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United Oil & Gas reveals production boost in Egypt ahead of deal completion

"Abu Sennan is a producing asset with considerable upside potential,” said Brian Larkin, United chief executive

United Oil & Gas PLC - United Oil & Gas reveals production boost in Egypt ahead deal completion

United Oil & Gas PLC (LON:UOG) has updated investors on the ASH-2 well at the Abu Sennan field - part of a package of assets to be acquired from Rockhopper PLC (LON:ROK) - which came online earlier this month.

In a statement. United noted that ASH-2 was drilled to a depth of 4,030 metres into the Alem El Buieb (AEB) formation and was completed in two reservoir intervals, each testing at 7,027 barrels of oil equivalent per day (boepd) and 3,851 boepd respectively.

It added that the well came online on 2 January and has consistently produced over 3,000 boepd, which equates to 660 boepd for the 22% interest being acquired by United from Rockhopper.

Since the addition of ASH-2 the Abu Sennan field has produced an average of 8,000 boepd, yielding 1,760 boepd net for the 22% stake.

United shares advanced just over 5% in Wednesday morning’s deals.

READ: United Oil & Gas awaits Jamaica farm-out

"As the test results to date on the ASH-2 well demonstrate, Abu Sennan is a producing asset with considerable upside potential,” Brian Larkin, United chief executive said in a statement.

“At the effective date of the Acquisition (1st January 2019), production attributable to Rockhopper's 22% interest in Abu Sennan was c. 800 boepd.  Today it stands at c.1,760 boepd.”

Larkin added: “While the interpretation of the data is continuing, it is clear that the intersected reservoirs have excellent production capacity. 

“With this in mind, we are looking forward to completing this transformational acquisition and working with our soon-to-be joint venture partners to optimise the field development plan for Abu Sennan.”

Broader field development

United noted that production from ASH-2 will continue to be assessed over the coming months as broader field development planning takes place.

A rig is presently being mobilised for the first well of the 2020 campaign, and, it is expected to spud shortly. In the meantime, the asset acquisition continues to advance towards a close – which the company expects to announce once an approval from the Egyptian authorities is concluded.

Extensions to the 31 January backstop date have been agreed to allow additional time for the government approval.

"I would like to thank our existing shareholders, the incoming investors and BP who continue to support what will be a transformational deal for our company,” Larkin said.

“Together with receipt of environmental approval for the development of the Selva Gas field in Italy and the extension of the Tullow-operated production sharing agreement on the Walton Morant licence offshore Jamaica, 2020 has got off to an excellent start.,” he added.

In a note, stockbroker SP Angel said: “As the test results to date on the ASH-2 well demonstrate, Abu Sennan is a producing asset with considerable upside potential.”

SP Angel noted that the well result suggests the deal between United and Rockhopper was “good for both sides”.

Quick facts: United Oil & Gas PLC

Price: 1.95 GBX

AIM:UOG
Market: AIM
Market Cap: £12.07 m
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