United Oil & Gas Share Discussion Threads

[xxnjr] 03/6/2020 15:57

Thanks spangles. There's a bit of ES field history on p229 of


Apart from the AR-E, where 33°API oil with a GOR of 200-300 scf/stb was found, all the reservoirs contain volatile oil with high GOR in the order of 1,900-2,500 scf/stb. etc etc + more.

Hopefully they have found a larger compartment this time :)

[spangle93] 03/6/2020 14:14

Cheers xxnjr - you're right I hadn't seen that optiva note. [Actually, I can't even see a 9/3/20 note on Optiva's website, but I found it on UOG's site]

Given that we have applied a fixed price of US$3.29 per mcf to Abu Sennan gas output and we anticipate gas price stability in relation to the current level of oil prices*, this element of United’s revenue is stable and already factored into our assumptions regarding Abu Sennan production. *(A price of US$2.65 per mmbtu will apply if Brent is US$22.00 per barrel or more. At a calorific value of 1.24 mmbtu per mcf, a gas price of US$3.29 per mcf is implied).

1.24 MMbtu/mcf implies there is a healthy fraction of NGL's in the gas, which raise its value versus methane.

As you allude to in post 2534, the difference to oil pric is greater than the factor of 6,000 (or 5,800) which is often used in calculation of equivalence. Many companies convert gas into boe in RNS's, and sometimes cynically I think that it's because it makes the gas look more valuable.

On the other hand, we know that the opex cost for oil is $6.50/bbl so we can work out operating margin, but we don't know the cost of the gas opex. Maybe the $6.50/bbl covers all the field facilities opex cost (since gas is associated rather than directly produced?

Finally, some parts of the world tax oil and gas differently - my Trinidad stocks have supplemetary petroleum tax to pay if the oil price is within a certain range, but there is no SPT on gas, so even if the oil margin is better, gas is more lucrative on the bottom line

But anyway, to cut through the caveats, the production from this reservoir is quite gas rich, and the gas fractions will provide a very nice upside to the oil.

[alexios1201] 03/6/2020 13:28

Thanks xxnjr

[kilijarslan] 03/6/2020 12:45

Well done long term holders!

[xxnjr] 03/6/2020 12:41

alexios - No numbers quoted but I'm assuming gas price is a fixed price if OP >$22

[alexios1201] 03/6/2020 12:32

Thank you xxnjr,How does the gas number translate at $40BrentSaharan Blend was trading at $38.77 yesterday

[xxnjr] 03/6/2020 12:26

Spangles ref your points about Gas pricing

According to KE's 2014 Bond Offering

"For gas from Abu Sennan, as advised by KE, a price of US$2.65/MMBTU will apply if the Brent price is US$22/Bbl or more. A calorific value of 1.363 MMBTU/Mscf has been used to arrive at a gas price of US$3.61/Mscf."

Optiva's 9/3/20 note used a slightly different conversion factor

"A price of US$2.65 per mmbtu will apply if Brent is US$22.00 per barrel or more. At a calorific value of 1.24 mmbtu per mcf, a gas price of US$3.29 per mcf is implied"

Going with the lowest implied mcf number, then

$3.29*6 is approx equivalent to $19.74/boe?

[markstevenkirby80] 03/6/2020 12:19

Up comes the oil , happy days

[cpap man] 03/6/2020 12:09

Brian Larkin CEO, United Oil & Gas Plc:

"As a development well into a known field, the El Salmiyah-5 well was always expected to encounter hydrocarbons. However, with a headline figure of c. 8,700 boepd achieved on test from the primary target in the Kharita, it is fair to say the results have significantly exceeded our pre-drill expectations.

When coupled with the outstanding result from the ASH-2 well, which was announced in January, and which is still producing at over 3,000 bopd, from a production point of view, the timing of our entry into the Abu Sennan licence could not have been better. The Well result is a further realisation of the value we identified in the licence, and is likely to lead to our net production levels from the licence rising to over 2,500 boepd in the coming weeks - a significant increase from January 2019, the effective date of the purchase of the asset. Importantly, with operating costs of around $6.5/bbl, this production is highly profitable at today's oil prices.

We firmly believe there is significant additional potential across the Abu Sennan licence - and with further development going ahead to bring gas from the ASH field into production this year, and with a deferred drilling programme ready to be re-instated should market conditions improve, we are looking forward to further activity and newsflow from the asset."

[source] 03/6/2020 12:07

Great news. But oil price not liking Opec news...not that relevant but may affect wider sentiment to great news. Regards

[9tintin] 03/6/2020 12:00

On projected numbers how can a company throwing of in the region of £2M a month in revenue be worth £17M ?

Crazy

tintin

[zen12] 03/6/2020 12:00

Think this could well be the highest riser today once the market catches the significant news released!

[miahkaysor] 03/6/2020 11:56

3.5p next stop

[cpap man] 03/6/2020 11:38

Add in the following to the extremely positive mix....

Oil prices hit 3-month highs on expectations OPEC+ will extend deepest-ever production cuts

www.cnbc.com

[bountyhunter] 03/6/2020 11:35

Fantastic news and worth the long wait in the end?!!

El Salmiya-5 Well Results

Highlights
-- Total of over 120m net pay across four hydrocarbon-bearing intervals encountered by El Salmiyah-5 well on Abu Sennan concession - main target potentially materially larger than previously believed

-- Flow rates of 4,100 bopd, with 18 mmscf/d gas (c. 8,700 boepd in total) achieved from Kharita Reservoir during well-testing

-- United's net production from the Abu Sennan asset as a whole likely to rise to over 2,500 boepd in the coming weeks

[tomboyb] 03/6/2020 11:35

2.8p -

Some have taken profits but it will be interesting to see that 3p break again -

[kevd1986] 03/6/2020 11:34

Thanks much appreciated, think a lot of people overlook these gas rates.

[soulsauce] 03/6/2020 11:27

At the end of the day when we took this on, 22% of Abu was producing about 800bpd. It is now possible we will be producing over 3000bpd and only valued a little above what we were at before the process kicked off.

Seems to me they have an angle on the prospects and where they should be drilling with the last two drills hitting sweet spots.

Italy gas still to come early next year and Jamaica still bubbling in the background.

[tomboyb] 03/6/2020 11:23

Look good to me -

[spangle93] 03/6/2020 11:22

Yes, but gas and oil equivalence is only based on calorific value, not economic value

In the lower 48, you'd have to divide by about 20 to get economic equivalence

So you're right that in boepd terms the gas and oil are not dissimilar in scale, but we don't know anything about how the gas economics looks vs oil

[xxnjr] 03/6/2020 11:19

Probably over 65%...?
Maybe 70%?

[cashandcard] 03/6/2020 11:15

How much of that 1530boepd from this well actually goes to state operator in taxes and royalties?


Cash