Interim Results for the Half Year to 30 June 2021

Source Press Release
Company United Oil & Gas PlcEGPCIthaca Energy Inc.Prospex Energy PLC 
Tags Hedging, Production/Development, Exploration, Discovery, Upstream Activities, Strategy - Upstream, Capital Spending, Environment, ESG/CSR, Guidance, Financial & Operating Data, Strategy - Corporate
Date September 28, 2021

United Oil & Gas PLC (AIM: "UOG"), the growing oil and gas company with a portfolio of production, development, exploration and appraisal assets is pleased to announce its unaudited financial and operating results for the half year ended 30 June 2021.

Brian Larkin, Chief Executive Officer commented:"

During the first half of 2021 three successful wells were drilled on Abu Sennan and the Company reached record working interest production of 2,730 boepd, delivering strong operational cashflow.""

The success that we enjoyed earlier in the year has led to two additional wells being added to the 2021 programme; the recent positive ASX-1X well and the new Al Jahraa 13 development well due to be drilled later this year.""

As part of the long-term objective to realise the full potential of Abu Sennan, we are pleased to be planning the drilling programme with our partners for 2022 and beyond. This plan will include multiple development and exploration wells and has the potential to deliver large reserve and production upside.""

In addition, during the period, the Company has completed a portfolio review, refocusing United around its low risk, high return production business, complemented by selected high impact exploration opportunities.""

With a production portfolio delivering strong operational cashflow, and multiple organic growth opportunities available, the Company is well placed to capitalise on new opportunities emerging across the industry both organic and external. We look forward to the remainder of the year."

Year to date summary

Strategic

·      Portfolio  review completed refocusing United into a low-cost, low risk production business in Egypt and the Greater Mediterranean area complemented by selected high impact exploration opportunities in the Caribbean and Latin America

·      Divestments of non-core assets in UK CNS and Italy signed post period end in line with the Company's strategy to reinvest the proceeds to support growth;  

-       Signed conditional SPA for sale of Italian interests for €2.165m (c. $2.54m)

-       Signed conditional SPA for the sale of UK Central North Sea Licences for a consideration of up to £3.2m (c $4.4m)

·      Long-term plan in Egypt to realise full potential of the Abu Sennan licence 

-       Indicative long term drilling programme starting with four wells in 2022

-       Potential to deliver large reserves, production and exploration upside

·      In Jamaica, the formal farm-out campaign for the Walton Morant licence, which commenced in early April continues

-       Actively working to achieve the best path forward for this exciting high-impact asset

·      Clear ESG focus and actions including evaluation of emissions baseline in Egypt and contributions to  social investment programmes

·      Continued evaluation of new business opportunities to grow the business in line with our strategy

1H 2021 Operational summary

·      Group working interest 1H 2021 production averaged 2,730 boepd (1H 2020: 1,975 boepd)1

·      Highly successful ongoing drilling campaign on the Abu Sennan licence

-       ASH-3 Development well came on stream in March 2021 at a gross rate of over 4,000 boepd

-       ASD-1X Exploration well delivered a commercial discovery in May with gross rate of over 1,200 boepd achieved on test. Development lease and commencement announced in late May with the well coming on production less than two months from discovery and producing an average of 600 bopd gross in the second quarter.

-       AJ-8 Development well (post period end) encountered over 40m net pay across three reservoir units and was immediately brought into production at an initial rate of 950 boepd

-       ASX-1X Exploration well encountered at least 10m of net pay in a number of oil-bearing reservoirs (post period end)

·      Post-period end, United revised its full year guidance for the Abu Sennan licence to 2,100-2,300 boepd in early September. This was due to increased water cut in the wells in the ASH field. Following  investigative processes during August, the water-cut and production from the ASH wells has stabilised  . The wells are being closely monitored and further interventions are being considered.

·      Zero Lost time incidents, Medical Treatment Injury, Restricted Work Injury, Spills, fires or  environmental incidents

1H 2021 Financial summary

·      Group Revenue for H1 2021 of $10.2m (H1 2020: $2.4m)1

·      Gross Profit of $5.7m (H1 2020: $0.3m)

·      Profit after Tax $2.0m (H1 2020: $1.8m)

·      Realised oil price of $63.10/bbl (H1 2020: $28.26/bbl)1

·      Cash collections in the six-month period of $8.2m (H1 2020:$3.6m)1

·      Cash operating costs of $4.61 /boe (H1 2020: $4.38/boe)1

·      Repayments on BP Pre-payment facility $2.4m (H1 2020: $0.7m)1

·      Group Cash balance of $2.0m at the period end (H1 2020: $1.2m)

1From the completion of Rockhopper Egypt acquisition to period end, 28 February 2020 to 30 June 2020.

Outlook and Guidance 

·      Continued focus on capital allocation to support low-cost production and selected high impact exploration opportunities

·      Group working interest  production in Egypt is forecasted to average between 2,100-2,300 boepd for the full year as announced on 6 September 2021

·      Group cash capital expenditure for the full year is forecasted to be $7.5-8.0m, fully funded from existing operations, with $7m to be invested in our low-cost production business and up to $1m across the other assets in the portfolio

·      Preliminary  four well 2022 drilling campaign planned and longer-term plans for accessing the significant upside reserves and production potential of Abu Sennan under discussion with partners

·      Test results for ASX-1X exploration which has encountered >10m net pay in a number of oil bearing resevoirs. Evaluation of the ASX-1X well-data is continuing, and a comprehensive testing programme for the well is planned. 

