REG - United Oil & Gas PLC - 2023 Full Year Results and Notice of AGM
25/06/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240625:nRSY6818Ta&default-theme=true
RNS Number : 6818T United Oil & Gas PLC 25 June 2024
United Oil & Gas PLC / Index: AIM / Epic: UOG / Sector: Oil & Gas
25 June 2024
United Oil and Gas plc
("United" or "the Company")
Final audited results for the year ended 31 December 2023 and Notice of AGM
United Oil & Gas Plc (AIM: "UOG"), the oil and gas company with a high
impact exploration asset in Jamaica and a development asset in the UK is
pleased to announce its audited results for the year ended 31 December 2023.
Brian Larkin, CEO, commented:
"2023 was a transitional year for United, starting with the conditional sale
of Quattro in January 2023 which ultimately was terminated in November 2023
due to the inability of Quattro to raise the funds to finalise the deal and
the licence expiring at the end of November 2023.
Egypt delivered steady production throughout the year with several wells
successfully drilled and brought into production. We maintained the record of
zero LTI's, TRIR's and only a minor environmental incident.
Due to the declining economic situation in Egypt and the outbreak war in Gaza
and the ongoing issues in repatriating USD dollars, the company made the
strategic decision to divest from Egypt in late 2023. The company was in
advanced discussions with the operator regarding the potential sale of our 22%
interest in the Abu Sennan concession. However, the discussions were aborted
with the operator following legal advice, notwithstanding attempts to agree a
mutual acceptable sale and purchase agreement. In January 2024, we received a
default notice for unpaid cashcall of $3.8m from the operator which we did not
remedy. This has started a process which will lead to the Company withdrawing
from the Abu Sennan Concession.
As we move into 2024, the company was granted a two-year extension to the
Jamaican licence which extends it out to 31 January 2026. We appointed a
Jamaican country manager in February 2024 to support the current work
programme, further strengthening our team focused on Jamaica, Iman Hill was
appointed as a consultant in April 2024 to support the progress of the
Jamaican project and particularly the farmout of the licence.
The successful £1 million equity placing will allow the United to move with
the farmout programme for Jamaica and advance the work programme.
At the start of April 2024, we were granted a five-year extension to the
Waddock Cross licence in which we hold 26.25% interest, which allows us to
move towards the preparation of drilling a well during 2025.
United is well placed to capitalise on emerging opportunities within the oil
and gas market and advance our 2024 work programme aim at delivering long term
value to our shareholders aligned with securing a farm out partner in Jamaica
and potential acquisition of growth assets."
Operational summary
· Group full-year 2023 production averaged 1,015 boepd net in line
with guidance
· 2023 Egypt work programme completed, consisting of two
development wells, two exploration wells, and several workovers
· Safety and the environment: Zero lost time incident frequency
rate. A minor environmental spills, no restricted work incidents or medical
treatment incidents
· In Jamaica, the completion of additional technical studies that
were agreed as part of the licence extension have provided additional positive
support to the farm-out process
· Post year end, we received a default notice from the operator for
unpaid cash call of $3.8m, which was not remedied and we are in the process of
withdrawing from the concession.
Financial summary
· Group revenue (discontinued operations) for full year 2023 was
$11.6m((1)) (2022 : $15.8m)
· The average realised oil price per barrel from Egypt achieved was
approx. $81.38/bbl (2022 : $96.10/bbl)
· Gross profit (discontinued operations) $6.2m (2022: $12.9m)
· Loss after tax ($20.4m) (2022: Profit $2.3m)
· Group Cash balances as at 31 December 2023 were $2.0m with Net
cash $0.8m (2022 Cash balances $1.4m : Net Debt $1.5m)
· Cash capital expenditure was $6.2m (2022 : $8.6m)
· Receivables of $2m (2022 : $4.4m) ($50k was received in January
2024 and $1m in April 2024)
((1))22% working interest net of Government Take
Corporate summary
· Resignation of Jonathan Leather as a Director of the Company
effective 31 August 2023
· Termination of Quattro sale process, and hand back of Maria
Licence to North Sea Transition Authority ('NSTA') November 2023
· Resignation of Peter Dunne from the Company on 31 December 2023
and from the Board and Company Secretary effective 15 December 2023
· Simon Brett appointed as Interim Chief Financial Officer November
2023 and Company Secretary effective 15 December 2023
· Two year licence extension for Walton Morant from the Jamaican
Ministry of Science, Energy, Telecommunications and Transport ('MSETT')
through to 2026.
· £1m equity raise in March 2024
· Appointment of Iman Hill as consultant for Jamaica & five
year licence extension secured for Waddock Cross , onshore UK April 2024
· Settlement agreement terms reached with our Debt provider in May
2024
· The Company initiated a full review of its G&A expenditure in
late 2023 and has commenced a programme to reduce these costs in 2024 compared
to 2023
Outlook
· Farm-out campaign for the Walton Morant licence, Jamaica,
continues to accelerate with the appointment of Iman Hill
· The work programme on Jamaica is being advance with the
appointment of the Jamaican Country Manager
· Finalisation of withdrawal from the Abu Sennan Concession
· Continued evaluation of new opportunities in the Greater
Mediterranean area, United Kingdom and North and West Africa regions to grow
the business in line with the strategy
Notice of Annual General Meeting ("AGM")
The Company also announces that its AGM, at which shareholders will have the
opportunity to consider the Serious Loss of Capital under section 656 of the
Companies Act 2006, will be held at the offices of Laytons ETL, Yarnwicke,
1(st) Floor, 119-121 Cannon Street, London, EC4N 5AT at 11.00 a.m. on 14
August 2024
The Annual Report & Accounts the year ended 31 December 2023, Notice of
AGM, and a Form of Proxy will be posted to shareholders and shortly be
available on the Company's website at
https://www.uogplc.com/investors/reports-cpr/
ENDS
This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the
Market Abuse (Amendment) (EU Exit) regulations (SI 2019/310).
Enquiries
United Oil & Gas Plc (Company)
Brian Larkin, CEO brian.larkin@uogplc.com (mailto:brian.larkin@uogplc.com)
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish | Felicity Geidt | Asia Szusciak +44 (0) 20 7628 3396
Shard Capital Limited (Joint Broker) +44 (0) 207 186 9900
Damon Heath | Isabella Pierre
Tennyson Securities (Joint Broker)
Peter Krens +44 (0) 020 7186 9030
Optiva Securities Limited (Joint Broker)
Christian Dennis +44 (0) 20 3137 1902
Camarco (Financial PR)
Andrew Turner | Emily Hall |Sam Morris +44 (0) 20 3757 4980
("Beaumont Cornish") is the Company's Nominated Adviser and is authorised
and regulated by the FCA. Beaumont Cornish's responsibilities as the Company's
Nominated Adviser, including a responsibility to advise and guide the Company
on its responsibilities under the AIM Rules for Companies and AIM Rules for
Nominated Advisers, are owed solely to the London Stock Exchange. Beaumont
Cornish is not acting for and will not be responsible to any other persons for
providing protections afforded to customers of Beaumont Cornish nor for
advising them in relation to the proposed arrangements described in this
announcement or any matter referred to in it.
Notes to Editors
United Oil & Gas is an oil and gas company with a development asset in
the UK and a high impact exploration licence in Jamaica.
The business is led by an experienced management team with a strong track
record of growing full cycle businesses, partnered with established industry
players and is well positioned to deliver future growth through portfolio
optimisation and targeted acquisitions.
United Oil & Gas is listed on the AIM market of the London Stock
Exchange. For further information on United Oil and Gas please
visit www.uogplc.com (http://www.uogplc.com)
CHAIR'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Dear Shareholders,
Introduction
As we reported in September 2023 when announcing our Half-year results, the
year started positively for the company. We made progress across our portfolio
and evaluated new venture opportunities. We continued our successful drilling
campaign in Egypt, with an impressive health and safety record, and we
continued to receive a small portion of our receivables in USD despite a
challenging macroeconomic environment. Discussions with potential farm-in
partners for our Jamaica exploration asset were progressing well and the
outlook for a successful sale of our Maria asset to Quattro looked favourable.
