Stockbroker Cenkos rates United Oil & Gas as a ‘buy’.
United on Monday reported first quarter production slightly ahead of guidance, after a 12% increase in the three months, and Cenkos expects the rate to rise again in the second quarter. First quarter production averaged 2,520 barrels oil equivalent per day, versus United’s guidance for 2,300 to 2,500 boepd for the first half of 2021.
“We would expect a further production increase in Q2/21 following a full quarter’s production from the ASH-3 well,” Cenkos analyst James Mccormack said.
In its statement, United noted production growth driven by additional output being delivered through the ASH gas pipeline and recently the addition of the ASH-3 well.
ASH-3 came online in early March and has so far averaged more than 4,000 boepd gross, which gives United 880 boepd net.
Elsewhere the ASD-1X exploration well, drilled successfully after ASH-3, encountered 22 metres of pay across multiple zones and testing is planned to start in the coming weeks.
Cenkos noted that if testing proves successful it will lead to an application for a development lease which would allow the project to be taken into production.
Highlighting further potential newsflow for the upcoming quarter the broker highlighted: “We are
not expecting any surprises, with United already reporting its 2020 working interest production, FY20 total revenues, and YE20 cash balances as part of its FY20 trading statement released in January.
“We would also expect the company to publish an updated YE20 reserves and resources report at Abu Sennan. A reserves uplift is expected given the success of the El Salmiya-5 and ASH-2 wells in 2020. Net 2P reserves at the end of 2019 were 2.97mmboe.”
“Whilst we anticipate that the testing of the ASD-1X exploration well would take longer than the previous development wells (eg ASH-2, ASH-3 etc), we would expect that the results will be reported during Q2/21. Following the completion of operations at the ASD-1X well, the rig will move to the Al Jahraa field to commence drilling of the AJ-8 development well.”
United owns a 22% working interest in the project which is operated by Kuwait Energy.
Read More: United Oil & Gas Plc is predicted to grow production further in second quarter