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Cenkos lifts United Oil & Gas Plc valuation as Egypt success continues

The broker’s core and exploration valuation suggest significant upside to the current market price for United Oil & Gas.

Cenkos has again nudged up its valuation for () as it marked an increase in production at the 22% owned Abu Sennan licence in Egypt, with analyst James Mccormack describing the update as “the latest in a continual flow of success” for the company.

“The continued drilling success at both the ASD-1X and ASH-1 ST2 wells further underline the potential of the licence, both through the drilling of new wells and through workovers / recompletions,” Mccormack said in a note.

Mccormack highlighted that drilling continues at Abu Sennan, with the AJ-8 development well, and increased his core valuation (Net Asset Value) to 5.9p and the analyst’s risked exploration NAV moves up to 29.6p. Compared to a market price of 4.48p, the valuation sees significant upside.

This morning United reported that a development lease had bee issued for the  ASD-1X discovery which means that production can now begin, with the initial gross rate seen at 1,295 bopd, which equates to 285 bopd net to United.

A separate programme to workover the ASH-1ST2 well has also boosted production numbers, adding just over 1,000 bopd gross or 220 net to United.

United highlighted the rapid pace of progress at Abu Sennan where the ASD-1X well was drilled as recently as April and is now producing.

“The speed at which the joint venture is developing Abu Sennan is demonstrative of the excitement we share for the long-term potential of the licence, which continues to deliver for the company,” said chief executive Brian Larkin. “We would also expect this result to add to the proven reserves on the licence.”

 “In tandem with exploration success in Abu Sennan, the encouraging result from the ASH-1ST2 workover will provide a further boost to production, and will also help increase our understanding of the ASH Field.”

Larkin also highlighted that drilling is presently underway on the Al Jahraa-8 development well with results pending in due course.

Read More: Cenkos lifts United Oil & Gas Plc valuation as Egypt success continues

2021-06-02 05:50:00

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