How is it doing
UOG has bought Rockhopper Exploration’s Egyptian asset portfolio, which will deliver United’s first production operation, yielding around 5,100 barrels oil equivalent gross, along with further development and exploration upside.
It constitutes a reverse takeover and United is paying US$16mln to acquire the Egyptian assets with the deal partially supported by a financing deal with BP, which will provide US$8mln, along with a share placing to investors and a US$5mln issue of equity to Rockhopper.
In Jamaica, the Walton Morant/Colibri prospect is estimated to contain 229mln barrels of prospective resources.
Tullow extended ‘drill or drop’ deadline to July as joint farm-out talks progress with ‘interested parties’. A new partner would support funding for the first well, which was originally pencilled in 2020 (now presumably subject to any deal timeline).
Selva in Italy is scheduled to begin production in 2020 at a targeted rate of 150,000 cubic metres of gas per day, which it will deliver significant cash flow to United says the company.
Awarded four blocks in the Central North Sea in 31st licensing round that includes the Zeta prospect, which United estimates could contain over 90 million barrels of in-place oil.
UOG recently agreed the sale of the Crown Discovery assets in the North Sea for US$5mln.
What the boss says: Brian Larkin, chief executive
"Operating costs in Egypt are cheap, the drilling costs are cheap and the exploration upside is low-risk.
"So it's a perfect fit for our business model at this stage of our growth."
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- Egypt assets will produce a net 1,100 barrels daily to UOG
- Operating costs US$6.50 per barrel
- Five wells to be drilled, one currently underway
- First production from Selva next year
- Jamaica farm-out
- Jamaica drilling
What the broker says
UOG is worth 10p per share following its acquisition of Rockhopper’s assets in Egypt according to Barney Gray at broker Optiva.
The deal gives UOG a 22% stake in the Abu Sennan prospect.
Four wells were scheduled to be drilled at Abu Sennan in 2019 with the last expected to be completed by the end of the year.
Production has risen as result to 5,000 boepd gross from 3,800 boepd and Optiva expects another four wells to be drilled in 2020.
Drilling costs are between US$3-4mln per well, which would mean a cost of about US$3.5mln for UOG, a figure that Gray says is well covered by the funds it will receive from production at Abu Sennan.
“Under the terms of the Abu Sennan PSC, the economics of the project are enhanced significantly by a historical recoverable cost pool of US$112mln.
“On the basis of a four-well work programme in 2019 and 2020 only at this stage, we have valued United’s 22% interest in Abu Sennan at US$29m on a risked basis.”
The multi-well drill programme has the potential to deliver considerable upside, adds Gray.