United Oil & Gas H1 Revenues Fall on Egypt Challenges

Independent producer United Oil & Gas PLC saw its revenues drop in the first half of 2023 to $6.4 million, compared to $9.9 million in the previous-year period, impacted by difficulties in its operations in Egypt, the company has said.

The average realized oil price per barrel from Egypt for the first half was approximately $78, compared with $105 in the first half of 2022, United Oil said, adding that “the continued impact of the macro-economic challenges affecting the Egyptian economy has resulted in increasing difficulty and foreign exchange cost to repatriate funds from our Egyptian operations”.

The company added that it incurred significant additional foreign exchange costs in translating Egyptian pounds to USA dollars for its working capital needs. “Notwithstanding these short-term challenges due to reduced USD liquidity in Egypt, we continue to manage our working capital position across the group”, United Oil said.

United Oil owns a 22 percent non-operating stake in the Abu Sennan license, located in the Western Desert west of Cairo, Egypt. The license, operated by Kuwait Energy Egypt, is composed of eight development concessions, each containing a producing field, as well as a 158,136-acre (644 square-kilometer) exploration license. The asset produced 1,312 barrels of oil equivalent per day (boed) in 2022, according to the company website. Net to United Oil’s working interest, oil production in the first half of 2023 averaged 1,051 barrels per day, with 93 boed net gas, United Oil said in a news release.

In Jamaica, United Oil owns a 100-percent stake in the Walton-Morant offshore exploration license, an 8,649 square-mile (22,400 square-kilometer) area estimated to have over 2.4 billion barrels of unrisked mean prospective resources.

United Oil had originally set the end of the first half of 2023 as the deadline for potential partners for a Walton-Morant drilling project. The company said it was “encouraged by the number and quality of companies that are in the process of completing their evaluations, and as they have requested additional time, we have agreed to extend the deadline.” It is now looking to make a commitment to drill a well by the end of January 2024.

"We have had a strong start to the first half of the year from our Egyptian drilling program with two successful development wells coming onstream and positive results from our low-cost workover program”, United Oil CEO Brian Larkin said. “We are cognizant of the short-term challenges in Egypt and with this in mind are delighted to continue drilling in the second half, initially targeting one exploration and one appraisal well In this highly prospective license. We look forward to announcing further details in due course.”

"In parallel, we remain focused on securing a partner in Jamaica for this potentially transformational license and we are delighted to have multiple quality potential partners advancing their evaluation of the project. We look forward to the remainder of the year and updating our shareholders on our progress", Larkin concluded.

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