·      New development well, Al Jahraa-13, has been added to the 2021 drilling campaign. This follows on from the success that was achieved at Al Jahraa-8

·      $5.2m of upfront consideration for portfolio management transactions expected following completion of UK Central North Sea and Selva transactions plus an update on timing of receipt of $2.85m Crown milestone from Hibiscus Petroleum is expected before the year end

·      In Jamaica, the formal farm-out campaign for the Walton Morant licence, which commenced in early April continues. The market environment for exploration remains challenging, and United are actively working to achieve the best path forward for this exciting high-impact asset. We look forward to further positive engagement with the Government of Jamaica to ensure the investment cycle has time to recover.

·      With a production portfolio delivering strong operational cashflow, and multiple organic growth opportunities available, the Company looks forward to completing our divestments, working with partners on the realising the upside potential in the Abu Sennan licence and is well placed to capitalise on new opportunities emerging across the industry.

Chief Executive's Report

United has had a strong start to 2021. On the Abu Sennan licence we have had multiple successes which have increased 1H 2021 average working interest production to 2,730 boepd, delivering positive  operational cashflow. The successful drilling campaign during the period included two development wells: ASH-3 and Al Jahraa-8 (AJ-8), the successful ASD - 1X exploration well and the work over of the ASH-1ST2 well.

As a result of the successful drilling program in 2021 to date, the joint venture  ("JV")  partners added an exploration well and a further development well to the 2021 drilling programme. This is testament to the confidence the JV partners have in the asset and in the outlook for commodity prices. The ASX-1 exploration well, near the commercial discovery at ASD-1X, was added to the Egyptian 2021 drilling programme. The well encountered at least 10m of net pay and is now being tested. The Al Jahraa-13 development well, has also been added to the 2021 drilling campaign. This follows on from the success that was achieved at Al Jahraa-8 and is anticipated to drilled  by the end of the year. By the end of 2021 five wells will have been drilled, all these wells and the 2021 work programme will have been fully funded from our operating cash flow. 

In September, United revised its full year production guidance for the Abu Sennan licence from 2,500-2,700 to 2,100-2,300 boepd net.  This was due to wells in the ASH field producing a higher proportion of water to oil ("water-cut"). The ASH-2 well increased water-cut at a faster rate than the other two wells reducing production from the ASH field. The JV partners initially performed a number of operations to investigate options for controlling the water-cut and stabilising production. The wells remain under continuous observation and since the end of August water-cut from the ASH wells has stabilised.

United will continue to work closely with the operator to ensure that production from the field is optimised. The other six fields on the Abu Sennan licence are entirely unaffected by this and are producing in line with our expectations. Since the transaction to acquire the Egyptian assets completed in February 2020 the JV partners have demonstrated potential from Abu Sennan by drilling five successful wells to date and increasing production.  We are working with our JV partners to maximise value from the prospects and leads in the Abu Sennan licence and recently met with the operator to discuss the long-term drilling programme which is expected to start with four wells in 2022. The JV partners are aligned on realising the full potential of the Abu Sennan licence which has the potential to deliver large reserves, production and exploration upside.

Our goal is to utilise our relationships and influence as a JV partner and our role in the Joint Operating companies to be a responsible and positive presence in the areas in which we operate. We will continue to add value for stakeholders including host countries, local communities, employees, contractors and shareholders.

Safety will always be of the highest priority within the business and, I am pleased to report that during the period our joint operations have achieved an excellent record of safety in Egypt with zero Lost time incidents, Medical Treatment Injury, Restricted Work Injury, Spills, fires or environmental incidents. We will work with our JV partners to continue this success in Egypt.

The Walton Morant Licence in Jamaica is our high impact exploration asset which contains over 2.4 billion barrels unrisked mean prospective resources identified across the licence area, while the drill-ready, high-impact Colibri prospect alone contains mean prospective resources of 406 mmbbls . We are actively working to achieve the best path forward for this exciting high-impact asset We announced a formal farm-out process to bring in a partner(s) seeking to join us in unlocking the potential in the Walton Morant licence. We maintain regular contact with the Government of Jamaica and we look forward to further positive engagement to ensure the investment cycle has time to recover.

Over the last two years the balance sheet has grown substantially. We carried out a review of the portfolio and identified assets that were no longer part of our core focus.  As part of this portfolio optimisation, we recently announced the proposed divestments of our UK CNS and Italian assets. Capital raised from these divestments will be invested back into the business and allocated for future growth investment.

We continue to evaluate new ventures emerging across the industry. We have very strict investment criteria validated with the acquisition of the Abu Sennan licence. We intend to pursue opportunities if they are in the best interest of our shareholders and stakeholders and that add value to our high-quality portfolio.

The business is well placed to benefit from rising commodity prices but is also well hedged to protect against volatility. We are growing the business through organic growth funded from free cashflow and look to also seeking opportunities to grow the business through M&A.  

We have a business that has;

-       Low-cost and risk production, development and exploration interests

-       One of the of the most competitive low operating cost production bases

-       Vast potential for growth from our Egyptian assets and organic growth from operating cash flow

-       JV partner alignment on maximising value from Egyptian assets

-       A high impact, exploration asset in Jamaica

-       Strict capital allocation and proportional spend on production and exploration

-       Managed risk across the portfolio- a growing producing business with some exploration

-       Committed to partnering with our host communities and nations

-       Committed to operating to highest environmental and regulatory standards

-       Investing in sustainable production practices to reduce our environmental impact

-       An experienced Board and management team capable of identifying and executing new opportunities

-       Committed to ethical conduct following our  corporate governance framework 

Our strategy is to continue to grow our full cycle portfolio of low-risk production, development and exploration assets complemented by selected higher risk, low-cost and high impact exploration opportunities. We want to create a business that has sustainable growth and that creates value for all stakeholders by;

-       Creating and maximising  value from our Egypt assets

-       Portfolio optimisation - divesting non-core assets and reinvesting proceeds into growing the business

-       Growing sustainably both  organically and through M&A opportunities; M&A will focus on additional barrels and production

-       Funding these from growing our current production base and in turn balance sheet strength, from our current assets, and capital from divested assets. Increasing production gives further optionality on growing the business

For the remainder of 2021, we look forward to the test results of the ASX-1X well, spudding the Al Jahraa--13 development well and working on the completion of our divestments. We have recently appointed a new Head of Investor Relations and ESG to increase our focus on shareholder and stakeholder management. With restrictions easing we look forward to engaging with all our stakeholders face to face as government directives allow. I would also like to thank our shareholder and stakeholders for their continued support. Our team are energised and focussed to deliver value from our assets. The success of the company has been built as a result of a great deal of hard work and I would like to thank all our staff for their effort and contribution to our achievements this year.