The second half of 2023, however saw the emergence of major headwinds for the
company. The macroeconomic environment in Egypt worsened considerably, partly
from the knock-on effects of the war in Gaza, leading to issues with receiving
payments in USD. Although we were paid in EGP, substantial foreign exchange
costs were incurred when repatriating these funds. In the UK, against a
backdrop of regulatory and fiscal challenges, Quattro were unable to raise
sufficient funds to complete the purchase of Maria and the licence expired in
November. In Jamaica the counterparty with whom we had been in farm out
discussions withdrew from the process.
The combination of these developments put the company's financial position
under considerable strain and eventually this led to the Operator of the
Egyptian assets issuing a default notice to the company which I comment on
later. Despite these uncertainties and challenges the management team
continued to engage in constructive discussions with the Government of Jamaica
and explored ways of maximising value from our Waddock Cross development asset
in the UK.
In the latter part of 2023, the Company made the decision to divest Egypt,
given the economic uncertainties in Egypt and the company's view of the future
capex requirements on the Abu Sennan assets, we engaged in discussions with
the operator to sell the asset.
Post year end
In January 2024, the operator proceeded to issue the company with a default
notice for unpaid cash calls of $3.8 million, which started a process which
will eventually lead to the company withdrawing from the Abu Sennan
concession. Discussions on an agreement had reached a very advanced stage but
the negotiations were aborted based on legal advice the company received,
notwithstanding attempts by the company to agree mutually acceptable terms.
In Jamaica, the considerable efforts of the management team bore fruit when in
January the company announced that terms of a two year extension to the
exploration period of the Walton Morant licence had been agreed, which
re-invigorated the company's efforts to find one or more suitable farm-in
partners. In the UK, Egdon Resources, the operator of Waddock Cross announced
in March that it had received a five year extension to the current phase of
the licence, and they were progressing plans to restart production - a very
promising development.
Against this backdrop, and in particular to provide funds to progress the
Jamaican work programme commitment, the company completed a fundraising of £1
million in March 2024. We thank our existing shareholders for supporting this
fundraising and we welcome our new shareholders to what we believe will be an
exciting new phase in the company's journey.
Strategy
Our immediate focus is progressing the farm-out of our Jamaican exploration
asset, while continuing to engage with Egdon on the plans for Waddock Cross.
At the same time however, we continue to receive and evaluate many
opportunities to grow our business and we keep an open mind on those
possibilities where value-adding for shareholders while not being distracted
from our current focus on Jamaica and the UK.
Board and governance
Jonathan Leather stepped down as COO and Executive Director in August 2023 but
continued to provide support to the company as a consultant until recently,
particularly in relation to Jamaica. Jonathan played a key role in the
Company's evolution and we wish him every success in the future.
Peter Dunne stepped down as CFO and Executive Director at the end of 2023 to
take up a prestigious CFO role in Ireland and we also wish him every success
in that endeavour. Peter made an outstanding contribution to the company and
we are very grateful to him for supporting a smooth transition to Simon Brett
who was appointed as Interim CFO in November. Simon brings to United a wealth
of sectoral and public market experience.
Dialogue with shareholders
Shareholders' views on the company, its strategy, and indeed all aspects of
our business and operations are very important to the Board and we welcome
every opportunity to engage. I can be reached via the Company Secretary at
info@uogplc.com (mailto:info@uogplc.com) .
Conclusion and outlook for 2024
2023 started well but proved to be a very challenging year for the company and
I would like to express my gratitude to our executives and all staff for their
loyalty and commitment in such times.
The early months of 2024 have seen some very positive changes with our
successful fundraising allowing us to progress the work commitment and
farm-out negotiations in Jamaica and more generally to pursue our strategy. We
look forward positively to the year ahead.
Graham Martin
Chair
Chief Executive Officer's Review
Well-positioned to capitalise on emerging opportunities
Operational Highlights
United has had a year of change, from taking the decision to terminate the
agreement with Quattro on the Maria discovery, the decision to divest out of
Egypt and a refocus on our core assets in Jamaica and the UK. During 2023, in
Egypt, our Abu Sennan license continued steady levels of production,
contributing robustly to the Company's overall performance, however continued
to be impacted by the Egyptian economic situation. Our exploration endeavours
in Jamaica have shown promising signs of potential, with ongoing activities
aimed at unlocking the considerable resource potential of this exciting
frontier. Onshore UK, our interest in the Waddock Cross licence is progressing
well, with the operator Egdon Resources forging ahead with a programme to
restart production from this oil field.
Maria Discovery
In early 2023, we reached an agreement with Quattro to conditionally sell the
Maria Discovery which was subject to raising the necessary finance. This
disposal was in line with our strategic decision to monetise non-core assets.
We granted a number of extensions to the timeline for Quattro to be able to
complete the sale. However, with the wider political headwinds and challenges
in the market, Quattro was unable to raise the necessary finance. The
conditional sale of Maria to Quattro was terminated as a result and the
subsequent exit from the licence, which was finalised during the year, was
executed in line with our disciplined approach to portfolio management and
capital allocation. It allowed our team to focus more on progressing talks
with parties interested in Jamaica, and the unfolding economic situation in
Egypt. Looking ahead, we are excited to get back to the roots of United, and
the strategy that propelled the company to success in its early years, which
is the cycle of acquiring assets, adding value and then monetising them for
more than our initial investment.
Waddock Cross - providing exposure to onshore UK
During the latter part of the year, we progressed talks with the operator of
Waddock Cross, Egdon Resources, to develop a programme for restarting
production. The previously completed reservoir modelling is encouraging,
estimating a significant Stock Tank Oil Initially in Place volume of 57
million barrels of oil, with potential for a new horizontal well that could
yield 500 -800 barrels of oil per day gross with approximately 1 million
barrels of gross oil recoverable when redeveloped. Following the announcement
in early 2024 of a licence extension of 5 years, we continue to progress plans
for the redevelopment of Waddock Cross, which has the potential to provide a
low-risk, high-margin opportunity for the Company as we continue to explore
future growth.
Abu Sennan - provided steady production throughout the year
Our operations at the Abu Sennan licence continued to deliver steady
production throughout the year, with a number of wells successfully drilled
and brought into production. Due to the declining economic situation within
the country, receivables continued to be an issue. This, coupled with the
ongoing economic unrest in Egypt, led to the Company making the strategic
decision to divest from Egypt in late 2023 and the company was in advanced
discussions with the operator regarding the potential sale of the 22% interest
in the concession. However, discussions were aborted with the operator
following legal advice, nothwithstanding attempts to agree a mutual acceptable
sale and purchase agreement. In January 2024, we received a default notice
from the operator for a cash call for the sum of $3.8 million which we did not
remedy. This started a process which will eventually lead to the Company
withdrawing from the Abu Sennan.
Operational Highlights
United has had a year of change, from taking the decision to terminate the
agreement with Quattro on the Maria discovery, the decision to divest out of
Egypt and a refocus on our core assets in Jamaica and the UK. During 2023, in
Egypt, our Abu Sennan license continued steady levels of production,
contributing robustly to the Company's overall performance, however continued
to be impacted by the Egyptian economic situation. Our exploration endeavours
in Jamaica have shown promising signs of potential, with ongoing activities
aimed at unlocking the considerable resource potential of this exciting
frontier. Onshore UK, our interest in the Waddock Cross licence is progressing
well, with the operator Egdon Resources forging ahead with a programme to
restart production from this oil field.
Maria Discovery
In early 2023, we reached an agreement with Quattro to conditionally sell the
Maria Discovery which was subject to raising the necessary finance. This
disposal was in line with our strategic decision to monetise non-core assets.
We granted a number of extensions to the timeline for Quattro to be able to
complete the sale. However, with the wider political headwinds and challenges
in the market, Quattro was unable to raise the necessary finance. The
conditional sale of Maria to Quattro was terminated as a result and the
subsequent exit from the licence, which was finalised during the year, was
executed in line with our disciplined approach to portfolio management and
capital allocation. It allowed our team to focus more on progressing talks
with parties interested in Jamaica, and the unfolding economic situation in
Egypt. Looking ahead, we are excited to get back to the roots of United, and
the strategy that propelled the company to success in its early years, which
is the cycle of acquiring assets, adding value and then monetising them for
more than our initial investment.
