United Oil & Gas Provides Half-year 2022 Trading and Operations Update
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.
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
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 €2.2m plus €0.1m 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