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United Oil & Gas heading towards production from broad spread of assets

Snapshot

  • Oil and gas company with assets in the UK, Italy and West Indies
  • Landed 4 UK North Sea blocks including Zeta prospect
  • Set to complete the acquisition of Rockhopper's Egyptian assets 
Isle of Wight

Quick facts: United Oil & Gas PLC

Price: 4.05 GBX

AIM:UOG
Market: AIM
Market Cap: £14 m
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What it owns

Italy - Selva gas field (20%)

UK – Colter (10% + 10% option) offshore

UK – Crown Discovery (100%) offshore

UK – Acle (24%) offshore

UK - Waddock Cross (26.25%) onshore

UK – Broadmayne (18.95%)

UK - Four blocks in the Central North Sea

Jamaica – Walton Morant/Colibri (20%) offshore

Benin - Option to take 20% stake in Elephant Oil acreage

How is it doing

UOG has agreed to buy 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, accordingly, United’s shares are presently suspended, and the deal is due to complete in the fourth quarter of 2019.

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 potential US$5mln issue of equity to Rockhopper.

In Jamaica. the Walton Morant/Colibri prospect is estimated to contain 229mln barrels of prospective resources.

Tullow is the operator with a first well pencilled in for next year.

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.

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What the broker says:

Optiva Securities analyst Barney Gray has a risked valuation of 11.4p per share for United Oil & Gas on a fully diluted basis, noting that this includes no value for Benin or the provisionally awarded 31st Round Blocks.

In a recent note, Gray said: “Although we reserve the opportunity to adjust our assessment in the event of the conclusion of potential farm-in opportunities, we note that that our unrisked valuation for United is over 51p per share at this stage, representing major potential upside to the company.

“This could be augmented further should United’s most recent acquisitions demonstrate significant promise upon further analysis.”

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