UK company joins Tullow hunt for oil in Jamaica
United Oil & Gas will partner with Tullow Oil to search for oil off the coast of Jamaica.
United announced the agreement on Monday to "farm-in" the Walton-Morant exploration licence, saying it would take a 20 per cent equity stake in the project. Both companies are based in the United Kingdom.
The partnership is subject to approval from the Petroleum Corporation of Jamaica (PCJ). However, the state agency, which manages the country's energy needs, is yet to respond to requests for comment.
Starting from November 1, United's investment will see it paying a 20 per cent share of the costs for Phase 1c of the current exploration programme. That phase will inevitably involve 3D deep mapping of the seafloor to determine where substances resembling oil are located.
In a market notice posted on the London Stock Exchange, United Oil Brian Larkin said Jamaica falls within his company's strategy of utilising funds earned in low -risk business in Europe to finance oil explorations in Latin America and Africa.
"This acreage is well known to the United team and we are very excited at the prospect of participating in this high- impact campaign," Larkin said.
Tullow entered the Walton-Morant licence, which covers an area in excess of 32,000 square kilometres, in October 2014. In addition to securing a large portfolio of legacy 2D seismic data, Tullow also acquired a further 3,650 kilometres of 2D seismic data in 2016 and 2017.
Interpretation of the data set has identified "attractive cretaceous and tertiary aged clastic and carbonate reservoir targets", and Tullow now intends to conduct a 2,000 square kilometre 3D seismic survey in the first half of 2018.
United Oil said the Walton-Morant licence offers a "commanding" exploration opportunity with access across three geological basins. So far, 11 wells have been drilled in the area, and despite difficulties with well placements, due to a lack of seismic control, 10 of these encountered hydrocarbon shows, the oil company said.
Recent work, including extensive onshore fieldwork, has confirmed the presence of "all" the elements required for a working petroleum system, and has also identified a thermogenically derived offshore oil seep.
That live oil seep provides United Oil with added confidence that there is the potential to find "significant" commercial volumes within the licence.
"The current low-cost environment has allowed United to take a material 20 per cent equity position in this high potential frontier exploration licence, and we look forward to working with Tullow Oil in the coming months to advance the 2017 and 2018 work programmes," said Larkin. "In addition to our new Jamaican interest, we continue to evaluate further potential farm-in and acquisition opportunities and we look forward to updating our shareholders in the coming months," added Larkin.
United is an independent oil and gas start-up established in 2015. It's described as a spin-off of a "former Tullow Oil team", with a strategy to acquire low and high-risk assets for exploitation. In July 2017, United was admitted to the London Stock Exchange's main market via a reverse takeover of Senterra Energy plc.
In August, Tullow described its investment to date as surpassing J$2.5 billion. The company is yet to respond to queries on the partnership with United Oil & Gas.
Back in August, Tullow Jamaica country representative David Barrett said the company had spent more than US$20 million since it began investing in Jamaica in 2014.