Wed | Oct 20, 2021

United pitching Jamaica plans to drilling firms

Published:Wednesday | July 28, 2021 | 12:05 AM

United Oil and Gas Plc, which holds the rights to search for oil offshore Jamaica, has started wooing outside companies to consider drilling in Jamaica.

There’s nothing firm as yet, but the company remains optimistic in its latest announcement regarding the hunt for oil in commercial quantities offshore Jamaica.

“The formal farm-out campaign for the Walton Morant licence commenced in early April, with a number of companies currently conducting evaluations,” said United Oil in its second-quarter filings.

United Oil holds the licence for two large zones, collectively called the Walton Morant, which contains over 2.4 billion barrels of substances that resemble oil, referred to as ‘prospective resources’. The quantities of resources were revised upwards based on independent finding conducted last year by Gaffney Cline & Associates. One small area, called the Colibri prospect, holds roughly 15 per cent of the total, amounting to 406 million prospective barrels.

“We will work to progress the Jamaican farm-out process whilst optimising further value from the portfolio,” said United Oil CEO Brian Larkin in a statement accompanying the results.

Overall, the group has budgeted US$7.2 million in capital outlay for the year, fully funded from existing operations. The bulk of the expenditure will go towards drilling wells in Egypt at US$6.5 million, while the remainder of US$700,000 is earmarked as development costs for Jamaica, Italy and United Kingdom.

The projected Jamaica spending was previously disclosed as US$400,000 for the full year, as outlined in the first-quarter filings. During that period, United Oil spent a combined US$200,000 on its Jamaican, Italian and UK assets. The UK-based company’s Jamaican assets were valued by the company at US$3.6 million up to last December.

United Oil took over the Walton licence last August, after acquiring Tullow Jamaica’s 80 per cent equity in the project. The Jamaican Government also extended the initial exploration period to January 31, 2022, when United will be required to make an initial ‘drill or drop’ decision.

Whether United chooses to drill or give up the licence is dependent on whether it can secure a partner.