Proactive Investors - United Oil & Gas PLC (LON:UOGU) shares rallied, rising around 10% in Thursday’s early deals, as it secured an extension to its Walton Morant exploration licence in Jamaica.
It sees the company retain its rights over the massive 22,400 square kilometre exploration block until January 2026.
The AIM-quoted firm can now continue its efforts to bring a new partner into the project, to replace Tullow Oil (LON:TLW) which exited the venture in 2020.
According to estimates by consultant Gaffney Cline & Associates, the untested exploration acreage has the potential to host some 2.4 billion barrels of oil – with the identified Colibri prospect seen to potentially have 406 million barrels, and United says such a project could be worth $23 billion.
At the moment, United Oil & Gas’s share price values the company at less than £3 million, and, an offshore exploration well will have a capex budget counted in tens of millions.
Finding and securing a partner prepared to invest in a well will be the first step in testing that potential value, and, chief executive Brian Larkin today repeated that “positive interest that has been shown by several parties”.
"This two-year license extension in Jamaica is a significant next step in our strategy alongside our onshore operations in the UK,” Larkin said in a statement.
He added: “This licence extension enables us to confidently continue our farm-out campaign, seeking a strategic partner to unlock the immense potential in this region.
“We will continue to focus on the recent positive interest that has been shown by several parties, and with the extended licence, this is a significant opportunity for the benefit of all stakeholders.”
In London, United Oil & Gas shares rose 11.76% to change hands at 0.38p each.
Earlier this week, United shares plummeted following the issue of a default notice by the operator of the Abu Sennan project in Egypt.
Kuwait Energy served the $3.8 million notice to United, with the claim said to cover unpaid cash calls. The notice gave United a 30-day period to remedy the default.
In a statement, the AIM-quoted company said it was in negotiations to sell its 22% stake in Abu Sennan to United Energy Egypt Limited. However, these talks failed due to disagreements over the sale and purchase agreement.
United said it is now exploring various options, including legal consultation and ongoing discussions with stakeholders, to address the default notice, while also dealing with the challenges of repatriating funds from Egypt and managing a receivables balance and cash reserves.
The share price is down some 69% in the past six months, having traded as high as 1.5p in August.