United Oil & Gas doubles production at Al Jahraa onshore Egypt
(AIM:UOG ) says gas production at the Al Jahraa field located at its 22% owned Abu Sennan concession, onshore Egypt, “continues to rise” and is helping to compensate for lower oil prices amid the ongoing coronavirus pandemic.
The group revealed that production at Al Jahraa had ‘more than doubled’ to around 8,400 barrels of oil equivalent per day with low operating costs of around $6.5/bb providing ‘solid operating margins’ despite current low market prices.
The group says its recently completed gas pipeline at Al Jahraa, which the group noted was achieved at low cost, “will pay for itself within months,” according to current projections.
It added that its pre-payment facility with multinational oil firm BP will provide downside price protection by hedging 6,600 bbls of oil per month at $60/bbl for the next 30 months.
Shares in United Oil & Gas were trading 11.54% higher at 1.45p in early morning trading.
“The economic and political uncertainty created by Covid-19 and the current low oil prices have created considerable challenges for our industry,” said Brian Larkin, CEO of United.
Alongside its partners, United said that it was taking ‘proactive measures’ to reduce near-term Capex commitments during the Covid-19 pandemic and current oil-price uncertainty.
The group’s deferral of both its Italian and Egyptian Capex is expected to improve cash flow and significantly reduce gross Capex estimates for the year.
United added that it had taken ‘a substantial cut’ in administrative expenditure which was resulting in further cost savings during this time.
"United's goal is to focus expenditure where it can deliver immediate benefit, maintain cashflow and emerge from this period of uncertainty in a position of strength, relative to the industry. We believe that this strategy can achieve that,” added Larkin.
The group added that it continues to make ‘good progress’ with ongoing drilling operations of an infill well targeting multiple undrained reservoirs at the El Salmiyah field.
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