United Oil & Gas PLC (LON: UOG) have given the market an update on their potential move to acquire Rockhopper Egypt Ltd from Rockhopper Exploration PLC (LON: RKH).
United Oil & Gas are a relatively young company, having only been trading since 2015.
The firm does have solid backing, as United is a former Tullow Oil team, with a strategy to acquire assets where the management team’s experience can drive near-term activity to unlock previously untapped value.
Last week, United updated the market by saying that they had conditionally raised $6.3 million to part fund their purchase.
United Oil and Gas undertook a conditional equity offer, raising $6.3 million gross through the issue of 159.0 million new shares at 3 pence per share.
Additionally, 150.6 million were conditionally places by brokers Optiva Securities and Cenkos Securities PLC.
The funding package includes prepayment financing of up to $8 million from BP Group PLC (LON: BP) with which United Oil & Gas has entered an off take agreement for United’s future production.
In todays update, Rockhopper updated the market by announcing the success of one well and the failure of another in Egypt.
At ASH-2, on the Abu Sennan concession, Rockhopper found 50 metres of net oil pay following the drilling of a hole 4,030 metres deep into the Alam El Bueib formation.
Rockhopper completed the well, perforated, and tested it, with “encouraging” results.
Total production at Abu Sennan is approbated at 5,100 barrels of oil per day, with 1,120 barrels of that net to Rockhopper given its stake.
The Rockhopper announcement was noted by United Oil & Gas PLC, which in July announced the $16 million purchase of Rockhopper’s Egyptian assets.
Shares in United Oil & Gas rose on the announcement by 1.59% to 3p. 18/12/19 17:36BST.
“Today’s announcement is further proof of the quality of the assets that United has agreed to acquire. Abu Sennan has a historic drilling success rate of over 80% and rising. Over the last year production at the licence has gone from just over 800 barrels to 1,100 barrels of oil equivalent per day net as a result of the successful four well development drilling campaign,” said UOG Chief Executive Brian Larkin.
“While we will wait to see the sustainable production levels on the ASH-2 well over the coming weeks, these initial results are excellent and we are confident this well will further increase production.”
“There is already a work programme in place for 2020, which will deliver a further four wells, significantly increasing newsflow from the company. We expect the transaction to complete in January 2020 following satisfaction of final conditions precedent,” Larkin continued.