Operational Review  

The first half of 2021 has been another strong six months in terms of operational performance. At Abu Sennan during the first half of 2021 three successful wells were drilled and record-high production levels of 2,730 boepd net (1H 2020: 1,975 boepd), were achieved.

There are seven fields in the Abu Sennan license. One of these fields, ASH, currently has three wells in production, and since the beginning of 2020 has performed exceptionally. As announced on the 6 September 2021, the water-cut increased on all three producing ASH wells, particularly on ASH-2, where it  increased at a faster rate than expected. The increase in water-cut had been accompanied by an associated drop in production from the ASH field and led us to revise the Group's full-year guidance to 2,100-2,300 boepd. The joint venture (JV) partners have performed a number of operations to investigate options for controlling the water-cut and stabilising production. Since the end of August, the ASH wells have been left to flow on a constrained choke and encouragingly, both the water-cut and the production from the wells has stabilised.

In Jamaica, it has been encouraging to see the positive impact of our continuing technical evaluation, and to launch a farm-down process on the back of the results of that work, which has received interest from a number of companies. With the current phase of the licence due to expire at the end of January 2022, we are actively working to achieve the best path forward for this exciting high-impact asset.

Egypt (22% working interest, non-operated)

Egypt Production

Production for 1H 2021 from the Abu Sennan licence net to the Group's working interest averaged 2,730 boepd. The Group's full year production guidance was subsequently revised to 2,100-2,300 boepd in early September.

The first half of the year saw three successful wells being drilled on the Abu Sennan licence, as well as a number of planned workovers. Given this activity, and the success that we have seen from the drilling, production numbers moved positively in the first half of the year. In Q2 we saw record production highs for the asset, with net production averaging 2,937 boepd for the quarter - an increase of 17% compared to Q1 - and continuing the upward trend in production we have seen since acquiring the asset. This led to  H1 2021 working interest average production of 2,730 boepd, of which c. 18% is gas.

Operational Activity Summary

Drilling re-commenced on the Abu Sennan licence at the beginning of 2021, with the ASH-3 development well. This was drilled into an area in the north of the ASH field, and after encountering over 27m of net pay in the targeted AEB reservoir, the well was tested and brought onstream at over 4,000 boepd gross (880 boepd net to United) in early March.

The contracted EDC-50 rig then moved to the north of the licence to drill the ASD-1X exploration target. This well targeted multiple reservoirs and after encountering 22m of net pay across four intervals (ARC, ARE, Lower Bahariya & Kharita), a commercial discovery was announced on 4 May, with gross rates of over 1,200 bopd achieved on test. Development lease approval and commencement of production occurred on 26 May, with the well averaging over 600 bopd (132 bopd net to United) to the end of June. The well was brought into production within two months from initial discovery.

The third well in the drilling programme was the Al Jahraa-8 development well, which spudded on the 2 May. This was a deviated well targeting multiple Abu Roash and Bahariya reservoirs in an undrained area of the Al Jahraa field. The results of this well were reported post-period (19 July) with preliminary results indicating it encountered over 40m of net oil pay across three different reservoir units - including over 30m of net pay in the Upper and Lower Bahariya reservoirs, significantly above pre-drill expectations. The well has now been completed in the Lower Bahariya, which on initial testing flowed at a maximum rate of 2,093 bopd and 3.63 mmscf/d (c. 2,819 boepd gross; 620 boepd net) on a 64/64" choke; and a rate of 1,189 bopd and 1.22 mmscf/d (c. 1,433 boepd gross; 315 boepd net) on a more constrained 26/64" choke. The well is now on production, and at the beginning of September was flowing at 977 boepd gross.

Given the success to date from the 2021 drilling campaign, the JV was encouraged to add an additional exploration well (ASX-1X) to the drilling schedule, which spud on the 14 August. This is located c. 7km to the north of the Al Jahraa field and is a similar structure to the nearby discovery that was made at ASD-1X. As announced on the 21 September the ASX-1X exploration well encountered at least 10m of net pay. Evaluation of the well data is continuing, and a comprehensive plan for testing and completing the well is now planned. If successful, this will be followed by an application to EGPC for a development lease.

Forward Plans

We are working with our JV partners to maximise value from the prospects and leads in the Abu Sennan licence and recently met with the operator to discuss the long-term drilling programme which is expected to start with four wells in 2022. The JV partners are aligned on realising the full potential of the Abu Sennan licence which has the potential to deliver large reserves,  production and exploration upside.

