Analysts at Optiva Securities say they are confident United Oil & Gas (LON:UOG) and its partners will be able to “mitigate” water-cut issues that have led to production declines at the ASH field onshore Egypt.
Calling the news “disappointing”, the broker’s oil team “tempered” its price target to 6.7p a share from 7.3p. That said, the valuation is still more than double the company’s share current share price.
“We remain confident that remedial action on ASH will serve to mitigate excessive production declines from the field and we highlight that our tempered assessment of United’s Egyptian assets still represents a significant uplift on the current share price,” Optiva said in a short note.
Earlier the group revealed its production was slightly ahead of expectations in the first half but said the water issues had forced it to downgrade forecast marginally for the second half to 2,100-2,300 of barrels of oil equivalent per day.