United Oil & Gas target lifted by Cenkos after El Salmiya-5 well


United Oil & Gas target lifted by Cenkos after El Salmiya-5 well

United Oil & Gas PLC (LON:UOG) has had its share price target bumped up to 7.3p by Cenkos, which was impressed by yesterday’s result from the El Salmiya-5 well in Egypt.

This was significantly better than pre-drill expectations, said the broker, with 120m of net pay and 8,700 barrels per day (boepd) on test from the primary Kharita target formation.

The ASH2 well is still producing over 3,000 boepd and net production levels from Abu Sennan are likely to rise to over 2,500 boepd in the coming weeks, said Cenkos.

On average, net production this year will be 2,100 boepd, and it estimates generating an underlying profit (EBITDA) of US$3.6mln.

Cenkos noted that the well encountered net pay in all the target intervals, while there were indications of a potential thicker and larger undrained area up-dip of the existing El Salmiya wells.

On test, the well produced at a rate of 4,100 boepd, with a further 18MMscf/d of gas ( circa 8,700 boepd gross).

As a comparison, the El Salmiya-2 well, drilled in 2013, encountered 56 metres of net pay within the Kharita and was tested at a rate of 3,530 boepd and 4.7MMscf/d of gas, said Cenkos.

The broker also noted that the 8,700 boepd achieved on test is just from the primary Kharita target and does not include production from the Abu Roash C or E Members.

Shares dropped 6% to 2.7p after a surge on Wednesday.


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