United Oil and Gas Provides Trading & Operations Update & Guidance for 2023

Egypt, Abu Sennan licence (22% working interest)

Full year 2022 production averaged 1,312 boepd net (1,137 bopd oil and 175 boepd gas), in line with revised production guidance of 1,300-1,325 boepd.

2022 Egypt work programme

The 2022 work programme consisted of three development wells, two exploration wells and eight workovers. The drilling programme achieved mixed results, with production added from ASD-2 and ASH-4, but with disappointing results from the two exploration wells. Q4 2022 production averaged 942 boepd net (884 bopd oil and 58 boepd gas), reflecting the expected decline from the existing wells, a proportionally higher decline in the lower-value gas volumes, and the fact that a number of wells were shut in pending workovers to return production. A number of these workovers which were planned for late 2022 were delayed due to operational issues and are now expected to be completed in Q1 2023.

Development drilling

The ASD-2 development well was brought onstream in March 2022 at rates above expectations and has continued to outperform projections throughout 2022.  The AJ-14 development well found good quality reservoir in the primary Abu Roash-C target, but due to near-borehole formation damage, consistent flow was not established. This well is now awaiting an imminent workover, with commercial flow-rates in line with the pre-drill expectations of approx. 300 bopd gross expected to be established once this is completed. The ASH-4 development well encountered top Alam El Bueib reservoir in an area that appears to be at least partially separated from the previously producing wells. The well was brought onstream in November 2022, and despite a steep initial decline, production from the well has now stabilised.

Exploration drilling

Two of the larger, but higher risk, prospects in the Abu Sennan exploration portfolio were drilled in 2022.  The ASV-1X well spud in April, and although there were some encouraging signs indicating the presence of hydrocarbons, the well did not flow on test. The ASW-1X well did not encounter hydrocarbons in any of the multiple pre-drill targets and was plugged and abandoned at the beginning of 2023.

2023 work programme and 1H 2023 production guidance

The proposed 2023 Egypt work programme consists of two firm wells and eight workovers. In 1H 2023 the focus will be on development drilling and in optimising production from existing wells  through low-cost workovers. The first development well will be the 60-day ASH-8 well, which spud on 22 January and the second will be ASD-3, which is aiming to build on the success achieved with ASD-2 in 2022. In parallel to the development drilling, workovers in Q1 2023 are targeting enhanced production from multiple reservoirs across a number of wells.

In line with previous years, where there has been flexibility in the drilling programmes, we expect any additional drilling in 2023 to be finalised with partners once we have seen the results of the two development wells. This contingent activity is likely to be focused on the remaining high-graded exploration targets in Abu Sennan. There remains a portfolio of additional prospects within the Abu Sennan licence and future exploration drilling and its potential to deliver a step-change in terms of production from the licence continues to be considered carefully by the JV partners. This will include the output from ongoing seismic reprocessing.

1H 2023 production guidance is 700-900 bopd net. Unlike previous years, where production has comprised circa 15% gas, the guided range is based on 100% oil production, as with the installation of pumps at the ASH Field and expected recompletions, the lower-value gas production in 1H 2023 is expected to be negligible. The upper end of the guidance includes risked contributions from the planned workovers and assumes that the ASH-8 development well will be onstream in May 2023. The development drilling planned in the first half of the year has the potential to have a positive impact on production levels in H2, and full year guidance will be provided once the results of the ASH-8 and ASD-3 wells are available.