Walton Morant has the potential to have a major impact on United Oil & Gas and we are delighted to have successfully concluded an agreement with the Jamaican government to take on operatorship and to develop this licence for the benefit of all stakeholders.
Brian Larkin, chief executive
How is it doing
UOG bought Rockhopper Exploration’s Egyptian asset portfolio, which is its first production operation along with further development and exploration upside.
In December, UOG said its working interest production from Abu Sennan was on target to exceed previous guidance of 2,300 boepd for the second half of 2020.
In Jamaica, the Walton Morant/Colibri prospect has just been estimated by consultant Gaffney Cline & Associates to contain 2.4bn barrels of potential resources.
The prospective resource is estimated across a total of 11 prospects.
Colibri, the most advanced of the prospects, is now estimated to host some 406mln barrels, up around 77% from prior estimates, meanwhile, the Thunderball prospect is another stand-out prospect with an estimated 603mln barrels.
United now has until January 31, 2022, before the drill-or-drop decision is required.
The company plans to complete a work programme to further de-risk Colibri and perform detailed interpretation of the numerous follow-on targets, including Moonraker, Thunderball, Moneypenny, Jaws, Goldfinger, Vesper, Oriole, Earspot and Rumpspot.
It is believed this work will have a significant impact on the continuing farm-down process, the group added.
What the boss says: Jonathan Leather, COO
“United has long held the view that the Walton Morant Basin is a highly prospective and exciting basin, with billion-barrel potential.
“This is the second independent report on the licence and the first to explore prospects across the full basin. The results are exceptionally positive and support our strong conviction that this is a transformational asset.”
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What brokers say
UOG received a healthy price target upgrade from Cenkos following the independent person’s report on the Walton Morant prospect.
Gaffney, Cline & Associates’ (GCA) report indicated resources of over 2.4bn barrels across eleven prospects and leads within the licence.
Resources at the primary target, Colibri, increased by 77% to a mean average 406mln barrels, with substantial follow-on potential elsewhere, Cenkos pointed out in a note to clients.
A drill-or-drop decision is required by January 31, 2022, and the new report will form part of the data-room that United Oil & Gas is holding to attract farm-in partners in 2021.
Based on a risked valuation of Walton Morant, Cenkos raised its share price target for United Oil & Gas overall to 21.2p from 18.1p and added that unrisked, the value of its assets is 108p.
Optiva also raised its price target for United Oil & Gas to 25.1p from 20.5p and noted that the current share price is more than covered by its valuation of the company’s 22% interest in the Abu Sennan producing asset in Egypt.