Key points:
- UK Oil & Gas reported excellent drill results for its Al Jahraa-13 Egyptian oil well
- Investors barely reacted to the positive news amid thin holiday trading conditions.
- The energy firm looks attractive at current prices heading into 2022.
The UK Oil & Gas PLC (LON: UKOG) share price barely moved after issuing an update regarding the drilling activities at its Al Jahraa-13 development well in Egypt’s Abu Sennan licence area.
The oil and gas company encountered 17.5m of net pay in the oil-bearing reservoir targets in the Upper and Lower Bahariya.
UKOG reached the well’s planned total depth ahead of schedule and used lesser funds than initially budgeted.
The discovery of commercially viable oil reserves at AJ-13 made it the seventh successful well drilled by UKOG at the Abu Sennan license area since the company acquired the project.
The AJ-13 well continues the successful drilling campaign on the Al Jahraa-8 well. The company was excited when the AJ-13 well reached its total depth of 3,840m days before its deadline and used fewer funds than initially allocated.
UK Oil & Gas intends to finish testing the well in the next few days and plans to bring it on stream via the existing infrastructure at the Al Jahaara facility.
The company owns a 22% interest in the Abu Sennan license area, operated by Kuwait Energy Egypt. The AJ-13 well is the fifth and final well drilled under the firm’s 2021 drilling campaign.
However, UKOG intends to keep drilling new wells under its 2022 drilling campaign.
Investors barely reacted to today’s significant announcement amid thin holiday trading conditions.
Brian Larkin, UKOG’s CEO, commented: “We have had outstanding results with our drilling campaign in 2021 with five out of five successful wells drilled at Abu Sennan this year. All of the wells have been brought into production quickly, generating cash flow for the company. The 2021 drilling campaign has further de-risked the exploration potential at Abu Sennan, and the development wells have provided further valuable data for future exploration drill targets, two of which are included in the 2022 programme, ASF-1X and AST-1X.”
UKOG shares have fallen 31.8% since the start of 2021 and may look attractive to long term investors interested in the company. Unlike many of its peers, UKOG is currently generating revenues from its existing operations, which is set to grow as more wells come onstream.
*This is not investment advice. Always do your due diligence before making investment decisions.
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