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United Oil & Gas expands portfolio with ‘potentially transformational’ frontier exploration opportunity in West Africa

"We are delighted to take a position in this exciting new opportunity,” said Brian Larkin, United chief executive

oil and gas operations
Block B spans a large and untested coastal area in Benin

United Oil & Gas PLC (LON:UOG) has expanded its asset portfolio, adding a frontier exploration project in West Africa.

The company has inked an option deal which will allow it to acquire a 20% stake in the Bénin Onshore Block B.

It is a coastal block covering some 4,590 square kilometres, which has only seen limited seismic exploration activity.

READ: United Oil & Gas fares best as Colter consortium mulls next steps

United highlighted that the Block is a frontier area and no wells have been drilled to date. There is, however, encouragement taken from non-technical indicators.

Block B is surrounded by prolific hydrocarbon producing regions, and there are excellent positive indications of a working petroleum system, the company said. It noted that oil and gas seeps have been reported from water wells within Benin Block B, and an extensive tar belt has been reported to the northeast of the area.

Data from a single seismic line suggests the presence of numerous large structures in the licence, with the potential to hold more than 200mln barrels.

United will now pay for passive seismic and field studies, spending up to US$175,000. This work is planned for next month.

If it exercises the option, United will commit to paying for 30% of non-drilling exploration costs for the block and 20% of future drilling costs. It will also make an initial US$260,000 for Elephant’s past costs, plus US$780,000 across three six-monthly payments.

An exciting new opportunity

"We are delighted to take a position in this exciting new opportunity,” said Brian Larkin, United chief executive.

“The new licence is a great fit with the United business model, where we are continuing to build a portfolio of near-term, low-risk assets and a viable producing business based in Europe, with carefully selected frontier exploration licences with transformational upside in South America and Africa.”

Larkin added: "Through working in Ghana and the Cote d'Ivoire, the United management has significant experience of Western Africa. 

“As with our other frontier exploration acreage in Jamaica, we believe that Benin can be transformational for United and it is indeed a testament to the technical and commercial skills of the wider team in being able to identify and assess such exceptional opportunities and speedily onboard these to the growing United portfolio. 

“This excellent opportunity has been added to our portfolio at a very small initial commitment and is one which we look forward to continuing to update investors upon as we work with our new partners to further derisk and eventually market this exciting new play."

The United boss also noted that the company has been actively assessing a number of more advanced new opportunities, which are development and production focused, and those projects are presently the subject of NDA.

United is now nearing advanced stages of due diligence and commercial negotiation for those opportunities, he added.

Quick facts: United Oil & Gas PLC

Price: 2.825 GBX

Market: AIM
Market Cap: £17.49 m

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