An additional development well, Al Jahraa-13, has been added to the 2021 drilling campaign. This follows on from the success that was achieved at Al Jahraa-8 and will target the Upper and Lower Bahariya reservoirs within the Al Jahraa field. We are already in discussions within the operator on longer-term plans to realise the significant potential of the Abu Sennan licence, resulting in an indicative four well 2022 drilling campaign. The potential being targeted lies both within the existing fields, and in the identified exploration prospects. In the existing fields, 2022 drilling will focus on development targets and candidates for water injection to boost recovery at Al Jahraa, ASH and ASD with the aim of maturing the 7 .6 mmboe of net WI 3P reserves. The first exploration target is currently planned to be the ASF-1X structure, located c. 15km to the south-west of the ASH Field, which will build on our knowledge from the ASH Field, and target multiple Abu Roash, Bahariya and AEB targets. We are also keen to drill additional exploration targets, with unrisked mid case resources of 5.7 mmboe net and possible unrisked upside of up to 12.7 mmboe net, clearly representing a substantial value opportunity.  

Jamaica (100% working interest)

The Jamaica asset is a high-impact frontier exploration licence. Our work on updating the regional source rock story, quantifying the basin-wide potential, and running economics based on an independent assessment of viable development options for the high-graded Colibri prospect and the costs associated with them was completed in Q1 2021. Following this, the formal farm-out campaign for the Walton Morant licence commenced in early April. The Walton Morant Licence in Jamaica contains over 2.4 billion barrels unrisked mean prospective resources identified across the licence area, while the drill-ready, high-impact Colibri prospect alone contains mean prospective resources of 406mmbbls. We are actively working to achieve the best path forward for this exciting high-impact asset.

Italy (20% working interest, non-operator)

In April the Italian Government granted Environmental approval for the development of the Selva natural gas field concession - a key milestone on the road to achieving first gas. Progress is continuing to be made on obtaining the required construction permits, and first gas is expected from the field in 2022.

In August (post-period) a Sales and Purchase Agreement (SPA), was signed with a subsidiary of Prospex Energy PLC, for the sale of 100% of the share capital of UOG Italia Srl for a consideration of €2.165 million in cash (c $2.54m). Under the terms of the SPA,  the Company received an immediate deposit payment of €108,235. The remainder of the  consideration is payable on completion which is progressing .

UK

CNS (100% working interests)

In the UK Central North Sea, H1 2021 saw progress made on the work programmes associated with the licences: new seismic data was purchased and interpreted, with the initial mapping providing positive indications on the existing Maria, Brochel and Maol discoveries, and on the identified prospectivity, including Zeta, Dunvegan, and the deeper Jurassic targets.

Post-period end, in August, a binding SPA was signed to sell United's UK Central North Sea Licences P2480 and P2519 to Quattro Energy Limited for a headline consideration of up to £3.2 million (c. US $4.4 million). Completion is expected during Q4-2021.

Waddock Cross (26.25% working interest, non-operator)

The operator has engaged with a third party who are currently working on finalising the well design, facilities specification, and commercial modelling for a possible phased redevelopment of the shut-in Waddock Cross oil field with the Operator indicating a Final Investment Decision is expected to be made by the end of 2021.

Crown

On 12 December  2019, Anasuria Hibiscus ("AHUK") completed the acquisition of 100% interest in the named blocks from United and Swift Exploration" Limited (Swift Exploration") for a total cash consideration of up to US$5 million, to be paid based on a series of planning milestones and production targets.

A payment of US$1m was received from Anasuria Hibiscus on completion in December 2019.  A payment of US$3m (US$2.85m to United) is due to be paid within 7 days of the actual date of approval of the Marigold Field Development Plan ("FDP"), which includes the development of the Crown discovery as part of the overall Marigold development ("FDP Approval"), by the UK's Oil and Gas Authority ("OGA"). 

In January the OGA  requested that the AHUK seek to work with Ithaca Energy Limited , holder of the P2158 Block 15/18b, which is adjacent to the Marigold field and contains  the Yeoman  discovery and propose a common development solution for the resources found in both licence Ithaca and AHUK have agreed to jointly develop the reserves in Marigold.

The joint development concept decision is expected later this year and update on the payment timing will be provided once that decision has been made.

Finance strategy

Our financial strategy underpins the business strategy of the Group and is based upon the investment and safeguarding of capital to optimally manage our assets and enhance shareholder value. The core areas of the financial strategy are maintaining a balanced capital structure, disciplined capital allocation, portfolio management delivery and managing commodity price risk all leading in turn to delivering free cashflow.

Highlights

  1H 2021  1H 2020 
Net Average Production volumes (boepd)  2,730 boepd  1,975 boepd 
Oil Price Realised ($/bbl)  $63.10  $28.26 
Revenue(1)  $10.2m  $2.4m(2) 
Gross Profit  $5.7m  $0.3m 
Profit after Tax  $2.0m  $1.8m 
Cash from Operating Activities  $6.3m  $0.6m 
Capital Expenditure  $4.3m  $2.0m 
Debt Repayments  $2.4m  $0.7m (2) 
Cash Operating Cost per boe  $4.61  $4.36 

(1) 22% working interest stated net of government take

(2) From the completion of Rockhopper Egypt acquisition to period end, 28 February 2020 to 30 June 2020

Group Production and Commodity Prices

Total group working interest production for H1-2021 four months was 2,730 boepd. The average realised oil price was $63.10/bbl and the average realised gas price was $2.61/mmbtu.

Group Operating costs, Depreciation, Depletion & Amortisation ("DD&A"), and expenses

Cash Operating costs amounted to $4.61/boe.

DD&A charges on production and development assets amounted to $2.2m

Derivative Financial Instrument

The Company's pre-payment facility with BP provides downside price protection by effectively hedging 6,609 bbls of oil per month from March 2020 through to September 2022. During 2020 three months volumes were deferred until the final year of the facility. During the period to 30 June 2021, a fair value loss has been recognised as a result of oil price movements in the period.

Exploration Costs

There were no exploration costs written off in the period;  $237k has been spent assessing New Venture activities and has been expensed as these costs are pre-licence.

