Abu Sennan is yielding around 1,700 barrels oil equivalent per day (boepd) to United, with the underlying operation producing around 7,900 boepd – thanks to the recent addition of a new well (ASH-2).
ASH-2 alone, in December, achieved a rate of 7,027 boepd during testing and it has been onstream, producing more than 3,000 boepd since the start of January.
Another new well, El Salmiya-5, was spudded in early February and its targeting multiple reservoirs. El Salmiya-5 is one of four fully-funded well that are being drilled within the Abu Sennan concession this year.
“United plans to participate in four fully-funded infill wells over 2020, the first of which, El Salmiya-5 was spudded on 3 February 2020,” said Optiva analyst Barney Gray.
“This is targeting multiple reservoirs in a previously undrained area of the El Salmiya field. The company also notes that construction of a gas pipeline on the Al Jahraa field is expected to be completed soon which is planned to bring a further 1,000 boepd (220 boepd net to United) of gas on stream.”
“United is now working with the operator, Kuwait Energy Egypt and the other JV partners to optimise production from the seven producing field within the concession and assessing the exploration potential within the Abu Sennan licence,” the analyst added.
Optiva has a per share valuation of 4.3p for the acquired Egypt business alone, compared to a market price of 2.67p – whereas the total sum-of-parts valuation rises to 10.4p once other production and more prospective exploration assets are factored in.
Gray said the broker’s valuation “demonstrates that the company’s current market capitalisation is well covered by our valuation of Egypt alone.
“With cash flow expected to be augmented from initial cash production from the Selva field in Italy later in 2020 and further progress anticipated with regards to United’s earlier stage assets, we believe that the company comfortably justifies our 10.4p valuation for the wider portfolio.”