United Oil & Gas (LON:UOG) chief executive Brian Larkin hailed the exceptional performance of the Abu Sennan licence onshore Egypt to date, though the company and its partners are currently addressing a 'water-cut' issue affecting production.
Output for the first six months averaged 2,730 barrels of oil equivalent a day (boepd) net to the group – marginally ahead of guidance, which was set at 2,500-2,700 boepd.
Experts are currently working on mitigating the impact of changes to the oil-to-water ratio seen since early July; its effect has been felt on the ASH field only and on the ASH-2 well in particular.
However, it means guidance has been lowered to 2,100-2,300 boepd.
A number of options for controlling the water-cut and stabilising production have and are being looked at, including differing choke sizes, shutting in various perforated intervals, investors were told.
"The Abu Sennan licence has performed exceptionally since we acquired the asset,” said CEO Larkin.
“Whilst the increase in water cut at ASH-2 and the resulting impact on our production guidance is disappointing, we will continue to work with the JV partners to identify and implement the best long-term solution.”
In the same announcement, the market was told ASX-1X exploration well, being drilled near a recent commercial discovery, will reach the primary reservoir targets in the next two weeks.
And the company said it would add a further well to this year’s programme.
“The continued investment in the Abu Sennan licence by the JV partners speaks to the potential which exists within the concession and we look forward to updating shareholders as we receive further results,” said Larkin.
“Our low-cost production base continues to deliver positive operational cashflow, and this, combined with recently announced portfolio management initiatives, ensures that United remains in a strong position to execute our strategy."