Impairment

There were no impairment triggers in the period

Taxation

In Egypt under the terms of the Production Sharing Agreement all corporate taxes are paid by EGPC who receive production entitlements from the licence.

Capital Expenditure

Total capital expenditure incurred in the period (including internal costs) on continuing operations amounted to $4.3m. Of this total $2.6m was spent on a three  well drilling campaign in Egypt, namely the ASH 3 and AJ 8 development wells and the ASD 1X  exploration well. An additional $1.1m was invested in other capital projects including workovers and facilities upgrades. Elsewhere, $0.6m was invested in capital projects across the remainder of the portfolio on our Jamaican , Italian and North Sea exploration assets.

CONSOLIDATED INCOME STATEMENT

Period ended 30 June 2021

    Note   Period ended 30 June 2021     Period ended 30 June 2020     Year ended 31 December 2020 
      Unaudited    Unaudited    Audited 
         
               
Revenue      10,213,771    2,435,922    9,053,657 
Cost of sales       5  (4,538,696)    (2,170,599)    (6,505,011) 
  Gross profit        5,675,075      265,323      2,548,646 
Exploration and New Venture write offs      (236,832)    (26,981)    (37,161) 
Other administrative expenses      (1,088,023)    (578,107)    (1,707,168) 
Total administrative expenses      (1,324,854)    (605,088)    (1,744,329) 
               
Operating profit / (loss)      4,350,220    (339,765)    804,317 
               
Fair value (loss) / gain on derivative financial instruments      (1,540,451)    2,821,715    1,572,706 
Interest expense      (787,987)    (709,976)    (1,580,842) 
Profit before taxation      2,021,782    1,771,974    796,181 
Taxation          56,480 
               
Profit for the financial period attributable to the Company's equity shareholders      2,021,782    1,771,974    852,661 
               
               
Earnings per share from continuing operations expressed in cents per share:               
Basic    0.32    0.33    0.15 
Diluted    0.30    0.33    0.14 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

         Period ended 30 June 2021     Period ended 30 June 2020     Year ended 31 December 2020 
        Unaudited    Unaudited    Audited 
           
                 
Profit for the financial period        2,021,782    1,771,974    852,661 
Foreign exchange movements        32,513    (279,997)    (337,713) 
                 
Profit for the financial period attributable to the Company's equity shareholders        2,054,295    1,491,977    514,948 
                 

CONSOLIDATED BALANCE SHEET

At 30 JUNE 2021

  Note    30 June 2021    30 June 2020    31 December 2020 
      Unaudited    Unaudited    Audited 
         
NON-CURRENT ASSETS               
Intangible Assets    7,424,024    7,437,988    7,891,743 
Property, Plant and Equipment    16,065,215    12,939,128    13,607,167 
      23,489,239    20,377,116    21,498,910 
CURRENT ASSETS               
Inventory      111,093    50,879    35,729 
Trade and other receivables    7,484,842    5,253,482    5,454,307 
Cash and cash equivalents      2,036,635    1,193,576    2,188,902 
               
      9,632,570    6,497,397    7,678,938 
               
TOTAL ASSETS      33,121,809    26,875,053    29,177,848 
               
               
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY               
Share capital  10    8,416,182    8,059,774    8,138,619 
Share premium  10    16,215,360    15,989,999    16,047,975 
Share-based payment reserve      2,101,983    1,771,218    1,922,090 
Merger reserve      (2,697,357)    (2,697,357)    (2,697,357) 
Translation reserve      (316,427)    (291,224)    (348,940) 
Retained earnings      (1,380,955)    (2,483,424)    (3,402,737) 
               
TOTAL EQUITY      22,338,786    20,348,986    19,659,650 
               
CURRENT LIABILITIES               
Trade and other payables      4,512,347    1,391,546    2,996,115 
Derivative financial instruments      1,942,972    84,504    992,681 
Borrowings  11    3,075,515    1,580,138    2,133,655 
Current tax payable      138,084    176,903    135,388 
Lease liabilities      21,358    47,541    94,050 
      9,690,276    3,280,632    6,351,889 
NON-CURRENT LIABILITIES               
Borrowings        11    661,741    2,904,699    2,422,146 
Derivative financial instruments      336,605    340,736    647,376 
Lease liabilities      94,401      96,787 
      1,092,747    3,245,435    3,166,309 
               
TOTAL LIABILITIES      10,783,023    6,526,067    9,518,198 
               
TOTAL EQUITY AND LIABILITIES      33,121,809    26,875,053    29,177,848 
               

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Period ended 30 June 2021

    Share capital    Share premium  Share- based payment reserve  Retained
earnings 
Translation reserve  Merger reserve    Total equity 
 
For the period ended 30 June 2021               
Balance at 1 January 2021  8,138,619  16,047,975  1,922,090  (3,402,737)  (348,940)  (2,697,357)  19,659,650 
Profit for the period  2,021,782  2,021,782 
Foreign exchange movements  32,513  32,513 
Total comprehensive income for the period  2,021,782  32,513  2,054,295 
Contributions by and distributions to owners:               
Share-based payments  179,893  179,893 
Shares issued  277,563  167,385  444,948 
               
Total contributions by and distributions to owners  277,563  167,385  179,893  624,841 
Balance at 30 June 2021 (Unaudited)  8,416,182  16,215,360  2,101,983  (1,380,955)  (316,427)  (2,697,357)  22,338,786 
               