Waddock Cross - providing exposure to onshore UK
During the latter part of the year, we progressed talks with the operator of
Waddock Cross, Egdon Resources, to develop a programme for restarting
production. The previously completed reservoir modelling is encouraging,
estimating a significant Stock Tank Oil Initially in Place volume of 57
million barrels of oil, with potential for a new horizontal well that could
yield 500 -800 barrels of oil per day gross with approximately 1 million
barrels of gross oil recoverable when redeveloped. Following the announcement
in early 2024 of a licence extension of 5 years, we continue to progress plans
for the redevelopment of Waddock Cross, which has the potential to provide a
low-risk, high-margin opportunity for the Company as we continue to explore
future growth.
Abu Sennan - provided steady production throughout the year
Our operations at the Abu Sennan licence continued to deliver steady
production throughout the year, with a number of wells successfully drilled
and brought into production. Due to the declining economic situation within
the country, receivables continued to be an issue. This, coupled with the
ongoing economic unrest in Egypt, led to the Company making the strategic
decision to divest from Egypt in late 2023 and the company was in advanced
discussions with the operator regarding the potential sale of the 22% interest
in the concession. However, discussions were aborted with the operator
following legal advice, nothwithstanding attempts to agree a mutual acceptable
sale and purchase agreement. In January 2024, we received a default notice
from the operator for a cash call for the sum of $3.8 million which we did not
remedy. This started a process which will eventually lead to the Company
withdrawing from the Abu Sennan
Concession. We received a couple of payments from Egyptian General Petroleum
Corporation of USD $50 thousand in January 2024, and a further $1 million
during April 2024, which was allocated as part of the settlement agreement
terms which was reached with our debt provider. This strategic realignment
allows the Company to concentrate its resources and expertise on its licenses
in Jamaica and onshore UK, where significant opportunities for growth and
value creation exist.
Jamaica - a transformational asset with significant support from government
We remain confident that the Walton Morant licence has the potential to be
transformational for United. During 2023, our exploration activities
progressed steadily, with encouraging signs of hydrocarbon potential in this
emerging frontier, and a number of high-calibre organisations continuing to
show interest in partnering with us to bring this highly prospective asset
into production. Our ongoing efforts are focused on delineating and de-risking
the prospectivity, leveraging advanced technologies and geological insights to
unlock value in this promising basin. We remain aligned with the Jamaican
Government and committed to demonstrating the huge potential this area has for
significant levels of hydrocarbons. The 2024 work programme is well underway,
and we continue to work with stakeholders in Jamaica to ready the asset for
the entry of a farm out partner.
Financial Performance
2023 was a challenging operating environment, United results reflect the
impact of the writedown of the Egyptian asset of circa $20 million, resulting
in a loss for the year. We have maintained our disciplined cost management,
operational efficiencies, and strategic divestments enabled us to navigate
market uncertainties.
Outlook and Future Prospects
United is well-positioned to capitalise on emerging opportunities within the
oil and gas market and advance our 2024 work programme aimed at delivering
long-term value to our shareholders aligned with securing a farm out partner
in Jamaica and potential acquisition of growth assets.
Our asset portfolio, operational expertise, and commitment to sustainable
growth underpin our confidence in navigating the evolving energy landscape. As
we look forward, and to where we are now in 2024, we now have the opportunity
to focus on our core assets, and have the capacity to focus on growth through
the acquisition and development of prospective assets, underpinned by our
ownership of the highly prospective Walton Morant licence and our onshore UK
asset.
We are focused on executing our strategic priorities, driving operational
excellence, and maximizing shareholder returns. I would like to express my
sincere gratitude to our shareholders, employees, partners, and stakeholders
for their unwavering support and dedication, as we embark on the next phase of
our growth journey.
The Group and Company has sufficient resources for the twelve months from the
date of signing. However, the directors have considered various matters and
concluded that a material uncertainty exists which is discuss further in the
going concern disclosure.
Brian Larkin
Chief Executive Officer
REVIEW OF OPERATIONS
Zero LTI's, TRIR's incidents and a minor environmental incident
Introduction
2023 was an active year for United with drilling and workover activities in
Egypt, technical work programmes execution in Jamaica and the UK, licence
management, farmout and divestment activities in all three jurisdictions. It
was a year of transition with the company's Chief Operations Officer, Dr
Jonathan Leather, stepping back from board activity at the end of August 2023.
Dr Leather continued in a technical advisory capacity through the rest of the
year to assist the company's activities, particularly in Jamaica. United
continued its record of zero LTI's, TRIR's and one minor environmental
incidents. The company had an average daily net production of 1,015 boepd
during 2023, with all production coming from the company's interest in the Abu
Sennan Concession in Egypt.
Walton Morant Licence - (100% working interest)
The Walton Morant licence is a 22,400km2 offshore exploration block situated
to the south of the island of Jamaica. Although considered to be a frontier
exploration licence, it benefits from excellent data coverage, including
2,250km2 of 3D data, and this has helped define multiple plays, and material
prospectivity within the acreage. Over 7 billion barrels of mean/mid-case
recoverable unrisked potential prospective resources have been identified
within the Walton Morant Licence area. This estimation is based on United's
arithmetic sum of the mean/mid-case prospective resources for each prospect
and lead identified by United and previous operators. The area includes over
21 prospects and leads, each containing more than 100 million barrels of oil.
The largest of which potentially contains more than 1.1 billion barrels mid
case prospective resource recoverable.
There are 11 high grade prospects and leads included in the Gaffney Cline and
Associates Prospective Resources Report which contains over 2.4 billion
barrels of recoverable unrisked mean prospective resources potential,
containing several 3D-definedprospects and 2D leads.
Through 2023, United continued to execute the agreed 2022-2024 technical work
programme, which was completed within the timeframe of the extension period.
United continued to constructively engage with the Jamaican Ministry of
Science, Energy, Telecommunications and Transport (MSETT) throughout 2023. In
early 2024, United announced an agreement with MSETT to extend the Initial
Exploration Phase of the licence for a further 2 years in exchange for an
additional, cost-effective technical work programme. This consists of a piston
coring survey and seismic reprocessing and is aimed at further derisking the
prospectivity seen. This technical work is underway, and in early 2024 United
appointed a Country Manager to, amongst other tasks, assist in permitting and
operational planning ahead of the piston coring survey. The licence now runs
until January 2026 before a "drill-or drop" decision is required to move into
the Second Exploration Phase of the licence, a 2-year phase that carries a
well commitment.
United continues to run a farm-out campaign to attract partners to the Licence
and its undoubted potential. The farm-out campaign remains a key focus for
United as we seek to move this potentially transformational project forward.
Both Envoi Ltd and Energy Advisors Group (EAG) have continued to be engaged as
advisors on the farm-out process with a view to attracting potentially
interested parties to the opportunity. United are in discussions with a number
of companies who have expressed an interest in the opportunity, and United
remain confident of attracting a partner to the Licence.
UK Onshore Waddock Cross Oil Field (26.25% Non-Operated Working Interest)
United currently hold a 26.25% non-operated working interest in the Waddock
Cross oil field redevelopment project, which is located onshore southern UK in
Dorset. The field redevelopment is located ~12 km west of the Wareham
oilfield, and ~15km west of the giant Wytch Farm Oil Field, which is one of
the largest onshore oilfields in western Europe. The project is operated by
Egdon Resources who are highly experienced in operating oil and gas
exploration and production activities onshore UK.
Waddock Cross was the first asset United Oil & Gas acquired in 2016,
shortly after the company was set up, and is a key asset for the company.
Reservoir modelling work recently completed by the operator estimates that
Waddock Cross contains a significant Stock Tank Initial in Place oil volume of
57 mmbbls. A new well with a horizontal section in the reservoir could yield
commercial oil production of between 500 and 800 bopd and such a horizontal
well could ultimately result in the recovery of around 1 mmbbls of gross oil.
Initial well planning and production facilities design has been completed. In
April 2024, the partnership received a 5-year extension to the PL090 licence
which contains the Waddock Cross field from the North Sea Transition
Authority, which is the industry regulator in the UK.
Further planning permission and permitting application processes are
continuing ahead of plans to drill during 2025 and we look forward to
providing updates as and when these planning and permitting milestones are
achieved. United continues to support the operator in their planning and
permitting efforts and to deliver the well which will hopefully result in
near-term, low-risk, low-cost, high-value production barrels for the benefit
United and our shareholders.
UK Offshore P2519 Outer Moray Firth
Licence P2519 containing the Maria discovery covered an area of circa 225 km2
in the Outer Moray Firth Basin of the UK Central North Sea (CNS). In January
2023, United announced the completion of a Contingent Resources Report (CPR)
on the Maria Discovery located within Licence P2519. The report broadly agreed
with United's own assessment of the discovery and assigned midcase 2C gross
contingent resources for the Forties and Dornoch reservoirs of the Maria
discovery are estimated at 6.3 mmbbls and 23.3Bcf (10.2 mmboe).
