reservoir	Gross Field Oil Reserves (MBbl)			Gross Field Gas Reserves (Bscf)
		Proved	Proved + Probable	Proved + Probable+ Possible	Proved	Proved + Probable	Proved + Probable+ Possible
Al Jahraa2	AR-C	2,752	5,736	9,969	0.00	0.00	0.00
	AR-D	57	227	570	0.00	0.00	0.00
	AR-G	71	205	1,145	0.00	0.00	0.00
	L Bahariya	65	389	1,508	0.54	2.60	7.64
	AR-E (Jah-7)	13	21	35	0.00	0.00	0.00
	U Bahariya	18	61	203	0.00	0.00	0.00
	L Bahariya II	10	33	135	0.00	0.00	0.00
	Sub-Total	2,985	6,673	13,564	0.54	2.60	7.64
El Salmiya	AR-C	13	234	774	0.00	0.58	2.16
	AR-E	273	849	1,751	0.00	0.00	0.00
	AR-G	0	134	261	0.00	0.00	0.00
	Kharita	250	414	909	1.40	2.86	9.94
	Sub-Total	536	1,632	3,695	1.40	3.44	12.10
ASA	AR-C	32	0	0	0.00	0.00	0.00
	AR-E	144	348	750	0.00	0.00	0.00
	Sub-Total	175	348	750	0.00	0.00	0.00
ASH	AEB	1,830	5,116	9,162	2.20	6.78	13.56
ASZ	AR-C	298	421	852	0.00	0.00	0.00
Total		5,825	14,189	28,023	4.15	12.83	33.31

Notes:

1.  The Reserves shown here equate to the Reserves shown in Table 1.

2.  Al Jahraa volumes shown here include Al Jahraa SE.

3.  No Reserves are attributed to the ZZ and Al Ahmadi fields, or to reservoirs not listed here.

4.  Totals may not exactly equal the sum of the individual entries due to rounding.

Prospective Resources Summary

The Prospective Resources attributable to UOG in Abu Sennan as at 31^st December 2020 are shown in Table 5.  Only the potential volumes estimated to lie within the Abu Sennan licence area are reported here.  GaffneyCline has not examined the economics of any of these Prospects, some of which are very small.

Prospective Resources are shown both as gross volumes and net to UOG on a Working Interest basis, i.e. UOG's Working Interest fraction of the gross volumes.  These do not represent UOG's actual Net Entitlement under the terms of the PSC that governs the asset, which would be lower.  Net Working Interest is quoted here since the Prospective Resources are not yet sufficiently mature to estimate the associated production profiles and costs that are needed to calculate the Net Entitlement.

Table 5 : Summary of Oil Prospective Resources (Prospects)
as at 31^st December 2020

(a) Outside the Existing Development Areas

Prospect		Gross (MBbl)			WI (%)	Net (WI Basis) (MBbl)			Pg (%)
		1U	2U	3U		1U	2U	3U
ASX3	AR-C	241	692	1,438	22	53	152	316	29
	AR-E	180	407	812		40	90	179	22
	AR-G	60	306	763		13	67	168	27
ASU	AR-G	3	25	64	22	1	5	14	43
	L Bahariya	40	114	233		9	25	51	39
ARQ	AR-C	87	217	439	22	19	48	97	45
	AR-E	57	202	454		12	44	100	34
	AR-G	109	316	666		24	69	146	28
	L Bahariya	55	195	455		12	43	100	34
ASG-I	AR-C	68	151	287	22	15	33	63	34
	AR-E	26	88	193		6	19	43	25
	AR-G	53	111	198		12	24	44	21
	L Bahariya	20	37	66		4	8	15	25
ASG-II	AR-C	44	93	172	22	10	20	38	34
	AR-E	51	102	184		11	22	41	25
	AR-G	41	83	141		9	18	31	21
	L Bahariya	14	30	56		3	7	12	25
ASF	AR-G	212	872	2,027	22	47	192	446	30
	Bahariya	124	561	1,334		27	123	294	26
	AEB	48	166	375		11	37	83	34
ASK	AR-G	148	346	681	22	32	76	150	20
	Bahariya	80	236	654		18	52	144	16
	AEB	86	205	417		19	45	92	20
Salmiya West	AR-C	156	384	896	22	34	84	197	35
	AR-E	102	246	481		22	54	106	35
	Bahariya	192	363	615		42	80	135	42
	Kharita	904	1,506	2,373		199	331	522	36
SW Al Ahmadi	AR-C	1,567	5,030	13,532	22	345	1,107	2,977	35
	Bahariya	1,349	3,543	7,193		297	779	1,583	24