For the period ended 30 June 2020               
Balance at 1 January 2020  4,564,787  9,912,988  1,591,808  (4,255,398)  (11,227)  (2,697,357)  9,105,601 
Profit for the period  1,771,974  1,771,974 
Foreign exchange movements  (279,997)  (279,997) 
Total comprehensive income for the period  1,771,974  (279,997)  1,491,977 
Contributions by and distributions to owners:               
Share-based payments  118,249  118,249 
Shares issued  3,494,987  6,521,815  10,016,802 
Share issue expense  (444,804)  61,161  (383,643) 
Total contributions by and distributions to owners  3,494,987  6,077,011  179,410  9,751,408 
Balance at 30 June 2020 (Unaudited)  8,059,774  15,989,999  1,771,218  (2,483,424)  (291,224)  (2,697,357)  20,348,986 
               
For the period ended 31 December 2020               
Balance at 1 January 2020  4,564,787  9,912,988  1,591,808  (4,255,398)  (11,227)  (2,697,357)  9,105,601 
Profit for the period  852,661  852,661 
Foreign exchange movements  (337,713)  (337,713) 
Total comprehensive income for the year  852,661  (337,713)  514,948 
Contributions by and distributions to owners:               
Shares issued  3,573,832  6,640,081  10,213,913 
Share issue expenses  (505,094)  62,516  (442,578) 
Share-based payments  276,766  267,766 
               
Balance at 31 December 2020 (Audited)  8,138,619  16,047,975  1,922,090  (3,402,737)  (348,940)  (2,697,357)  19,659,650 
               

CONSOLIDATED STATEMENT OF CASHFLOWS

Period ended 30 June 2021

     Period ended 30 June 2021     Period ended 30 June 2020     Year ended 31 December 2020 
    Unaudited    Unaudited    Audited 
       
Cash flows from operating activities             
Profit before taxation    2,021,782    1,771,974    796,181 
Adjustments for:             
Share-based payments    179,893    118,249    267,766 
Amortisation    2,029      3,862 
Depreciation    2,308,395    1,113,723    2,628,990 
Fair value loss/(gain) on derivatives    1,540,451    (2,821,715)    (1,572,706) 
Impairment of intangible assets        37,161 
Gain on disposal of intangible assets      44,241    31,307 
Loss on disposal of property, plant and equipment    (25,683)     
Interest expense    787,987    709,976    1,580,842 
Foreign exchange movements    127,135    (105,156)    (189,918) 
             
    6,941,989    831,292    3,625,803 
             
(Increase) / decrease in inventories    (75,364)    49,283    64,433 
(Increase) / decrease in trade and other receivables    (2,030,535)    2,730,890    2,530,065 
Increase / (decrease) in trade and other payables    1,516,232    (2,978,581)    (1,390,182) 
             
Net cash from operating activities     6,352,322    632,884    4,830,119 
             
Cash flows from investing activities             
Cash outflows on business combination      (11,200,000)    (11,200,000) 
Cash acquired in business combination      46,543    46,543 
Purchase of property, plant & equipment    (3,093,236)    (1,392,505)    (2,816,460) 
Payments for intangible exploration assets    (1,257,093)    (654,941)    (1,457,307) 
             
Net cash used in investing activities    (4,350,329)    (13,200,903)    (15,427,224) 
             
Cash flows from financing activities             
Issue of ordinary shares (net of expenses)    444,949    5,712,315    5,835,834 
Proceeds on issue of swap financing arrangement      7,760,288    7,760,288 
Repayments on swap financing arrangement    (2,292,540)    (789,233)    (1,666,116) 
Payments on oil price derivatives    (132,632)      (70,431) 
Capital payments on lease    (22,159)    (34,881)    (73,183) 
Interest paid on lease    (7,984)    (2,845)    (5,753) 
             
Net cash (used in) / from financing activities    (2,010,366)    12,645,644    11,780,639 
             
(Decrease) / Increase in cash and cash equivalents     (8,373)    77,625    1,183,534 
             
Cash and cash equivalents at beginning of period / year    2,188,902    1,275,537    1,275,537 
Effects of exchange rate movements    (143,894)    (159,586)    (270,169) 
             
Cash and cash equivalents at end of period / year    2,036,635    1,193,576    2,188,902 
             

Basic and diluted loss per share                                   

  Period ended 30 June 2021    Period ended 30 June 2020    Year ended 31 December 2020 
           
Profit for the period ($)  2,021,782    1,771,974    852,661 
Weighted average number of ordinary shares for the purposes of basic earnings per share(number)  630,039,328    531,981,886    578,248,726 
Dilutive shares  38,575,000      23,207,377 
Weighted average number of ordinary shares for the purposes of diluted earnings per share(number)  668,814,328    531,981,886    601,456,103 
Basic earnings per share from continuing operations (cents per share)  0.32    0.33    0.15 
Diluted earnings per share from continuing operations (cents per share)  0.30    0.33    0.14 

5. COST OF SALES

       
  30-Jun-21  30-Jun-20  31-Dec-20 
 
Production Operating costs  2,280,289  1,049,911  3,941,743 
Depreciation, depletion and amortisation  2,258,407  1,071,405  2,563,268 
Inventories  49,283 
  4,538,696  2,170,599  6,505,011 

6. INTANGIBLE ASSETS

    Exploration and Evaluation assets  Computer software  Total 
Cost         
At 31 December 2019    7,728,138  11,383  9,596,637 
Acquired in business combinations    3,181,362  3,181,362 
Additions    1,457,307  11,374  3,097,401 
Transfer to production assets    (2,538,981)  (2,538,981) 
Disposals    (31,307)  (31,307) 
Exchange movements       335,459  1,070  336,529 
         
At 31 December 2020    10,131,978  12,444  10,144,422 
Additions    1,257,093  1,257,093 
Transfer to production assets    (1,700,706)  (1,700,706) 
Exchange movements    (21,836)  (390)  (22,226) 
         
