United Oil & Gas, the full-cycle oil and gas company with a portfolio of production, development, exploration and appraisal assets, issues the following trading and operations update summarising recent operational activities, providing trading guidance in respect of the financial year to 31 December 2022, and initial guidance for 2023. This is in advance of the Company's audited full year results which will be released in April 2023. The information contained herein has not been audited and may be subject to further review and amendment.

United Chief Executive Officer, Brian Larkin commented:
"Operationally 2022 was a very active year for the Company with an extensive work programme executed in Egypt, generating good operational cashflow despite mixed drill results. Over the three years that United has held Abu Sennan, the production base has generated material cashflows for the business. As the asset matures, it is transitioning to a phase in its development where operations are focused on maintaining and extending long term production rates to generate operational cashflows for many years to come. Egypt remains an integral part of our business providing operational cashflow which supports the wider asset portfolio of the Company and our strategy to grow through M&A.

"In Jamaica, the farm-out of our high impact exploration licence with 2.4 billion barrels of unrisked mean prospective oil resource is picking up pace with a timetable for receipt of indicative offers due in Q2 2023.  We continue to build on our excellent track record of active portfolio management, adding value to our assets and monetising them in excess of our investment, as seen most recently with the sale of the Maria discovery.

"In line, with our continued focus on good capital allocation and the recognition of the value disconnect between the business valuation and the share price, United intends to seek the requisite approvals from shareholders at our 2023 AGM to allow for a limited buyback programme, should this be the best use of capital at the time.

"I am excited about the potential for the Company as the fundamentals of the business remain solid, and we remain committed to our growth ambitions with the focus on new ventures in the Greater Mediterranean and North Africa regions."

2022 Operational summary

• Group full-year 2022 production averaged 1,312 boepd net (1,137 bopd oil and 175 boepd gas) in line with revised 2022 guidance of 1,300-1,325 boepd
• 2022 Egypt work programme completed, consisting of three development wells, two exploration wells, and eight workovers
• Safety and the environment - zero lost time incident frequency rate and fatal accident frequency rate. No environmental spills, restricted work incidents or medical treatment incidents
• In Jamaica, as part of the licence extension that was granted, technical studies that have provided additional positive support to the farm-out process have been completed
• In the UK, the completion of low-cost technical studies and a contingent resources report supported the negotiation of an increased transaction value on the conditional sale of the Maria discovery

2022 Financial summary 

• Group revenue for full year 2022 is expected to be approx.$16m(1) (FY 2021 : $19.2m)
• The average realised oil price per barrel from Egypt achieved was approx. $96/bbl (FY 2021 : $68.9/bbl)
• Group Cash balances as at 31 December 2022 were approx. $1.4m with Net Debt approx. $1.5m (2021 Cash balances $0.4m : Net Debt $5.5m)
• Cash capital expenditure was approx. $7m (FY 2021 : $5.5m)
• Receivables of $4.2m (FY 2021 : $5.1m)

(1)22% working interest net of Government Take

Corporate summary

• Amounts due from Anasuria Hibiscus UK Ltd for Crown disposal fully satisfied in the year ($2.5m)
• A binding Asset Purchase Agreement signed for the conditional sale of UK Central North Sea Licence P2519 containing the Maria discovery for a maximum consideration of up to £5.7m 
• United intends to seek the requisite shareholder approvals at this year's Annual General Meeting to approve a limited share buyback programme, which will be subject to completion of the Maria sale and market conditions
• The Company initiated a full review of its G&A expenditure in Q4 2022 and has commenced a programme to reduce these costs by up to 15% in 2023 compared to 2022

2023 Outlook; production and capital expenditure guidance

• 1H 2023 production guidance from Abu Sennan is 700-900 bopd net. Note that this range comprises 100% oil production, as with the installation of pumps at the ASH Field and expected recompletions, the lower-value gas production in 1H 2023 is expected to be negligible. The upper end of the guidance includes risked contributions from the planned workovers and a pro-rated contribution from the recently spud ASH-8 development well, which is assumed will be brought onstream in May 2023
• The development drilling planned in the first half of the year has the potential to have a positive impact on production levels in 2H 2023, and full year guidance will be provided once the results of the ASH-8 and ASD-3 wells are available
• Farm-out campaign for the Walton Morant licence, Jamaica, continues to accelerate with the appointment of Energy Advisors Group ("EAG"), a Houston-based M&A advisory group, targeting US companies and investment funds. Process is ongoing with indicative offers due Q2 2023
• Group cash capital expenditure for the full year is forecasted to be approx. $4.4m, funded from existing operations, with circa $4m to be invested in Egypt and up to $0.4m across the other assets in the portfolio
• ESG focus on evaluating emissions baseline in Egypt with operator and contributions to social investment programmes
• Continued evaluation of new opportunities in the Greater Mediterranean area and North Africa regions to grow the business in line with the strategy

2023 Egypt work programme consists of two firm wells, and eight workovers, with the potential to add additional wells to the programme later in the year:

• 1H 2023 focus will be on development drilling and optimising production from existing wells through low-cost workovers
• Two firm development wells are planned: ASH-8, which has now commenced drilling, and ASD-3, which is looking to build on the success achieved with ASD-2 in 2022
• The potential for additional drilling in 2023, which is likely to focus on exploration, will be finalised with JV partners once the results of the ASH-8 and ASD-3 wells are available

KeyFacts Energy: United Oil & Gas UK country profile