United announced in January 2023, a binding but conditional Asset Purchase
Agreement (APA) with Quattro Energy Limited for the divestment of the P2519
licence. On 1 November 2023 after several extensions and despite regulatory
consent for the transfer of the licence being approved, Quattro had not
satisfied the funding conditions of the transfer of the licence and the
parties elected to terminate the agreement, and the licence subsequently
lapsed on 30 November 2023.
Egypt Onshore Abu Sennan (22% Non-Operated Working Interest) (discontinued
operations)
The Abu Sennan licence is located in the Abu Gharadig Basin in the Western
Desert, onshore Egypt, circa 200km west of Cairo. United acquired its 22%
working interest in the licence in February 2020. United's working interest
production for 2023 averaged 1,015 boepd for the year which was in line with
guidance. The company was involved in the drilling and/or completion of 4
wells in 2023, 2 exploration and 2 appraisal/development. During the year a
number of workovers were completed in order to maintain or enhance production
from existing wells.
The year began with the completion of drilling operations on the ASW-1x
exploration well, 10 days ahead of schedule and under budget. The ASW
structure was an exploration target in the SW of the Abu Sennan exploration
licence area. Although the well encountered net reservoir in the target
reservoir sections, log analysis concluded these reservoirs did not contain
hydrocarbons. The well was subsequently plugged and abandoned.
The ASH-8 development well on the ASH field was spudded on 22 January 2023 and
reached TD on 21 February 2023. This well was targeted at an undrained part of
the ASH field and encountered 22m net oil pay in the Alam El Bueib primary
reservoir. The well was completed as a producer and commenced production at a
stabilised rate of 656 bopd and 0.58 mmscfd, net to United's 22% working
interest.
On completion of operations at ASH-8 the rig was moved to drill the ASD-3
development well on the ASD field, located in the north of the Abu Sennan
Concession area. This well started drilling in early April 2023 and reached TD
on the 8 May 2023 having encountered 12.5m net pay in the primary Abu Roash
"C" and "E" reservoirs and was brough onstream at 124 bopd net to United's 22%
working interest.
On 11 November 2023, the ASD S-1X well commenced drilling. This exploration
well was drilled to test the ASD South exploration target to the south of the
existing ASD field and targeting similar reservoir intervals to those on
production at ASD. The well reached a TD of 3,450m on 12 December 2023 and log
analysis indicated the presence of 9.5m net pay in the Abu Roash "C"
reservoir. The well was subsequently tested at a maximum rate of 2,173 bopd
gross, and in early January 2024, a notice of a commercial discovery and
application for a development lease for ASD South was made to the Egypt
General Petroleum Corporation ("EGPC").
On 18 January 2024, United received a default notice for outstanding cash
calls for the sum of $3.8 million from Kuwait Energy Egypt Limited, the
operator of the Abu Sennan Concession. The details and background which have
been set out in the Chair's statement. The Company did not remedy the default
and is currently in the process of completing paperwork for the exit from the
Abu Sennan Concession. Consequently, the company no longer has any operation
in Egypt to report.
FINANCIAL REVIEW
This Financial Review provides an overview of the Group's Financial
Performance for the year end 31 December 2023 and of United's financial
position as at that date.
The Group's performance for 2023 can be split into two periods. The pre and
post October performance. The pre-October performance was stable, with issues
around the repatriation of USD dollar. However, the post-October 2023 was
impacted by the Geo-political instability in the region and the war in Gaza.
This compounded the issues in repatriating US dollars from Egypt as there was
a shortage of currency in the country, which resulted in Egypt paying in
Egyptian pounds creating considerable foreign exchange losses.
Net production was down 23% and revenue down 26.58% while the cash generated
from operations was $910.1m (2022: $8.7m) and EBITDAX $4.8m (2022: $13.3m)
taking into account discontinued operations. The net cash generated for the
Group was approximately $2m (2022: $2m) in line with previous year. The net
cash generated for the group was achieved through tight management of the
cashflows and delay in the payment of the debt facility. The capital program
for 2023 was $6.2m (2022: $8.6m).
Financial results summary 2023 2022
Net Average Production volumes (boepd) 1,015 1,312
Oil Price Realised ($/bbl) 81.38 96.10
Gas Price Realised ($/mmbtu) 2.63 2.63
Revenue - (discontinued operations) $11.6m $15.8m
Gross Profit - (discontinued operations) $6.2m $12.9m
Cash operating cost per boe (3) $11.08 $10.30
Exploration costs written off $1.4m $0.7m
(Loss)/profit after Tax ($20.4m) $2.3m
Basic (loss)/profit per share (cents) (3.10) 0.36
Capex $6.2m $8.6m
EBITDAX(3) $4.8m $13.3m
Cashflow from Operating Activities $10.1m $8.7m
(2) 22% interest net of government take
(3) See Non-IFRS measure
Group Production and Commodity Prices - discontinued operations
Total group working interest production for 2023 was 1,015 boepd, a decrease
of c. 23% for the year (2022: 1,312 boepd) This decrease reflects the decline
in production that occurred from the existing well-stock during 2023,
partially offset by additional production from drilling activity and
workovers. The Group's average realised oil price was $81.38/bbl representing
an decrease of 15.32% on the prior year, and the fixed gas price was
$2.63/mmbtu. Group revenue for the year totalled $11.6m representing a
reduction of 26.58% on the prior year. Revenues from the Abu Sennan concession
are stated after accounting for government entitlements under the production
sharing contract. Crude oil from Abu Sennan is sold as Western Desert Blend
and the average discount to Brent was $1.56/bbl.
Group Operating Costs
Total Group cash operating costs were $4.1m (2022: $4.9m). The cash operating cost per barrel has increased to $11.08/boe in 2023 (2022: $10.3/boe) with this increase primarily relating to the increase in variable costs due to higher fuel costs coupled to a reduction in production compared to the prior year.
Group Depreciation, Depletion and Amortisation (DD&A)
Group DD&A associated with producing and development assets amounted to
$3.6m (2022: $3.3m). DD&A per boe was $9.77/boe in 2023 (2022: $6.72/boe).
Administrative Expenses
Administrative Expenses for the year totalled $4.2m (2022: $3.6m restated) Adjusting for the non-cash items under IFRS 2 Share Based Payment, impairment of assets and IFRS 16 Leases, the administrative expense is $3.9m (2022: $3.2m). Included in Administrative expenses are foreign exchange losses of $1.4m (2022: $1.1m) with the increase being due primarily to realised losses on the devaluation of the Egyptian pound versus the USD during the year.
The Group is reviewing a number of initiatives to further reduce General and Administration costs whilst ensuring continuity of operational capability. These will be ongoing during the year to ensure we maximise cost savings where possible.
Divestments
In January 2023, the Company signed an agreement with Quattro Energy for the conditional sale of UK Central North Sea (UK CNS) Licence, P2519 for a consideration of up to £5.7m (c. $7m). In August 2023, we received $0.1m as a non-refundable deposit to extend the closing period. However, the Company was unable to complete the sale of Maria Licence (P2519) to Quattro Energy, as they were unable to raise the funds to complete the transaction which was terminated on 1 November 2023. The Maria Licence expired on 30 November 2023 which resulted in a write off of $1.1m.
Post year end, the Group announced in January 2024, that it had received a
default notice from Kuwait Energy Egypt Limited for $3,822,143, the operator
of the Abu Sennan concession in Egypt. From late 2023, the Group had been in
advanced discussions with a Subsidiary of Kuwait Energy Egypt Limited about
acquiring the 22% interest, but this aborted based on legal advice,
notwithstanding attempts by the company to reach agreement on mutually
accepted terms. The Group did not remedy the default and is in the process of
withdrawing from the Concession.
Derivative financial instrument
At the 31 December 2023, the company had an amount of c. $1.2 million
outstanding to our debt provider. The facility was due to be fully paid by the
end of the year, however due to geo-political turmoil in the middle east from
the Gaza War and the impact of foreign exchange losses on the Egyptian pound,
we were unable to extinguish the debt. An agreement was reached post year end
in relation to the settlement terms of the debt facility.
