United Oil still hunting partner for Jamaica exploration
Published:Wednesday | April 27, 2022 | 12:08 AM
United Oil & Gas Plc spent the equivalent of about $135 million on its hunt for oil offshore Jamaica in 2021, topping the previous year’s expenditure.
The company is still searching for a drilling partner, but has until January 2024 to either drill or drop the licence.
The United Kingdom-based oil explorer said “$900,000 was spent in Jamaica on the Walton Morant licence,” in its annual report released on Tuesday.
“The results of the work programme carried out in 2021 have enhanced [United Oil’s] understanding of regional source rock development, quantified the basin-wide potential, and demonstrated robust economics based on an independent assessment of viable development options for the high-graded Colibri prospect,” the company said.
The Colibri prospect holds roughly 15 per cent or 406 million barrels of the total 2.4 billion barrels of substances that resemble oil found offshore Jamaica.
The value of the investment in Jamaica now stands at US$4.5 million or about $675 million in Jamaican currency.
United Oil holds the right to search for oil offshore Jamaica in the Walton Morant area offshore the island. The zone for exploration spans 22,400 square kilometres offshore and south of the island. It offers a high-impact frontier exploration opportunity with the potential to open an entirely new hydrocarbon frontier, the company stated.
The US$900,000 spent last year and the US$800,000 spent in 2020 are minor compared to the millions needed to finance the drilling programme. United started hunting a drill partner last April. There’s nothing firm yet but the company remains optimistic. A partner would not only add drilling experience to the project, but also spread the risk.
“In Jamaica, the sentiment to exploration and recovery of the investment cycle is returning due to higher commodity prices, the expectation that the energy transition will take time, and the recent discoveries in new basins such as Namibia and Morocco. We are encouraged by the interest shown in our farm-out process so far and we look forward to pursuing this significant opportunity,” said United Oil CEO Brian Larkin in remarks in the annual report.
The company holds oil reserves and operations in the UK, Egypt and Jamaica. The group earned a profit of US$4.1 million on revenue of US$19.2 million for its full year ending December 2021. A year before that it earned profit of US$852,000 on revenue of US$9.05 million. The higher revenue was “largely down to higher commodity prices and also increased production,” United said.
Year to date, oil prices have jumped 34 per cent from US$76.08 a barrel to US$102 a barrel. Prices spiked as high as US$130.50 a barrel in March after the initial commodity spike arising the Russian invasion of Ukraine.
United Oil and Gas got independent verification that its licence contains over 2.4 billion barrels of substances that resemble oil which it terms “prospective resources”, an upward revision emanating from independent findings by Gaffney Cline & Associates.
United Oil and Gas took full control of the Walton licence in August 2020, after being assigned Tullow Oil Plc’s 80 per cent equity stake. The deadline for the ‘drill or drop’ decision was extended by the Jamaican Government from January 31, 2022 to 2024.
United Oil’s shares fell three per cent to £2.30 on Tuesday on the AIM market for small and medium companies on the London Stock Exchange.