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United Oil & Gas Plc: THE INVESTMENT CASE
INVESTMENT OVERVIEW

United Oil & Gas is moving quickly, adding shareholder value with a two-track growth strategy

United is growing its oil and gas business through relatively low-risk assets in Europe, meanwhile, big-bang exploration offshore Jamaica could prove to be a game changer
Offshore oil operations
INVESTMENT OVERVIEW: UOG The Big Picture
The oiler's share price has doubled since the relaunch

Brian Larkin and his team at United Oil & Gas Plc (LON:UOG) have barely sat still since bringing the company to the market just over eight months ago.

Having introduced themselves with two assets, one in the UK and one in Italy, the company has moved quickly to grow and create shareholder value - UOG shares have doubled in price, trading at 5.06p.

The evident success, to date, is the product of a fairly balanced and pragmatic approach to company building.

“Our strategy is dual focussed. Ultimately what we want to do is create as much shareholder value as possible. How we do that is by building a low-risk business in Europe with near-term activity, and  Adding high impact, game changing opportunities in Latin America, South America and Africa,” Larkin said.

Larkin added: “When we listed, on 21 July 2017, we had one licence onshore UK and we had an option agreement in Italy, and in the last eight months we have added five more licences and drilled a successful well in Italy - where we found gas and are now firmly on the road to production.”

“We have done a major farm-in with Tullow Oil for the Jamaica licence and we’ve done a secondary placing, at Christmas, which was pretty much at no discount.

“And we have more than doubled our share price in eight months. We’ve been moving fast and we intend to keep up that momentum. In addition to all of that, we have also appointment Graham Martin as our chairman, who spent almost two decades on Tullow Oil’s board.”

Deal making efforts continue, though in the coming weeks and months the catalysts are expected to come in the field.

Operational catalysts in the schedule

United is invested in an appraisal well off the English south coast in Bournemouth bay, close to the Wytch Farm field. Here, drilling is due to begin during the second or third quarter, and a success would deliver more value to the portfolio.

In Italy, the group will follow up the 2017 success with fresh exploration efforts starting with a 3D seismic programme.

The start of exploration offshore Jamaica is also due to start, with the aim of setting up an exploration well in 2019.

Jamaica could be a game changer

“Jamaica is one of our most exciting licences as far as the City of London seems to be concerned. We have an acreage position 0f around 32,500 square kilometres, which is comparable to the North Sea,” Larkin said.

The United chief executive highlighted that eleven wells have been drilled to date and every one of them has returned hydrocarbon shows. These wells were drilled in the 1970s and 80s, and, the new exploration programmes will be informed by 3D seismic.

The seismic will set up exploration drilling but United wants to strike another partnership deal to bring in a farm-out partner that will carry the drilling costs.

Detailing the plans, Larkin highlighted: “We’ll acquire 3D, we will farm-down to get a carry on an exploration well for late 2019.

If that well is a success it is a game changer. A value has been put on it, at gross level, for one target at US$60mln, net to United

“If that prospect comes in, the first target, the NPV of US$60mln net, is nearly irrelevant because there are 20 more targets to  chase after that, all with a similar value.”

“It would be a little bit like owning 20% of the North Sea in 1970. Admittedly, it is hugely risky, in the sense that we might find nothing. But, our maximum exposure is only £2mln assuming we get a carry on the well.”

It’s a template for the future acquisition strategy

“It [Jamaica] is a template of the kind of opportunity we’re looking for – we’ve got a material position, but, not a huge capex exposure, and if it comes in it is a game changer from a shareholder’s perspective.

“Not only that, the Jamaica opportunity says to the industry that United Oil & Gas can do big farm-ins. They are brave. They can take on big projects with admittedly with low capex exposure.”

Larkin added: “We’re continuing to look at additional acquisition and farm-in opportunities. Compared to around six months ago, we’re now looking at larger opportunities.

“We’re looking at larger scale opportunities, particularly in Europe, as well as portfolio opportunities and potential some corporate acquisitions. We’re building the company, and we’re ambitious with that. We’ve been very clear [with investors] on that. We’ve demonstrated that we can do it and we’ve been doing it.”

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