Key points:
- The United Oil & Gas (UOG) share price plunged 11% on a drilling update.
- Investors ignored all the positive milestones achieved by the company.
- Can UOG shares reverse course and rally? Read on to find out.
The United Oil & Gas PLC (LON: UOG) share price plunged 11% after announcing that it had commenced drilling operations at its ASH-4 development well in the Abu Sennan licence area, onshore Egypt.
Investors were unimpressed by the news, as evidenced by the decline in UOG’s share price. Investors were expecting more from the oil and gas company that boasts a production, exploration, development and appraisal portfolio.
Also read: The Best Oil Stocks To buy Right Now.
United Oil & Gas confirmed that it had started drilling its fourth well (ASH-4) as part of its 2022 Abu Sennan drilling programme. ASH-4 is a unique high-impact well that targets discovering over 2 million barrels of gross oil deposits within the prolific Alam El Bueib (AEB) reservoir.
Investors were disappointed to learn that the company had not managed to establish a consistent flow rate at its AJ-14 well despite recovering some oil to the surface during testing.
The company is still doing further testing within the Abu Roash-C (“ARC”) interval at AJ-14. However, based on pre-drill estimates, it expects to deliver commercial production rates of up to 300 barrels of oil daily.
Investors ignored that United Oil & Gas was fully funding the drilling of the ASH-4 well with monies generated from its operational cash flow. The drilling is expected to be completed within 55 days and is done as a vertical hole directed at the prolific AEB reservoir.
United Oil & Gas told investors that it had encountered seven metres of net pay within the primary ARC target, which aligned with the upper target of its pre-drill estimates. Still, investors were unmoved by the positive results as UOG shares kept trading in negative territory.
Brian Larkin, United Oil & Gas CEO, commented: “The ASH-4 development well has the potential to be an important well for United from both a production and reserves perspective as it is targeting one of the most prolific reservoirs in Abu Sennan.”
For those wondering whether UOG shares can reverse course and rally higher. The short answer is yes. Still, they can quickly turn around.
*This is not investment advice.
The United Oil & Gas (UOG) share price.
The United Oil & Gas (UOG) share price plunged 10.98% to trade at 1.54p, falling from Wednesday’s closing price of 1.73p.
