4th Jan 2023 12:40
(Alliance News) - SP Angel's Energy analyst David Mirzai on Wednesday said United Oil & Gas PLC experienced a disappointing end to its 2022 five-well drilling campaign in Egypt.
With two unsuccessful exploration wells and two underperforming development wells, United Oil & Gas downgraded its 2022 full year production guidance for its Abu Sennan licence in onshore Egypt in late November.
The guidance was lowered to between 1,300 to 1,325 net barrels of oil equivalent per day from 1,450 to 1,500 net boepd, although this doesn't include workover contribution that were still to be completed in the late fourth quarter of 2022.
Although initial flow-rates of the ASH-4 development well in the Abu Sennan licence were in excess of the well-test average, United Oil & Gas said the rates from the well "sharply declined", suggesting that the well is connected to a smaller volume of oil than was expected pre-drill.
The choke size of the well was reduced to 24/64 inches from 32/64 inches to manage the reservoir and production rates. While these were expected to stabilise, United Oil & Gas said these production rates will be at a lower level than had previously been expected.
On Wednesday, the bad news continued.
United Oil & Gas said that drilling had failed to find hydrocarbons at the Abu Sennan licence. While the ASW-1X exploration well encountered net reservoir in the Abu Roash, Bahariya, and Alam El Bueib targets, the logs did not indicate that there were hydrocarbons present.
The ASW-1X well will be plugged and abandoned, and the Sino Tharwa-1 rig will be used to drill the ASH-8 development well, the first of the 2023 drilling campaign, the company said.
United Oil & Gas holds a 22% non-operating interest in the Abu Sennan licence, which is operated by Kuwait Energy Egypt.
"Despite the strengthening of the balance sheet over 2022 from production highly leveraged to the high oil price environment, the company has been less successful in demonstrating production growth or adding new reserves to materially boost the longer-term value of the Abu Sennan licence," David Mirzai said.
Shares in United Oil & Gas dropped 24% to 0.97 pence on Wednesday afternoon in London.
By Jaskeet Briah, Alliance News reporter
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