2 weeks ago
5
Cash-strapped United Oil & Gas Plc will pause farmout discussions with potential drilling partners until next year in the hunt for oil offshore Jamaica.
“The company was engaged in discussions with selected parties, but those discussions have been suspended until the new year. We also continue to explore potential interest from other parties, but we don’t expect those discussions to progress further until the new year, either,” stated CEO Brian Larkin in his investor update issued on Wednesday.
United, listed on the AIM market of the London Stock Exchange, has been exploring offshore Jamaica for years. However, operations have scaled back this year following its exit from Egypt due to currency challenges. The company is awaiting a US$620,000 receivable from the Egyptian General Petroleum Corporation to improve liquidity. United reported a US$1.6-million net loss for the six months to June 2024, following a US$20.3-million net loss for its full 2023 financial year. It however holds cash of US$750,000 on its books, mainly from a public offer earlier in the year.
United didn’t say when talks would resume with certain parties.
“The company has had to make some decisions to maximise our cash resources. With this in mind, we plan to significantly reduce the company’s cost base to absolute essential outgoings only, in order to maximise the chances of securing a potential farmout agreement within the constraints of our limited funds and timeframe,” stated Larkin on Wednesday.
A partner would offset the cost of drilling, which the company consultants estimated at US$30 million. The company has one year remaining under its two-year licence extension that expires in January 2026. United holds a licence to explore 22,400 square kilometres offshore along the island’s southern coast, known as the Walton-Morant zone. The company conducted a series of 2D and 3D tests and uncovered substances resembling oil, but further investigation was needed. The potential value of its most promising reservoir was independently estimated at US$23 billion, which could be extracted over a span of 25 years. United Oil requires a test drill to determine whether the substances are crude oil or underground water.
The oil exploration company hopes the samples it collects will deliver data that will raise the chances of an oil discovery offshore Jamaica. The odds of a commercial find were last estimated at 25 per cent, but the company expects to raise that to 33 per cent, based on past statements.
In addition to its activities in Jamaica, United Oil & Gas holds a development asset in the United Kingdom and is pursuing growth through portfolio optimisation and targeted acquisitions. Despite the near-term challenges, the company is confident about its long-term prospects, bolstered by its experienced management team and strategic partnerships.
English (US) ·