Taxation and Other Income
The Egypt concession was subject to corporate income tax at the standard rate of 40.55%. However, responsibility for payment of corporate income taxes falls upon EGPC on behalf of UOG Egypt Pty Ltd. The Group records a tax charge with a corresponding increase in other income for the tax paid by EGPC on its behalf.
(Loss)/profit post tax
The loss for the year from operations was ($20.4 m) (2022: profit: $2.3m).
Cash flow
Net cashflow from continuing operations amounted to $10.1m (2022: $8.7m), an
increase of 14.80% compared to 2022. Cost control and liquidity management
both served to protect the cashflows.
Capital investment
Total capital expenditure on continuing operations for the year amounted to
$6.2m (2022: $8.6m), with $1.7m incurred on the two successful development
wells, $0.8m on one exploration wells and $3.0m on other development and
infrastructure projects in Abu Sennan. The remaining $0.7m was invested in
other assets across the remainder of the portfolio.
The Group will continue to focus on capital discipline with 2024 capital
investment largely directed at maximising value from the Group's assets. The
Group's cash capital expenditure for the full year is forecasted to be funded
from available cash resources which are subject to the cashflow assumptions
outlined in the going concern note.
Balance sheet
Intangibles Assets increased decreased during the year to $6.1m (2022:
$7.4m). Additions for the year amounted to $0.7m in Egypt, $0.4m Jamaica and
$0.2m on UK assets. The Group has written off $1.1m on the expiration of the
licence for Maria and $1.5m in Egyptian Exploration expenses.
The movement in Property, Plant and Equipment was circa $20m which was the
result of the impairment of the Abu Sennan concession. Additions were $5.0m in
total, with a DD&A charge of $3.5m on a unit of production basis.
Trade and other receivables amounted to $2.0m and included $1.1m of accrued
income on oil and gas sales. Borrowings at year end were $1.2m.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chair's
statement and the Strategic Report.
United regularly monitors its business activities, financial position, cash
flows and liquidity through the preparation and review of detailed forecasts.
Scenarios and sensitivities are also regularly presented to the Board, which
could affect the Group's future performance and position. A base case forecast
has been considered which includes budgeted commitments, a Jamaican farmout
with some back costs recovered, the 166m warrants being exercised in December
2024 and receipt of our outstanding receivables from the Egyptian General
Petroleum Corporation. The key assumptions and related sensitivities include a
"Reasonable Worst Case" ("RWC") sensitivity where the Board has considered a
scenario with significant aggregated downside, including a delay in the
farmout, subject to different terms and conditions than budgeted, delay in
exercise of warrants, delay in receiving outstanding receivables and an equity
raise.
Under the combined RWC, the Group forecasts there will be sufficient resources
to continue in operational existence for the foreseeable future. The various
assumptions considered were:
a. 50% reduction in receivables from Egyptian General Petroleum Corporation
b. Securing a Jamaica farmout with various reimbursement of back costs
c. No Jamaica Farmout in the period
d. Exercise of the Warrants in December 2024
e. No Exercise of Warrants
The likelihood of all the downside sensitivities occurring simultaneously is
unlikely. Under such a RWC scenario, we have identified suitable mitigating
actions, including deferring capital expenditure, adjusting the Group's cost
base, and potentially undertaking an equity raise, which would be subject to
market conditions and is not guaranteed to succeed. However, based on past
experience, the Directors believe that an equity raise is likely to be
successful.
Based on the forecast prepared by the Directors, the Group and Company will be
able to discharge all liabilities as they fall due. The Directors believe that
the Company is reasonably likely to achieve a Jamaican farmout or, if
necessary, obtain further equity funding. However, there is no guarantee that
the Company will be able to secure a farmout or such equity funding.
The Directors have considered the various matters set out above and have
concluded that a material uncertainty exists that may cast significant doubt
on the ability of the Group and Company to continue as a going concern and the
Group and Company may therefore be unable to realise their assets or discharge
their liabilities in the normal course of business. Nevertheless, after making
enquiries and considering the uncertainties described above, the Directors are
of the view that the Group and Company will have sufficient cash resources
available to meet their liabilities and continue in operational existence for
at least 12 months from the date of approval of these 2023 financial
statements.
On that basis, the Directors consider it appropriate to prepare the financial
statements on a going concern basis. These financial statements do not include
any adjustment that would result from the going concern basis of preparation
as not appropriate to use.
Financial Outlook
United's financial strength is founded on our longterm approach to prudently
managing capital to generate value for shareholders.
We have streamlined our portfolio of assets and reduced our operational costs
while we search for new opportunities. Our focus will be on financial
discipline for 2024 as the business recovers from the disappointment of 2023.
The Jamaica farmout for 2024 will be the key initiative while continuing to
progress the preparations for drilling the Waddock Cross well which will be in
2025.
Post year end, we raised £1 million in March 2024 through an equity placing
and in May 2024, we reached a settlement agreement with our debt provider
which enables the company to focus on moving the work programs forward for
Jamaica and Waddock Cross.
Based on the cashflow and cashflow assumptions outlined in the going concern
note, United is expected to have cash resources to be able to fund its 2024
work program.
Simon Brett
Interim Chief Financial Officer
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Restated
Notes 2023 2022
$ $
Continuing operations:
Revenue 4 - -
Other income 4 - -
Cost of sales 5 - -
Gross profit - -
Administrative expenses:
Other administrative expenses (1,065,013) (1,344,704)
New Venture write offs (1,428,875) (284,275)
Foreign exchange (losses) / gains (1,204,458) 5,035
Operating (loss) 6 (3,698,346) (1,623,944)
Finance expense 7 (77,632) (1,679,386)
(Loss) before taxation (3,775,978) (3,303,330)
Taxation 8 - -
(Loss) for the financial year attributable to the Company's equity (3,775,978) (3,303,330)
shareholders from continued operations
(Loss) / profit for the year from discontinued operations 3 (16,589,188) 5,652,107
(Loss) / profit for the financial year attributable to the Company's equity (20,365,166) 2,348,777
shareholders
Total (loss) / earnings per share
From continuing operations expressed in cents per share: 9
Basic (0.58) (0.51)
Diluted (0.58) (0.51)
From continuing and discontinued operations expressed in cents per share: 9
Basic (3.10) 0.36
Diluted (3.10) 0.36
The 2022 comparative results have been restated to show the effect of the
discontinued operations separately from continuing operations in accordance
with IFRS 5.
