The Rockhiopper assets acquired in Egypt continue to exceed expectations and provide positive operational cashflow even during times of low oil prices
() has posted financial results that celebrated significant progress in 2019, as the company’s growth continued.
During the year it agreed the transformational acquisition of the Rockhopper Egypt business; advanced permitting for the Selva gas development project in Italy, where ‘first gas’ is slated for 2021; realised a profit with the sale of the Crown discovery in the North Sea; and also expanded its footprint via the UK offshore licensing round.
The company’s management team was bolstered during the period, with David Quirke joining the group as chief financial officer.
Since completing the Rockhopper Egypt acquisition in February 2020, the producing Abu Sennan asset has performed strongly, with the new ASH-2 achieving rates ahead of expectations, and presently remaining above 3,000 barrels of oil per day, the group said.
More new wells are being planned for the ASH field at Abu Sennan, targeted before the end of 2020.
In March, the Al Jahraa area added to gas production volumes and separately the ES-5 development well, which was spudded in February, is due to provide results shortly.
Importantly, despite challenges in the wider market, the company’s Egypt operation has positive operational cashflow in even the present low oil price environment. For example, Abu Sennan provides solid margins due to its low operating cost of around US$6.5 per barrel.
The company is further supported thanks to a pre-payment facility via () which effectively hedges some 6,600 barrels of crude per month at US$60 per barrel until September 2022. As well, the group noted, around 20% of net production is gas, sold through fixed-price contracts and therefore not sensitive to crude market movements.
Elsewhere, United O&G noted that it is working with the Jamaican Government to agree a path forward for the transformative Walton Morant licence.
“At the beginning of the year we outlined our intention to complete a transformative acquisition and to build a full cycle oil and gas company,” Brian Larkin, United O&G chief executive said in the results statement.
“We have achieved both goals with the Rockhopper acquisition, which has already exceeded expectations. In addition to the continued drilling success on the licence, which has seen production grow rapidly and contribute positive cashflow despite the current pricing environment, we are glad to have built new partnerships with BP and Rockhopper.
“Beyond the Rockhopper deal we have made excellent progress across our portfolio,” Larkin added.
Commenting on the impacts of coronavirus (COVID-19), Larkin added: United’s management has acted quickly to protect our business and to ensure that our strategy is appropriate to these circumstances.
“While we are currently adopting a prudent approach, this is with the objective of ensuring that we maintain a pipeline of opportunities for future development and emerge from this challenging time in a position to take advantage of opportunities which may arise.”
In terms of the financial results for 2019, in which it did not yet own producing assets, the company reported a US$2.13mln loss. It ended December with US$1.27mln of cash.