United Oil and Gas recorded a strong start to the year as the company saw some success with its well-drilling programme.
Three successful wells were drilled on Abu Sennan in Egypt during the first six months of 2021, with the company reaching record working interest production of 2,730 boepd.
Revenue for the group was $10.2 million (€8.74 m) up from $2.4 million in the first half of 2020 as the company saw production rise and oil prices rose to $63.10 per bbl from $28.26 per bbl a year earlier. The acquisition and integration of its Egyptian assets also contributed to growth. Gross profit was $5.7 million, up from $300,000 a year earlier.
Cash collections more than doubled to $8.2 million. Group cash balance was $2.0 million at the end of the six months.
United also completed a portfolio review during the period, identifying several assets that were no longer part of its core business as it sought to refocus United as a low-risk production business in Egypt and the Greater Mediterranean area, lowering costs.
As part of the portfolio optimisation, United announced proposed divestments of assets in the UK and Italy, with the capital raised from the sale to be invested back into the business and allocated for future growth investment. The company has signed conditional agreements for the sale of Italian interests for €2.165 million and its UK licences in the central North Sea for £3.2 million.
The group said it would continue to focus on capital allocation to support low-cost production and selected high-impact exploration opportunities.
United has added two additional wells to its 2021 programme as a result of its early success, with the company now planning its drilling programme for next year and beyond, with multiple development and exploration wells with the potential to deliver large reserve and production upside.
Its working interest production in Egypt is forecasted to average between 2,100-2,300 boepd for the full year.
Portfolio
"With a production portfolio delivering strong operational cashflow, and multiple organic growth opportunities available, the company is well placed to capitalise on new opportunities emerging across the industry both organic and external. We look forward to the remainder of the year," said chief executive Brian Larkin.
“We’re really excited about next year. We’ll drill four more wells and four in 2023, and four more in 2024. So we’ve got quite an aggressive drilling programme coming up which is really chasing additional upside, chasing exploration opportunities to grow.”
The loosening of Covid-19 restrictions is also something to look forward to, with Mr Larkin noting the return of in-person meetings would benefit the company.
“I’ve been in London every week for the last four weeks, it was really energising to be back,” he said. “Re-engaging with out shareholders, re-engaging with the markets, talking to potential new shareholders, telling the story again. It’s been really energising for me, and really excited about coming out of restrictions and seeing everything open back up.”
