Cenkos analyst James McCormack, in a note, highlighted that it has transformed the company into a full-cycle E&P, by adding low-cost production.
Moreover, the transaction was further boosted by expectation beating results of new drilling since the acquisition was first agreed in 2019.
He notes that with the latest well driving net production to 1,760 barrels oil equivalent, the asset now yields some 60% more than it did at the time of the deal.
Cenkos is house broker to the company and it has repeated a ‘buy’ recommendation for the oil and gas share.
McCormack said: “we believe United is one of the leanest companies in the sector, making the Company much more resilient to the current low oil price environment.”
He added: “With low operating costs (cUS$6.5/bbl) and drilling costs, Abu Sennan remains cash flow positive with oil prices below US$20 per barrel,”
“Additional downside protection comes from the Company’s pre-payment facility with BP, effectively hedging 6,600bbls per month at US$60/bbl until September 2022 and its longterm fixed gas contracts, insulating 20% of United’s production from the current price volatility.”
Central to the strong performance in Egypt is the ASH-2 well in the Abu Sennan permit.
It was tested at a rate of 7,027 bopd in December and after subsequently coming online has been producing at around 3,000 bopd gross.
McCormack notes that ASH-2 has significantly outperformed pre-drill expectations and demonstrates the presence of a sizeable accumulation.