At 30 June 2021    9,666,527  12,056  9,678,583 
         
Depreciation         
At 31 December 2019    2,158,648  2,158,649 
Charge for the year    3,862  3,862 
Impairment    37,161  37,161 
Exchange movements    52,722  286  53,008 
At 31 December 2020    2,248,531  4,148  2,252,679 
Charge for the year    2,029  2,029 
Exchange movements    (149)  (149) 
  At 30 June 2021    2,248,531  6,028  2,254,559 
         
Net book value         
At 31 December 2020    7,883,447  8,296  7,891,743 
         
At 30 June 2021    7,417,996  6,028  7,424,024 
         

At 30 June 2021, the Group's E&E carrying values of $7,417,996 related to our high impact exploration prospects in Jamaica, gas development Selva asset in Italy, and the UK North Sea and Wessex basin exploration/development work programmes. All final exploration assets held in Abu Sennan were transferred to Oil and Gas assets upon the successful testing and bringing onstream of the ASD 1X Well in June 2021.

Our Italian development at the Selva field continued to make progress in 2021. Formal technical environmental approval from the Italian Environmental Ministry was granted in January 2021 and preliminary work has commenced on the development programme preparing for first gas. At the Balance Sheet date, $2,667,444 had been capitalised for this asset. Post Balance Sheet date the company has announced the conditional sale of 100% of the share capital of UOG Italia Srl for EUR2.165m (c $2.54m) to Prospex Energy plc.

In August 2020, the Group was assigned Tullow Jamaica Ltd.'s 80% equity in the Walton Morant licence meaning the company now operates and has a 100% equity interest in the licence. The initial exploration period was extended until 31 January 2022 when an initial drill-or-drop decision is required. The Group continues with a work programme to further de-risk the high-graded Colibri prospect and perform detailed interpretation of the numerous follow-on targets. The Company is actively working to achieve the best path forward for this exciting high-impact asset in challenging market conditions As at 30 June 2021 the Group is carrying $3,901,877 for Jamaica in Intangible assets.

In the UK North Sea, post balance sheet date (Note 12) the company announced the proposed sale of its UK Central North Sea Licences P2480 and P2519 to Quattro Energy Limited for a Consideration of up to £3.2m (c $4.4m), split between an initial payment of £2m (c $2.7m) at completion of the transaction, and a further £1.2m (c $1.7m) on Field Development Plan approval. Costs to date on the balance sheet of $453,324 are capitalised and will be allocated against disposal proceeds for recognition of profit on disposal for the full year 2021 results.

The work programme continues on the Waddock Cross development with current capitalised costs at half year of $625,553.

Management reviews the intangible exploration assets for indications of impairment at each balance sheet date based on IFRS 6 criteria. Commercial reserves have not yet been established and the evaluation and exploration work is ongoing. The Directors do not consider that any indications of impairment have arisen and accordingly the assets continue to be carried at cost.

7. PROPERTY, PLANT AND EQUIPMENT

  Production assets  Computer equipment  Fixtures and fittings  Right of use asset  Total 
Cost           
At 31 December 2019  8,589  114,775  123,364 
Acquired in business combinations  10,630,944  61,127  10,692,071 
Transfer from E&E assets  2,538,981  2,538,981 
Additions  2,806,734  6,755  2,971  204,763  3,021,223 
Disposals  (186,700)  (186,700) 
Exchange movements  (1,638)  10,799  9,161 
           
At 31 December 2020  15,976,659  13,706  2,971  204,764  16,198,100 
           
Transfer from E&E assets  1,700,706  1,700,706 
Additions  3,093,236  3,093,236 
Disposals  (43,862)  (43,862) 
Exchange movements  (428)  (93)  (521) 
           
At 30 June 2021  20,770,602  13,278  2,879  160,901  20,947,659 
           
Depreciation           
At 31 December 2019  5,812  90,830  96,642 
Charge for the year  2,563,268  3,169  231  62,322  2,628,990 
Disposals  (144,382)  (144,382) 
Exchange movements  (1,665)  17  11,331  9,683 
At 31 December 2020  2,563,268  7,316  248  20,101  2,590,933 
Charge for the year  2,258,407  1,960  484  47,543  2,308,395 
Disposals  (16,625)  (16,625) 
Exchange movements  (247)  (12)  (259) 
  At 30 June 2021  4,821,675  9,029  720  51,019  4,882,444 
           
Net book value           
At 31 December 2020  13,413,391  6,390  2,723  184,663  13,607,167 
           
At 30 June 2021  15,948,926  4,249  2,159  109,881  16,065,215 
           

All producing assets of $15,948,926 at the Balance Sheet date relate to operations in the Abu Sennan concession in the Western Desert of Egypt and include in 2021 the costs of both the ASH3 development well, Al Jahraa 8 development well and the successful ASD 1X exploration well drilled in the first half of 2021.

The costs of the ASH-3 development well net to United of $824,981, capital costs for the Al Jahraa 8 development well of $913,231 and $1,700,706 ASD 1X exploration well costs along with ongoing workovers and facilities costs, net of DD&A movements of $2,258,407 make up the movement of Oil and Gas assets of $2,535,535 in the first half of 2021.

Management reviews the tangible assets for indications of impairment at each balance sheet date based on IFRS 6 criteria. With the continued successful drilling results achieved in both the ASH-3 and ASD 1X wells in the first half of 2021, and gross 2P Reserves increasing to 15MMboe at the 2020 year end Independent CPR review, combined with the steady increase in commodity prices since the start of 2021, the company believe no impairment indicators are present that would reduce the carrying value of $15.9m of PP&E at the balance sheet date.

