Cenkos has nudged higher its valuation for United Oil & Gas PLC (AIM:UOG, FRA:1UO) following its latest expectation beating result at the Abu Sennan project in Egypt, with the Al Jahraa-8 (AJ-8) well flowing up to 2,819 barrels oil equivalent per day.
It’s the most recent in a series of successes and Cenkos has now lifted its core valuation (net asset value) from 6.5p to 6.9p, suggesting some 80% upside to the current market price.
Cenkos analyst James Mccormack highlighted United’s 100% success rate over the past five wells and there’s more to come, with preparations underway for the next well - ASX-1X , due to spud in the third quarter – and beyond.
“Discussions are continuing with the Abu Sennan block partners on the 2022 drilling programme and the longer term plans for accessing the significant long term potential of the licence,” Mccormack said in a note.
On Monday, United released results from the Al Jahraa-8 (AJ-8) well from which preliminary short-term tests yielded a maximum rate of 2,819 boepd, comprising 2,093 bopd and 3.63mln cubic feet of gas per day, and a rate of 1,433 boepd on a more constrained choke.
The results exceed the company’s pre-drill expectations for the well. And it will now be brought onto production in the coming days.
United owns a 22% interest in the Abu Sennan licence which is operated by Kuwait Energy.
"We will now work with our partners to bring the well on stream in the coming days, at a rate which will maximise the long-term production and contribute to our low cost production base.”
The drill rig will shortly now move some 7 kilometres north to drill the ASX-1X well on the Al Jahraa Field. Drilling is expected to start in the coming days.