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United Oil & Gas completes acquisition of Rockhopper Egypt

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Oilfield Technology,

United Oil & Gas Plc has completed the acquisition of Rockhopper Egypt Pty Ltd. from Rockhopper Exploration plc.

The acquisition, which has an effective date of 1 January 2019, includes a 22% non-operating interest in the producing Abu Sennan concession, onshore Egypt, where production averaged 7900 bpd in the first half of February 2020 (over 1700 bpd to United’s net working interest).

Abu Sennan operational update

United has provided the following operational update on the Abu Sennan concession in the Western Desert, onshore Egypt, one of Egypt’s most productive hydrocarbon regions:

  • Gross production for the concession has averaged over 7900 bpd for the first half of February 2020 (over 1700 bpd to United’s net working interest). This follows the successful ASH-2 well and amounts to a doubling of the production from the concession since the effective date of the Acquisition (1 January 2019).
  • Following the result of the ASH-2 well, which tested at a maximum gross rate of 7027 bpd from the Alam El Bueib reservoir at the end of December 2019, and which has been onstream at over 3000 bpd (660 bpd to United’s net working interest) since the beginning of January 2020, plans to optimise the further development of this area are well advanced.
  • El Salmiya-5, the first of four fully-funded infill wells to be drilled in 2020, spudded on the 3rd February. This is targeting multiple reservoirs in a previously undrained area of the El Salmiya field.
  • Construction of a gas pipeline on the Al Jahraa field is expected to be completed shortly. On a gross basis, this is expected to bring an additional c. 1000 bpd of gas onstream.
  • United’s technical team will now be focussed on supporting the operator (Kuwait Energy Egypt), and the other JV partners in optimising production from the seven producing fields within the concession, and pursuing the significant exploration potential within the licence area.
  • United sees significant potential in the 644 km2 exploration area of the field, particularly in the deeper reservoirs, as illustrated by the recent success in the Alam El Bueib at ASH-2. The company is looking forward to working with our new partners to put together an exploration drilling plan targeting the best prospects and aiming to continue the 80% exploration success rate that has been achieved in the licence to date.
  • Gaffney Cline & Associates (GCA) completed a Competent Person’s Report on the assets with an effective date of 30th June 2019 which attributes 12.12  million boe gross 2P reserves to the Abu Sennan Licence (2.66 million boe to United’s net working interest). It is worth noting that these figures pre-date the recent drilling activity on the licence.
  • A further 29.4 million boe of gross unrisked prospective resources (net working interest of 6.46 million boe) have been identified on the Abu Sennan licence by GCA.
  • The BP Facility is based on a floor price of US$60/bbl for c.6600 bbl of crude oil production per month for the next thirty months, effectively hedging this portion of production while allowing United to benefit from market prices above US$60.
  • For as long as Rockhopper holds 10% or more of the entire issued share capital of the company, it is entitled to appoint a non-executive director to the Board and a further announcement will be made in due course.
  • United is also pleased to be retaining the Rockhopper country manager, who will provide continuity with both EGPC and the Abu Sennan joint venture partners and will assist the development of our business in Egypt.

United Oil and Gas CEO, Brian Larkin said: “Completing the Acquisition of Rockhopper Egypt represents a significant milestone in the development of United, establishing the company as a full-cycle E&P company, and putting us in a strong position for further growth.

“At over 1700 bpd, our 22% share of production at Abu Sennan and the revenues it generates are material. This does not take into account any future growth arising either from the ongoing infill drilling programme at Abu Sennan or the multiple exploration targets that have been independently estimated to hold gross unrisked prospective resources of 29.4 million boe. Production has increased significantly over the last 12 months, reaching 7900 bpd in February 2020. This highlights the potential of the assets and we look forward to working with our new partners to fully deliver on this promise.

“With drilling now underway at El Salmiya 5, the first well in the fully funded 2020 infill programme in Egypt, first gas scheduled for later this year in Italy and further progress expected across our other licence areas, we are entering an exciting phase in United’s development, one which will see our highly cash generative platform deployed to grow the company further. With this in mind, we look forward to keeping shareholders appraised of our next steps on what has already been an exceptional growth trajectory.”

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