Consolidated Statement of Comprehensive Income
2023 2022
$ $
(Loss) / profit for the financial year (20,365,166) 2,348,777
Foreign exchange gains / (losses) 9,499 337,866
Total comprehensive (expense) /income for the financial year attributable to (20,355,667) 2,686,643
the Company's equity shareholders
Consolidated Balance Sheet as at 31 December 2023
Notes 2023 2022
Assets $ $
Non-current assets
Intangible assets 10 6,138,180 7,385,326
Property, plant and equipment 11 87,539 20,368,299
6,225,719 27,753,625
Current assets
Inventory 12 - 268,859
Trade and other receivables 13 2,012,258 4,469,493
Derivative financial instruments - 120,168
Cash and cash equivalents 14 1,992,496 1,345,463
4,004,754 6,203,983
Current liabilities:
Trade and other payables 16 (1,900,774) (3,709,667)
Borrowings (1,189,356) (2,964,225)
Lease liabilities (94,348) (83,985)
Current tax payable - -
(3,184,478) (6,757,877)
Non-current liabilities:
Provisions (254,068) (233,630)
Lease liabilities - (7,356)
(254,068) (240,986)
Net assets 6,791,927 26,958,745
Equity and liabilities
Capital and reserves
Share capital 15 8,839,679 8,839,679
Share premium 15 16,798,823 16,798,823
Share-based payment reserve 2,511,686 2,547,688
Merger reserve (2,697,357) (2,697,357)
Translation reserve (998,638) (1,008,137)
Retained earnings (17,662,266) 2,478,049
Shareholders' funds 6,791,927 26,958,745
Consolidated Statement of Changes in Equity
Share Share premium Share-based payments reserve Retained Translation reserve Merger reserve Total
capital
earnings
$ $ $ $ $ $ $
For the year ended 31 December 2023
Balance at 1 January 2023 8,839,679 16,798,823 2,547,689 2,478,048 (1,008,137) (2,697,357) 26,958,745
Loss for the year - - - (20,365,166) - - (20,365,166)
Foreign exchange difference - - - - 9,499 - 9,499
Total comprehensive income - - - (20,365,166) 9,499 - (20,355,667)
Share-based payments - - 188,849 - - - 188,849
Lapsed share-based payments - - (224,852) 224,852 - - -
Balance at 31 December 2023 8,839,679 16,798,823 2,511,686 (17,662,266) (998,638) (2,697,357) 6,791,927
For the year ended 31 December 2022
Balance at 1 January 2022 8,416,182 16,215,361 2,247,465 201,543 (558,104) (2,697,357) 23,825,090
Profit for the year - - - 2,348,777 - - 2,348,777
Foreign exchange difference - - - - 337,866 - 337,866
Total comprehensive income - - - 2,348,777 337,866 - 2,686,643
Foreign exchange adjustment arising on change of parent company functional 283,278 523,376 53,516 (72,271) (787,899) - -
currency to USD
Shares issued 140,219 60,086 - - - - 200,305
Share-based payments - - 246,707 - - - 246,707
Balance at 31 December 2022 8,839,679 16,798,823 2,547,688 2,478,049 (1,008,137) (2,697,357) 26,958,745
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER
2023 2022
$ $
Cash flow from operating activities
(Loss) / Profit for the financial year before tax (18,157,008) 7,530,235
Share-based payments 188,849 246,707
Depreciation & Amortisation 3,618,163 3,309,940
Fair value loss on derivatives - 1,562,467
Impairment of intangible assets 2,602,234 483,611
Impairment of production assets 21,715,270 -
Interest expense 78,424 128,429
Foreign exchange movements 1,334,903 1,106,614
Tax paid (2,208,157) (5,238,704)
9,172,678 9,129,299
Changes in working capital
Decrease/(Increase) in inventory 268,859 (123,289)
Decrease in trade and other receivables 2,457,234 732,529
Decrease in trade and other payables (1,797,824) (1,032,853)
Cash inflow from operating activities 10,100,947 8,705,686
Cash outflow from investing activities
Proceeds received on disposal of non-current assets - 4,887,275
Purchase of property, plant & equipment (4,959,474) (5,610,924)
Spend on exploration activities (1,280,665) (2,972,201)
Net cash used in investing activities (6,240,139) (3,695,850)
Cash flow from financing activities
Issue of ordinary shares net of expenses - 200,305
Repayments on oil swap financing arrangement (1,718,250) (1,452,118)
Payments on oil price derivatives - (1,522,892)
Capital payments on lease (95,806) (90,096)
Interest paid on lease (5,504) (86,669)
Net cash used in financing activities (1,819,560) (2,951,470)
Net increase in cash and cash equivalents 2,041,248 2,058,366
Cash and cash equivalents at beginning of financial year 1,345,463 397,308
Effects of exchange rate changes (1,394,215) (1,110,211)
Cash and cash equivalents at end of financial year 1,992,496 1,345,463
1. Statutory Accounts
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2023 or 2022 but is derived
from those accounts. The Auditor has reported on those accounts, and its
reports were unqualified and did not contain statements under sections 498(2)
or (3) of the Companies Act 2006.
The statutory accounts for 2023 will be delivered to the Registrar of
Companies following publication.
While the financial information included in this preliminary announcement has
been prepared in accordance with UK-adopted International Accounting
Standards ("framework"), this announcement does not itself contain sufficient
information to comply with the framework. The Company expects to distribute
the full financial statements that comply with UK-adopted International
Accounting Standards by 30 June 2024.
2. Principal Accounting Policies
Basis of consolidation
The financial statements for the year ended 31 December 2023 incorporate the
results of United Oil & Gas plc ("the Company") and entities controlled by
the Company (its subsidiaries). Control is achieved where the Company has
the power to govern the financial and operating policies of an investee entity
so as to obtain benefits from its activities.
All intra-Group transactions, balances, income and expenses are eliminated in
full on consolidation. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.
Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chair's
statement and the Strategic Report.
United regularly monitors its business activities, financial position, cash
flows and liquidity through the preparation and review of detailed forecasts.
Scenarios and sensitivities are also regularly presented to the Board, which
could affect the Group's future performance and position. A base case forecast
has been considered which includes budgeted commitments, a Jamaican farmout
with some back costs recovered, the 166m warrants being exercised in December
2024 and receipt of our outstanding receivables from the Egyptian General
Petroleum Corporation.
The key assumptions and related sensitivities include a "Reasonable Worst
Case" ("RWC") sensitivity where the Board has considered a scenario with
significant aggregated downside, including a delay in the farmout, subject to
different terms and conditions than budgeted, delay in exercise of warrants,
delay in receiving outstanding receivables and an equity raise.
Under the combined RWC, the Group forecasts there will be sufficient resources
to continue in operational existence for the foreseeable future. The various
assumptions considered were:
a) 50% reduction in receivables from Egyptian General
Petroleum Corporation
b) Securing a Jamaica farmout with various
reimbursement of back costs
c) No Jamaica Farmout in the period
d) Exercise of the Warrants in December 2024
e) No Exercise of Warrants
The likelihood of all the downside sensitivities occurring simultaneously is
unlikely. Under such a RWC scenario, we have identified suitable mitigating
actions, including deferring capital expenditure, adjusting the Group's cost
base, and potentially undertaking an equity raise, which would be subject to
market conditions and is not guaranteed to succeed. However, based on past
experience, the Directors believe that an equity raise is likely to be
successful.
Based on the forecast prepared by the Directors, the Group and Company will be
able to discharge all liabilities as they fall due.
The Directors believe that the Company is reasonably likely to achieve a
Jamaican farmout or, if necessary, obtain further equity funding. However,
there is no guarantee that the Company will be able to secure a farmout or
such equity funding.
The Directors have considered the various matters set out above and have
concluded that a material uncertainty exists that may cast significant doubt
on the ability of the Group and Company to continue as a going concern and the
Group and Company may therefore be unable to realise their assets or discharge
their liabilities in the normal course of business. Nevertheless, after making
enquiries and considering the uncertainties described above, the Directors are
of the view that the Group and Company will have sufficient cash resources
available to meet their liabilities and continue in operational existence for
at least 12 months from the date of approval of these 2023 financial
statements.
On that basis, the Directors consider it appropriate to prepare the financial
statements on a going concern basis. These financial statements do not include
any adjustment that would result from the going concern basis of preparation
as not appropriate to use.
New and amended International Financial Reporting Standards adopted by the
Group
The Group has adopted the following standards, amendments to standards and
interpretations which are effective for the first time this year. The impact
is shown below:
New/Revised International Financial Reporting Standards Effective Date: Annual periods beginning on or after: UKEB Impact on
adopted
the Group
IAS 1 Amendments to IAS 1: Classification of Liabilities as Current or Non-current 1 January 2023 Yes No impact
and Classification of Liabilities as Current or Non-current
IAS 1 Disclosure of accounting policies (amendments to IAS 1 and IFRS Practice 1 January 2023 Yes No impact
Statement 2)
IAS 8 Definition of accounting estimate (amendment to IAS 8)) 1 January 2023 Yes No impact
IAS 12 Amendments to IAS 12: Deferred Tax relating to Assets and Liabilities arising 1 January 2023 Yes No impact
from a Single Transaction
International Financial Reporting Standards in issue but not yet effective
At the date of authorisation of the consolidated financial statements, the
IASB and IFRS Interpretations Committee have issued standards, interpretations
and amendments which are applicable to the Group. For the next reporting
period, applicable International Financial Reporting Standards will be those
endorsed by the UK Endorsement Board (UKEB).
New / revised International Financial Reporting Standards which are not
considered to potentially have a material impact on the Group's financial
statements going forwards have been excluded from the above.
New/Revised International Financial Reporting Standards Effective Date: Annual periods beginning on or after: UKEB
adopted
IFRS 16 Lease liability in a sale and leaseback (amendment to IFRS 16) 1 January 2024 Yes
IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint No confirmed date n/a
venture
IAS 1 Amendments to IAS 1: Classification of Liabilities as Current or Non-current 1 January 2024 Yes
and Classification of Liabilities as Current or Non-current
IAS 7 and IFRS 7 Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements 1 January 2024 Yes
Management anticipates that all relevant pronouncements will be adopted in the
Group's accounting policies for the first period beginning after the effective
date of the pronouncement. New standards, interpretations and amendments not
listed above are not expected to have a material impact on the Group's
financial statements.
