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Stockbroker sees ‘material future potential’ for United Oil & Gas

The share trades at a significant discount to Cenkos' valuation, even before the company's latest well success in Egypt.

United Oil & Gas PLC - Stockbroker sees ‘material future potential’ for United Oil & Gas

United Oil & Gas PLC (LON:UOG) will continue to see ‘material future potential’ in Egypt, so says stockbroker Cenkos which today repeated a ‘buy’ recommendation for the AIM-quoted share.

It comes as United this morning revealed its latest positive and better than expected well result with the Al Jahraa-8 (AJ-8) well encountered more than 40 metres of net oil pay across three reservoir units. It sets up the next new production well at the Abu Sennan project.

United also said it is adding an extra exploration well at Abu Sennan with the ASX-1X planned as a step-out and follow up to the prior success at the ASD-1X well some 11 kilometres away.

Cenkos analyst James Mccormack in a note highlighted that United and its JV partners have more 21 further prospects in the inventory and more work is presently being discussed.

“Whilst the ASX-1X well is expected to be the final well of the 2021 campaign, longer-term plans for unlocking the additional potential in the Abu Sennan licence are currently under discussion amongst the JV partnership,”

“In line with the company’s previous drilling campaigns, we would expect future drilling campaigns to be a combination of low-risk development drilling designed to increase production and exploration drilling aimed at unlocking this identified upside.”

The Cenkos analyst has a 5.9p core valuation for United, before the addition of today’s success, and it is only partially accounted for in the prevailing market price of 3.92p.

Quick facts: United Oil & Gas PLC

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AIM:UOG

Price: 2.45 GBX

Market Cap: £15.8 m

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