The United Oil & Gas PLC (LON: UOG) share price plunged 29.1% after completing the drilling of the ASW-1X well within the Abu Sennan license area in onshore Egypt. The drilling results did not show the presence of any hydrocarbons in the well.
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Therefore, the ASW-1X well will have to be plugged and abandoned since it cannot be brought into production due to the absence of hydrocarbons. Investors reacted negatively to the news, given that the well had been drilled to 3,640 metres.
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United Oil & Gas has a 22% non-operating interest in the Abu Sennan licence. Luckily for the company, its stake in the project is passive since it is not involved in the daily operations within the license area, which are run by Kuwait Energy Egypt (KEE).
Nevertheless, the disappointing results cast doubt regarding any recoverable oil reserves within the Abu Sennan license area, and investors will be more cuatiuos when funding projects in the region. While Egypt is well known for its gold deposits, it is not known for its oil reserves.
However, the country had proven hydrocarbon reserves of 3.3 billion barrels of oil and 77.2 trillion cubic feet (tcf) of natural gas at the end of 2018. Egypt’s government has been encouraging foreign firms to invest in the country and helo it explicit its oil and gas reserves.
Brian Larkin, United Oil’s CEO, commented: “Although the results of the ASW-1X well are disappointing, the JV partners are positive about the remaining prospectivity on the licence and will continue to deliver the maximum value from it. We are looking forward to the 2023 drilling campaign, which will initially focus on the further development of the asset by drilling the ASH-8, followed by the ASD-3 well. These development wells target the most prolific areas of the Abu Sennan licence to maximise production before drilling at least one further exploration well in Abu Sennan later in the year. We look forward to updating the market with further details of planned activity across our portfolio later in January.”
The company’s drill rig will now be mobilised to drill the first well of 2023.
*This is not investment advice.
United Oil & Gas (UOG) share price.
The United Oil & Gas (UOG) shares plunged 29.13% to trade at 0.90p, from Tuesday’s closing price of 1.27p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.