3. Discontinued operations
In November 2023, the Group made a decision to discontinue the Egypt
operations.
The results of the discontinued operations, which have been included in the
profit for the year, were as follows:
2023 2022
$ $
Revenue 11,603,378 15,831,237
Other revenue 2,208,157 5,181,458
Cost of sales (7,618,685) (8,143,910)
Administrative expenses (371,049) (428,450)
Impairment of exploration & producing assets (23,249,658) (483,611)
Release other Egypt working capital 3,178,065 -
Foreign exchange losses (130,446) (1,111,649)
Interest expense (793) (11,510)
Loss before tax (14,381,031) 10,833,565
Attributable tax expense (2,208,157) (5,181,458)
Net loss attributable to discontinued operations (16,589,188) 5,652,107
The 2022 comparative results have been restated to show the effect of the
discontinued operations separately from continuing operations in accordance
with IFRS 5.
Assets and liabilities of Egypt have not been classified as held for sale at
31 December 2023 because all short-term assets and liabilities are expected to
be either settled or transferred to continuing Group operations. These are
included in the respective Group assets and liabilities and are as follows:
2023
$
Assets
Property, plant and equipment 6,309
Trade and other receivables 1,966,380
Cash 1,468,315
Total assets 3,441,004
Liabilities
Trade and other payables (9,917)
Lease liability (8,616)
Total liabilities (18,533)
Net assets 3,422,471
Discontinued Operations (continued)
Cash flows from (used in) discontinued operations
2023 2022
$ $
Net cash from operating activities 10,730,660 10,654,073
Net cash used in investing activities (5,593,613) (6,982,899)
Net cash flows for the year 5,137,047 3,671,174
4. Segmental reporting
Operating segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources, assessing the
performance of the operating segment and making strategic decision, has been
identified as the Board of Directors.
The Group operates in four geographic areas - the UK &Europe, Latin
America and Egypt. The Group's revenue from external customers and information
about its non-current assets (other than financial instruments, deferred tax
assets and post-employment benefit assets) by geographical location are
detailed below.
The below information relates to both continuing and discontinued operations.
The Egypt column represents the discontinued operations.
2023
$ UK & EU Latin America Total
Egypt
Revenue - - 11,603,378 11,603,378
Other income 2,208,157 2,208,157
Non-current assets 559,662 5,659,748 6,309 6,225,719
2022
$ UK & EU Latin America Total
Egypt
Revenue - - 15,831,237 15,831,237
Other income - - 5,181,458 5,181,458
Non-current assets 1,340,605 5,228,625 21,184,395 27,753,625
5. Cost of sales
The below information relates to discontinued operations in Egypt:
2023 2022
$ $
Production costs 4,103,926 4,930,038
Depreciation, depletion & amortisation 3,514,759 3,213,872
Discontinued Cost of Sales (Note 1) 7,618,685 8,143,910
6. Operating (Loss) / Profit
2023 2022
$ $
Operating (loss) / profit is stated after charging:
Depreciation:
- Owned assets 3,520,382 3,219,080
- Right of use leased assets 97,781 88,382
Amortisation - 2,478
Share based payments 188,849 246,707
Foreign exchange losses 1,334,903 1,106,614
Fees payable to the Company's auditors for the audit of the annual financial 110,000 110,000
statements
7. Finance expense
2023 2022
$ $
Fair value loss on derivatives 60,644 1,562,467
Effective interest on borrowings 12,276 41,760
Interest expense on lease liabilities 5,504 86,669
78,424 1,690,896
In this note, finance expense includes amounts of $793 (2022: $11,510)
relating to discontinued operations (see note 1).
8. Taxation
2023 2022
$ $
Profit before tax (18,157,008) 7,530,235
Profit on ordinary activities multiplied by standard rate of corporation tax (4,266,897) 1,430,744
in the UK of 23.5% (2022: 19%)
Tax effects of:
Foreign tax 2,208,157 5,181,458
Adjustments in respect of prior periods -
Double tax relief 4,266,897 (1,430,744)
Corporation tax charge (Note 1) 2,208,157 5,181,458
The Group has accumulated tax losses of approximately $24.7m (2022: $6.8m).
No deferred tax asset was recognised in respect of these accumulated tax
losses as there is insufficient evidence that the amount will be recovered in
future years.
The tax rate changed from 19% to 23.5% from 2022 to 2023 respectively and is
reflected in the table.
9. Earnings per share
The Group has issued share warrants and options over Ordinary shares which
could potentially dilute basic earnings per share in the future.
Basic earnings per share is calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
There were 60,070,869 (2022: 69,179,818) share warrants and options
outstanding at the end of the year that could potentially dilute basic
earnings per share in the future.
Basic and diluted earnings per share
2023 2022
Cents Cents
Basic (loss) / earnings per share from continuing operations (0.58) (0.51)
Diluted earnings per share from continuing operations (0.58) (0.51)
Basic (loss) / earnings per share from continuing & discontinued (3.10) 0.36
operations
Diluted (loss) / earnings per share from continuing & discontinued (3.10) 0.36
operations
Basic and diluted earnings per share (continued)
The (loss) and weighted average number of ordinary shares used in the
calculation of earnings per share from continuing operations are as follows:
2023 2022
$ $
(Loss) used in the calculation of basic and diluted earnings per share from (3,775,977) (3,303,330)
continuing operations
(Loss) / profit used in the calculation of basic and diluted earnings per (20,365,166) 2,438,777
share from continuing and discontinued operations
Number of shares 2023 2022
Number Number
Weighted average number of ordinary shares for the purposes of basic earnings 656,353,969 656,353,969
per share
Dilutive shares - -
Weighted average number of ordinary shares for the purposes of diluted 656,353,969 656,353,969
earnings per share
10. Intangible assets
Exploration and Evaluation assets Computer software
$ $ Total
$
Cost
At 1 January 2022 7,813,541 11,474 7,825,015
Additions 2,972,201 - 2,972,201
Foreign exchange differences (44,093) (657) (44,750)
At 31 December 2022 10,741,649 10,817 10,752,466
Additions 1,280,665 - 1,280,665
Foreign exchange differences 74,386 366 74,752
At 31 December 2023 12,096,700 11,183 12,107,883
Amortisation and impairment
At 1 January 2022 2,847,274 7,650 2,854,924
Charge for the year - 2,478 2,478
Impairment 483,611 - 483,611
Foreign exchange differences 26,530 (403) 26,127
At 31 December 2022 3,357,415 9,725 3,367,140
Charge for the year - - -
Impairment 2,602,234 - 2,602,234
Foreign exchange differences - 329 329
At 31 December 2023 5,959,649 10,054 5,969,703
Net book value
At 31 December 2023 6,137,051 1,129 6,138,180
At 31 December 2022 7,384,234 1,092 7,385,326
At 31 December 2023 the group's E&E carrying values of $6.1m related to
our high impact exploration activity in Jamaica, and the Waddock Cross
development campaigns.
In Jamaica, the work program continues in parallel with the ongoing farmout
activity which is seeking to bring in a partner before the end of the current
licence period. Currently the company has 4 interested partners under NDA, and
the Licence has been extended to 31 January 2026. The Balance Sheet value of
our Jamaican exploration asset was $5.7m at 31 Dec 2023, and given the ongoing
work programme and active farmout process no conditions exist that would
result in the impairment of the carrying value of the asset.
In the UK Waddock Cross licence, the Operator, Egdon Resources Ltd recently
announced the licence has been granted a 5-year extension and expires in March
2029. Planning has been submitted for a redevelopment well and the operator
expects the outcome of this to be granted in September 2024. As a result,
and with an active work programme in place for 2024, the directors are of the
view that all costs incurred on the licence at December 2023 are fully
recoverable given the commercial viability of the development demonstrated by
the operator. As a result, United continue to carry capitalised costs of $0.4m
at 31 December 2023, which includes a decommissioning asset recognised of
$0.25m.
In the UK North Sea, a Binding Asset Purchase Agreement had been signed with
Quattro, in 2023, for the sale of P2519 containing the Maria discovery to
Quattro Energy Limited for a maximum consideration of up to £5.7m - however
the sale did not materialise due to the buyer's inability to raise the funds
and the deal was terminated 31 October 2023. As a result, and with the
licence expiring on 30 November 2023, the directors decided not to seek a
further extension and all costs incurred were written off to the value of
$1.05m.