9. TRADE AND OTHER RECEIVABLES

  30 June 2021    30 June 2020    31 December 2020 
     
Trade debtors  234,629    2,077,940   
Prepayments and deposit  7,735      7,984 
Accrued income  4,257,664      2,518,794 
Other tax receivables  134,815    325,542    77,529 
Crown disposal proceeds due  2,850,000    2,850,000    2,850,000 
  7,484,842    5,253,482    5,454,307 

10. SHARE CAPITAL & SHARE PREMIUM

Allotted, issued, and fully paid:

      30 June 2021 
      Share capital  Share premium 
    No 
Ordinary shares of £0.01 each         
Opening balance    625,153,969  8,138,619  16,047,975 
         
Allotments:         
17 May Issue for cash    19,650,000  277,563  167,385 
         
At 30 June 2021    644,803,969  8,416,182  16,215,360 
         
       
       
       
      30 June 2020 
      Share capital  Share premium 
    No 
Ordinary shares of £0.01 each         
Opening balance    345,613,985  4,564,787  9,912,988 
         
Allotments:         
28 Feb issue for business combination    114,503,817  1,463,002  2,457,843 
28 Feb issue for cash    159,036,167  2,031,985  4,063,972 
Share issue costs    (444,804) 
         
At 30 June 2020    619,153,969  8,059,774  15,989,998 
         
         
      31 December 2020 
      Share capital  Share premium 
    No 
Ordinary shares of £0.01 each         
Opening balance    345,613,985  4,564,787  9,912,988 
         
Allotments:         
28 Feb issue for business combination    114,503,817  1,463,002  2,457,843 
28 Feb issue for cash    159,036,167  2,031,985  4,063,972 
Shares issued for cash    6,000,000  78,843  118,266 
Share issue costs    (505,094) 
         
At 31 December 2020    625,153,969  8,138,619  16,047,975 
         
         

11. BORROWINGS AND DERIVATIVES

Summary of borrowing arrangements:

In February 2020, the Group entered into a prepaid commodity swap arrangement for $8 million to part-finance the acquisition of Rockhopper Egypt Pty Ltd. The funds will be repaid through 30 monthly repayments which are structured as a fixed notional amount with variations based on movements in oil prices. Due to the price structure, the arrangement includes an embedded derivative (a forward contract). For financial reporting purposes, this must be separately accounted for at fair value at each balance sheet date. The balance of proceeds that did not relate to the derivative were treated as the opening carrying amount of the loan which will then be measured at amortised cost over its life, with finance charges recognised to give an even return over the loan life and repayments of capital allocated appropriately.

As at 30 June 2021, a fair value loss on derivative financial instruments has been recognised as a result of oil price movements in the period

12. EVENTS AFTER THE BALANCE SHEET DATE

1.     On 28 July 2021, the Group announced the proposed sale of its UK Central North Sea Licences P2480 and P2519 to Quattro Energy Limited for a Consideration of up to £3.2m (c $4.4m) , split between an initial payment of £2m at completion of the transaction, and a further £1.2m on Field Development Plan approval. This deal, subject to the completion of due diligence and OGA approval is expected to complete by 30 September 2021.

2.     On 2 August 2021 the Group announced the successful testing of AJ 8 Development well, Abu Sennan in the Egypt Western Desert. Preliminary test results from the Lower Bahariya reservoir indicate maximum flow rates if 2,093 bopd and 3.63mmscf/d (c. 620 boepd net to United) on a 64/64'' choke, and a rate of 1,189 bopd and 1.22 mmscf/d (315 boepd net) on a more constrained 26/64 '' choke.

These headline test results exceeded pre-drill expectations and the well came onstream within days of this announcement.

3.     On 10 August 2021, the Group agreed the conditional Sale of 100% of the share capital of UOG Italia Srl for EUR2.165m (c.$2.54m) to Prospex Energy plc. under the terms of the deal United received €108,235 on the signing of the SPA on 10 August, with the remainder of consideration payable on completion. This sale is a small premium on the assets held in UOG Italia at 31 December 2020 and removes any further development expenditure associated with the Selva development. United held a 20% interest in the Podere Gallina licence. The sale is conditional upon the approval of the Italian authorities to the change in control of UOG Italia Srl, and also upon Prospex completing a fundraising process. The transaction is expected to complete in late 2021.

4.     On 21 September 2021 the Group announced the successful testing of the ASX 1X exploration well, Abu Sennan in the Egypt Western Desert. The well encountered at least 10m net pay in a number of oil-bearing reservoir intervals, including the primary reservoir targets of the Abu Roash Formation. The well came in ahead of schedule and under-budget, and will now be tested , and if successful, will be followed by an application to the Egyptian General Petroleum Company (EGPC) for a development lease.

13. COPIES OF INTERIM REPORT

Copies of the interim report are available to the public free of charge from the Company at United Oil & Gas Plc, 200 Strand, London, WC2R 1DJ during normal office hours, Saturdays and Sundays excepted, for 14 days from today and are available on the Company's website at .  

Cash operating costs are defined as cost of sales less depreciation, depletion and amortisation, and movements in inventories. The cash operating costs are then divided by barrels of oil equivalent produced to demonstrate the cash cost of producing oil and gas from the Group's producing assets.

         Period ended 30 June 2021   Period ended 30 June 2020   Year ended 31 December 2020 
             
       
             
Cost of Sales      4,538,696  2,170,599              6,505,011    
             
Less:             
             
Depreciation, depletion and amortisation  (2,258,407)  (1,071,405)  (2,563,268)              
             
Inventories                     (49,283)     (64,433)               
             
Cash Operating costs    2,280,289            1,049,911    3,877,310  
             
Production (BOEPD)    2,730                1,975                   2,195    
             
Cash Operating cost per BOE ($)  4.61                 4.36                    5.77    
             
             
       
Source: EvaluateEnergy® ©2022 EvaluateEnergy Ltd