AIM-listed United Oil & Gas, the full cycle oil and gas company with a portfolio of production, development, exploration and appraisal assets, has announced its unaudited financial and operating results for the half year ended 30 June 2023.

Brian Larkin, CEO commented:
"We are pleased to be able to report progress across our portfolio as we seek to explore further opportunities for growth to deliver greater value to our shareholders.

Looking at Egypt, we successfully drilled and brought 2 development wells onstream during the first half of 2023. Notably, we maintained our excellent safety record throughout these operations. Our active drilling programme continues with the drilling of a further near field exploration well planned for the fourth quarter of the year. Simultaneously, we continue to work with our JV partners to optimise production from our existing well stock through a comprehensive programme of workovers and well intervention activity. Whilst the macroeconomic situation In Egypt remains challenging, we do continue to be paid a portion of our receivables in US dollars.

In Jamaica we are engaged in discussions with the Government and with high-quality potential farm-in partners on our exciting high-impact exploration asset. Identifying a partner with the right skillset to complement our work is of paramount importance to advancing this project and we expect to move forward to commercial discussions with a preferred partner over the coming weeks.

Whilst Quattro have not yet completed their funding process and are likely to require a further extension to the long stop date on the sale agreement for licence P2519, we are hopeful that this transaction will complete over the coming weeks, given the renewed interest in the North Sea

We enter the last quarter of 2023 well placed, and will continue to work hard on delivering on our strategy in order to return value to our shareholders."

1H 2023 Operational summary

• 1H 2023 Group net 22% working interest production averaged 1,051 bopd and 93 boepd gas with full year average net production forecast to be in the range of 930 to 1,030 boepd.
• In Egypt
  • Active drilling programme continues with two wells drilled in 1H, and one additional exploration well planned for H2
  • Successful ASH-8 development well brought onstream in March
  • Successful ASD-3 development well brought onstream in May
  • Zero - Lost Time Incident Frequency rate and Fatal Accident Frequency rate. No environmental spills, Restricted Work Incidents or Medical Treatment Incidents
  • We continue to have a portion of our Egyptian receivable balance settled in USD
• In Jamaica, discussions continuing with the Ministry and with potential farm-in partners with commercial discussions with a preferred partner expected to commence in Q4.
• In the UK, whilst the current deadline for completion of the deal with Quattro has been extended to 30th September, this is likely to be extended further as Quattro have not yet completed their funding process.

1H 2023 Financial summary 

• Group revenue for the first half of 2023 was $6.4m(1) (1H 2022:$9.8m)
• Realised oil price of $78.19/bbl (1H 2022:$105.5/bbl)
• Gross Profit (excluding Egypt tax gross up) $2.2m (1H 2022: $5.6m)
• Cash Operating Expenses of $10.65/boe  (1H 2022: $8.40/boe)
• Profit After Tax of $0.6m (1H 2022: $2.4m)
• Cash collections in the six-month period of $7.0m (1H 2022: $8.7m)
• Repayments on BP Pre-payment facility of $1.2 (1H 2022: $1.6m)
• A 30% reduction in Corporate G&A to $830k (1H 2022: $1.2m) and on target to deliver the 15% full year reduction.
• Group cash balances at period end were $0.6m (1H 2022: $3.8m)

(1) 22% working interest net of Government Take

1H 2023 Corporate summary

• Jonathan Leather, Executive Director and Chief Operating Officer stepped down from the Board on 31 August 2023. Jonathan will continue to provide support to the company on the Jamaican farm out process on a consultancy basis.

Outlook

• In Egypt we look forward to drilling the ASD-S-1X near-field exploration well, which we expect to spud in October. This is an exciting exploration well located to the south of the prolific ASD Field. The well is targeting an estimated gross in-place mean volume of 10.1 million barrels of oil in multiple stacked reservoir targets across the productive Abu Roash and Bahariya reservoirs. 
• The ASD-S-1X exploration well will be followed by additional development drilling on the Abu Sennan concession - likely targeting an undrained crestal area that has been identified on the ASH Field.
• In Jamaica, we continue discussions with high-quality potential partners and expect to commence commercial discussions with a preferred party over the coming weeks. We will provide further updates to the markets in due course.
• In the UK, we are looking to complete the transaction with Quattro on the P2519 licence containing the Maria discovery.

Operations Update

Egypt, Abu Sennan (22% non-operated working interest, operated by Kuwait Energy Egypt)

1H 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 first half was 1,011 bopd net, plus 111 boepd net gas with Group working interest production forecast to average between 930 and 1,030 boepd for the full year 2023.

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 we 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) and producing 390,000 barrels to end of August, production from the ASH-8 well is now declining, and is currently producing at a flow rate of 601 bopd (132 bopd net). This decline is broadly 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.

The results of ASD-3 significantly improved our understanding of the ASD field and has led to a significant increase in our in-place volumetric estimates for the field by 16% from 11.4 to 13.2 MMBO in the mid case. This well also had strong initial production rates which have now declined in line with expectations.

We continue to work with the operator and Joint Venture partners on initiatives including additional drilling, water injection, and stimulation to offset the natural production decline in the wells and re-instate production from temporarily shut in wells.

Additional drilling in 2H 2023 has now been agreed by the JV partners and is expected to commence in October with the drilling of the ASD-S-1X exploration well. This exciting exploration prospect lies to the south of the prolific ASD Field and is expected to take approximately 40 days to drill. The exploration well is targeting a gross mean in-place volume of 10.1 million barrels of oil in multiple stacked reservoir targets across the productive Abu Roash and Bahariya reservoirs.

Once ASD-S-1X has been completed, additional development drilling is planned and will likely target an undrained crestal area that has been identified on the ASH Field. Subject to rig availability, this well is expected to spud in Q1 2024.

Jamaica, Walton Morant Licence (100% working interest)

The farm-out campaign remains a key focus for United, as the company seek to take this potentially transformational project forward into the next phase of the Licence. UOG have continued to engage with potential partners to participate alongside us in drilling an exploration well and have been encouraged by the quality of the companies who have undertaken in-depth evaluations. The initial deadline for indicative offers that was set at the end of 1H was extended to allow these evaluations to be completed. Commercial discussions with a preferred partner are now expected to commence in Q4. Additional updates will be provided in due course.

UK Central North Sea, Maria Discovery, Licence P2519 (100% working interest)

United entered into a binding Asset Purchase Agreement ("APA") on the licence with Quattro Energy Limited ("Quattro") on 18th January 2023. This APA had a long-stop date of 31st July 2023, and although the NSTA approval was received for this transaction, Quattro had not completed the required fundraising by this long-stop date.

After receiving further assurances from Quattro and a non-refundable deposit of $0.1m, the parties subsequently agreed an extension of the long stop date in the APA to 30th September 2023. It was also 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, with such extension to be automatically granted on the satisfaction of the Quattro funding condition being met by 30 September 2023. Whilst we understand that Quattro has made progress towards completing their funding process it is likely that they will require a further extension to the long stop date to facilitate this process. A further update will be provided in due course.  

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. 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.

KeyFacts Energy: United Oil & Gas UK country profile