United Oil and Gas hails ‘landmark year’ despite Covid crisis
United Oil and Gas this morning hailed a “landmark year” for the AIM-listed firm despite the carnage caused by the coronavirus pandemic.
The company, one of the few smaller oil and gas firms to operate both exploratory and production assets, posted its first ever profit in 2020.
United also said that it had seen its working production increase nearly a quarter over the year, despite the plunge in demand for fuel during the Covid-19 lockdowns.
That was largely down to the acquisition of Rockhopper Egypt, the firm said, one of a number of new assets the firm took on last year.
It also secured ownership of new licenses in Jamaica and in the UK’s North Sea continental basin.
Chief executive Brian Larkin, who used to work at FTSE 250 firm Tullow, told City A.M. that 2020 was “probably the hardest year of my career”.
A near complete collapse in demand in April and May sent prices down to record lows, battering oil firms profit, but United, named after Larkin’s favourite football team, still managed to post its maiden profit of £850,000, with revenue of £9m.
He said that the firm’s extremely low production cost had enabled United to stave off the damage done to bigger firms.
Before the Open: Get the jump on the markets with our early morning newsletter
At the same time the Rockhopper acquisition, which completed in February and nearly trebled the firm’s output, has transformed United’s business, Larkin added.
“We’re just getting started with Egypt”, he said. “We’ve drilled three wells there so far and all have been successful, and now we’re waiting for the fourth.”
He said that he saw Egypt and Jamaica as likely the core of the firm’s asset base going forward, but did not rule out further acquisitions if the right sites become available.
“We feel that we’re better off focusing on areas that we know best, where we can create maximum value for shareholders. In time, it might make sense to look outside of those regions, but for the moment we’re focused on those core areas,” Larkin said.
For the coming year, the exploratory firm said it expected production to climb again, with output forecast at 2,500 to 2,700 barrels per day.
It will also more than double its spending in 2021, with the majority of its $6m investment set for a number of new wells in Egypt.
Larkin said investors would see a return on that investment later in the year.