- The United Oil & Gas share price plunged 24.5% on negative well results.
- Investors were disappointed after the ASV-1X well did not have any oil.
- So what happens next to UOG shares? Read on to find out.
The United Oil & Gas PLC (LON: UOG) share price plunged after the oil company announced that it had not encountered any oil deposits in the ASV-1X exploration well drilled in the Abu Sennan licence area onshore Egypt.
Investors were disappointed by the news, which could mean that the area surrounding the ASV-1X well does not contain any oil reserves. However, the company quickly pointed out that it would begin drilling the ASF-1X exploration well within the same licence area later this year.
Also read: The Best Oil Stocks To Buy Right Now.
United Oil noted that the ASF-1X exploration well is located about 30 kilometres from ASV-1X to the southwest of the license area and would not be impacted by the negative results from the ASV-1X well.
The company also noted that having drilled the ASV-1X well to a depth of 3,496 metres and completed the entire process under budget, the well provided valuable data regarding the subsurface areas of the Abu Sennan license area.
United Oil & Gas insisted that it would continue to study the drilling data to see if it could draw any more valuable insights about the area from the data. The company also claimed that the data gathered during the process had helped it de-risk the entire project by understanding the migration of hydrocarbons in the area.
The company is currently proceeding with drilling the AJ-14 development well, which was spud on 21 June 2022. Luckily for investors, UOG has production assets combined with other development and exploration assets; hence, all its hopes were not resting on the ASV-1X well.
Investors looking to buy UOG shares should consider that after a sharp decline, the shares bounced off a crucial long-term support level and are trading above it. As a trader, I would wait a few days to see how UOG shares trade following today’s news before deciding whether to invest.
*This is not investment advice. Always do your due diligence before making investment decisions.
The United Oil & Gas (UOG) share price.
The United Oil & Gas (UOG) share price plunged 24.51% to trade at 1.17p, falling from Tuesday’s closing price of 1.55p.