In November 2023, the company agreed to the outline terms for selling the Abu
Sennan concession in Egypt to the Operator. As a result, the company's current
and prior year results for Egypt are presented as discontinued operations, as
shown on the income statement and detailed in Note 1 of the accounts.
Due to the outlined sale terms and the anticipated default notice in January
2024 for the Abu Sennan concession, the directors decided to write down the
capitalised exploration and evaluation assets at the end of 2023, resulting in
a $1.5 million write-down.
Management reviews the intangible exploration assets for indications of
impairment at each balance sheet date based on IFRS 6 criteria such as where
commercial reserves have not yet been established and the evaluation,
exploration work is ongoing and a development plan has not been approved. As a
result of these reviews the Directors believe no impairment indicators exist
on the company's remaining exploration portfolio, and as a result carry
intangibles at cost value of $6.1m at 31 December 2023.
11. Property, plant and equipment
Production assets Computer equipment Fixtures and fittings Right of use asset
$ $ $ $ Total
$
Cost
At 1 January 2022 24,453,758 12,638 2,740 190,033 24,659,169
Additions 5,600,238 10,686 - 87,012 5,697,936
Foreign exchange differences - (724) (157) (3,508) (4,389)
At 31 December 2022 30,053,996 22,600 2,583 273,537 30,352,716
Additions 4,958,276 1,198 - 91,234 5,050,708
Foreign exchange differences - 764 87 7,982 8,833
At 31 December 2023 35,012,272 24,562 2,670 372,753 35,412,257
Depreciation
At 1 January 2022 6,568,370 9,984 1,142 88,864 6,668,360
Charge for the year 3,213,872 4,359 849 88,382 3,307,462
Foreign exchange differences - (509) (54) 9,158 8,595
At 31 December 2022 9,782,242 13,834 1,937 186,404 9,984,417
Charge for the year 3,514,760 4,967 656 97,780 3,618,163
Impairment 21,715,270 - - - 21,715,270
Foreign exchange differences - 558 77 6,233 6,868
At 31 December 2023 35,012,272 19,359 2,670 290,417 35,324,718
Net book value
At 31 December 2023 - 5,203 - 82,336 87,539
At 31 December 2022 20,271,754 8,766 646 87,133 20,368,299
In November 2023, the company agreed to the outline terms for selling the Abu
Sennan concession in Egypt to the Operator. As a result, the company's current
and prior year results for Egypt are presented as discontinued operations, as
shown on the income statement and detailed in Note 1 of the accounts.
Due to the outlined sale terms and the anticipated default notice in January
2024 for the Abu Sennan concession, the directors decided to write down the
capitalised tangible oil and gas assets at the end of 2023, resulting in a
$21.7 million write-down.
12. Inventory
2023 2022
$ $
Oil in tanks - 268,859
- 268,859
With the anticipated default from the Abu Sennan licence in January 2024, all
Oil inventory value has been written down to zero in accordance with the terms
of exiting the licence and reassigning of our 22% share to the remaining JV
partners on the licence.
13. Trade and other receivables
2023 2022
$ $
Trade receivables 873,165 3,549,051
Prepayments 7,174 6,941
Contract assets 1,093,215 873,206
Other tax receivables 38,704 40,295
2,012,258 4,469,493
The Directors consider that the carrying values of trade and other receivables
are approximate to their fair values.
No expected credit losses exist in relation to the Group's receivables as at
31 December 2023 (2022: $nil).
Trade receivables represent amounts invoiced for oil and gas sold in the year,
not yet received from EGPC, and a provision of $500K to cover the potential
assignment bonus and legal fees associated with the Abu Sennan concession
transfer. Contract assets relate to two month's Oil & Gas invoices not
received at year-end for the Abu Sennan producing assets in Egypt under the
receivable terms of the agreement with EGPC.
14. Cash and cash equivalents
2023 2022
$ $
Cash at bank (GBP) 18,438 52,251
Cash at bank (EUR) 109,854 23,620
Cash at bank (USD) 608,679 799,390
Cash at bank (EGP) 1,255,525 470,202
1,992,496 1,345,463
At 31 December 2023 and 2022 all significant cash and cash equivalents were
deposited in creditworthy financial institutions in UK, Ireland and Egypt.
15. Share capital, share premium and merger reserve
Allotted, issued, and fully paid:
2023
Share capital Share premium
No $ $
Ordinary shares of £0.01 each
At 1 January 2023 656,353,969 8,839,679 16,798,823
At 31 December 2023 656,353,969 8,839,679 16,798,823
2022
Share capital Share premium
No $ $
Ordinary shares of £0.01 each
At 1 January 2022 644,803,969 8,416,182 16,215,361
Effect of Parent company functional currency change - 283,278 523,376
Allotments:
Shares issued for cash (exercise of warrants) 11,550,000 140,219 60,086
At 31 December 2022 656,353,969 8,839,679 16,798,823
As regards income and capital distributions, all categories of shares rank
pari passu as if the same constituted one class of share. Deferred shares are
disclosed in Note 18.
16. Trade and other payables
2023 2022
$ $
Trade payables 458,509 499,217
Other payables 1,257,326 1,295,680
Deferred shares (note 18) 40,476 40,476
Accruals 144,463 1,874,294
1,900,774 3,709,667
17. Events after the balance sheet date
- On 18 January 2024, the Group received a default notice for
$3.8m for unpaid cash calls from the Operator of the Abu Sennan Concession.
The default was not remedied, and we are working towards an orderly exit from
the concession.
- At the end of January 2024, the Group was notified that it had
received a two-year licence extension for Jamaica, taking the licence tenure
to 31 January 2026.
- In March 2024, the Group raised £1 million through an equity
offering, issuing 500,000,000 new ordinary shares at £0.002 each. As part of
the offering, the Group issued one warrant for every three shares purchased,
with an exercise price of £0.0028. The warrants will expire on 31 December
2024. The nominal value of the shares was changed from £0.01 to £0.00001.
- On 1 April 2024 the Group announced that it had received a
five-year licence extension for the Waddock Cross licence, taking the licence
tenure to March 2029.
- Early April 2024, the Group received USD $1 million from
Egyptian General Petroleum Corporation in regarding its receivables balance
that was outstanding. The remaining balance is expected to be received over
the summer months.
- In April 2024, Iman Hill agreed to provide consultancy services
to the Group to support the progress of the Jamaica project. The initial
contract is for three months, with the possibility of extension by mutual
agreement or termination with one month's notice. Iman is a non-executive
Director of the Company.
- In May 2024, the Group reached an agreement with its debt
facility provider regarding the repayment terms of the outstanding debt.
GLOSSARY
Bbl Barrels
/Bbl Per barrel
Bn Billion
bopd Barrels of oil per day
Boepd Barrels of oil equivalent per day
Capex Capital Expenditure
EGPC Egyptian General Petroleum Corporation
ESG Environment, Social, Governance
ESP Electrical Submersible Pumps
HCIIP Hydrocarbon initially in place
HSE Health, safety and environment
JOC Joint Operating Company
JV Joint Venture
km Kilometres
km(2) Square kilometres
KPI(s) Key performance indicator(s)
m Metres
M Thousand
MBbl Thousand barrels
Mbopd Thousands of barrels of oil per day
MM Million
MMBbl Million barrels
MMboe Million barrels of oil equivalent
MSET Ministry for Science, Energy and Technology
NPV Net present value
OGA Oil and Gas Authority
OPEX Operating expenditure
Q1 First Quarter
Q2 Second Quarter
Q3 Third Quarter
Q4 Fourth Quarter
scf Standard cubic feet
SPA Sales and Purchase Agreement
TD Total Depth
UK CNS UK Central North Sea
WI Working interest
% Percentage
2C Best estimate of contingent resources
2D Two-dimensional
3D Three-dimensional
2P Proved plus probable reserves
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FIMBTMTJTTMIRecent news on United Oil & Gas
See all newsREG - United Oil & Gas PLC - Major holdings in Company
AnnouncementRCS - United Oil & Gas PLC - Technical and Operational Update on Walton Morant
AnnouncementREG - United Oil & Gas PLC - Holding(s) in Company
AnnouncementREG - United Oil & Gas PLC - Holding(s) in Company
AnnouncementREG - United Oil & Gas PLC - Walton Morant Licence Extension Secured
Announcement