Continued on next page

 

(a) Outside the Existing Development Areas (continued)

Prospect			Gross (MBbl)				WI (%)	Net (WI Basis) (MBbl)			Pg (%)
			1U		2U	3U		1U	2U	3U
South Al Jahraa 1	ARC	55		163		442	22	12	36	97	54
	ARE	30		74		167		7	16	37	36
South Al Jahraa 2	ARC	83		175		335	22	18	38	74	54
	ARE	34		80		177		7	18	39	36
South Al Jahraa 5	ARC	98		295		828	22	22	65	182	54
	ARE	43		150		498		9	33	110	36
South Al Jahraa 6	ARC	48		91		153	22	11	20	34	54
	ARE	40		86		168		9	19	37	36
NE Al Jahraa 7	ARC	289		609		1,150	22	64	134	253	58
	ARE	211		471		961		46	104	211	38
	ARG I	164		284		463		36	63	102	36
	ARG II	122		270		528		27	59	116	36
NE Al Jahraa 8	ARC	328		651		1,170	22	72	143	257	54
	ARE	199		479		1,068		44	105	235	36
ASH West II5	AEB	211		456		994	22	46	100	219	30

(b) Within the Existing Development Areas

Prospect		Gross (MBbl)			WI (%)	Net (WI Basis) (MBbl)				Pg (%)
		1U	2U	3U		1U	2U	3U
ASA	AR-C	84	220	765	22	18	48	168		40
	AR-E	100	337	1,541		22	74	339		40
	Bahariya	8	28	101		2	6	22		35
	Kharita	229	837	1,848		50	184	407		42
Al Jahraa4	U Bahariya	33	145	703	22	7	32	155		40
	L Bahariya	56	141	406		12	31	89		40
Al Ahmadi-3	AR-C	110	270	630	22	24	59	139		32
	AR-G	96	190	372		21	42	82		32
	Bahariya	153	291	496		34	64	109		22
	Kharita4	775	1,311	2,092		170	288	460		40
ASH East4	AEB	252	546	1,147	22	56	120		252		60
ASH West4	AEB	270	565	1,164	22	59	124		256		40

Continued on next page

Notes:

1.  Gross Prospective Resources are 100% of the volumes estimated to be recoverable from the Prospect, in the event that a discovery is made and subsequently developed.

2.  UOG Net Prospective Resources in this table are UOG's Working Interest fraction of the Gross Prospective Resources; they do not represent UOG's actual Net Entitlement under the terms of the PSC that governs the asset, which would be lower.

3.  Prospect ASX extends outside the licence area; only the volumes estimated to lie within the licence area are reported here.

4.  Volumes shown for Al Jahraa, Al Ahmadi-3 Kharita, and ASH East, West and West II are combined oil and gas volumes in Mboe.

5.  The P_g reported here represents an indicative estimate of the probability that drilling this Prospect would result in a discovery.  This does not include any assessment of the risk that a discovery, if made, may not be developed.

6.  The volumes reported here are "unrisked" in the sense that no adjustment has been made for the risk that no discovery will be made or that any discovery would not be developed.

7.  Identification of Prospective Resources associated with a Prospect is not indicative of any certainty that the Prospect will be drilled, or will be drilled in a timely manner.

8.  Prospective Resources should not be aggregated with each other, or with Reserves or Contingent Resources, because of the different levels of risk involved.

9.  1U = Low estimate, 2U = Best estimate, 3U = High estimate.

10.  AR-C = Abu Roash C member, AR-E = Abu Roash E member, AR-G = Abu Roash G member, AEB = Alam El Bueib Formation.

 

END

 

 

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