TIDMUOG
RNS Number : 4312A
United Oil & Gas PLC
22 January 2024
United Oil & Gas PLC / Index: AIM / Epic: UOG / Sector: Oil
& Gas
22 January 2024
United Oil & Gas plc
("United" or "the Company")
Receipt of Notice of Default from the Operator of the Abu Sennan
Concession
United Oil & Gas Plc (AIM: "UOG"), the full-cycle oil and
gas company with a portfolio of production, development,
exploration and appraisal assets announces that it has received a
default notice ("Default Notice") from Kuwait Energy Egypt Limited
("Kuwait Energy" or "Operator") for a total of USD $3,822,143 for
outstanding cash calls in relation to the Abu Sennan concession.
Pursuant to the joint operating agreement ("JOA") relating to the
Abu Sennan concession, the Company has 30 days ("Default Period")
to remedy the default from the start of the default period which is
28 January 2024. In the event that the Company does not remedy the
situation during the Default Period, then each non-defaulting party
to the JOA has the option to require the Company to withdraw from
the Abu Sennan Concession pursuant to the terms of the JOA.
The Company had been in advanced discussions regarding the
potential sale of its 22% stake in the Abu Sennan concession to
United Energy Egypt Limited ("UEEL"). UEEL, a sister company of the
operator Kuwait Energy; both share the same parent, United Energy
Group which is listed on the Hong Kong stock exchange. However,
discussions aborted as the Company was unable to agree to execute
the draft sale and purchase agreement ("SPA") presented to it by
UEEL following legal advice notwithstanding the attempts from the
Company to agree a mutually acceptable SPA.
The effective date for the SPA was 1 November 2023, when the
consideration was $2.052 million which would have settled all
outstanding cash calls as at that date, and the Operator would pay
all future cash calls and receive all future revenues. The
increased figure for the default notice is due to the cash calls
received for work undertaken on the concession in the interim
period.
The Company believes that its commercial position remains
unchanged between a default scenario out of the Abu Sennan
concession and the commercial terms of the SPA (if completed), as
the proposed cash consideration from a sale would be used to settle
outstanding cash calls with the Operator and either of scenarios
would involve the divestment of the Abu Sennan concession.
The decision to divest from Abu Sennan was influenced by the
challenging macro-economic conditions in Egypt and the persistent
difficulty the Company faced in repatriating funds from the
country, as previously reported. The Company remained committed to
collaborating with local Egyptian stakeholders, EGPC, and the
Operator to navigate and address these challenges but unfortunately
these efforts have not been rewarded. Also, the 2024 proposed
budget, indicating a net deficit of USD $3 million, reflects
United's belief that the main value has been extracted from the Abu
Sennan concession, prompting a refocus by the Company on other
assets to enhance shareholder value.
Before September 2023, the Company received payments from the
Egyptian National Oil Company ("EGPC") in both USD and EGP, with
the latter primarily used to settle operational liabilities. Since
September 2023, approximately 13% of payments have been in USD,
with the rest in EGP, resulting in considerable foreign exchange
losses when converting EGP to USD. The Company has a receivables
balance of USD $0.80 million outstanding from EGPC and cash in the
bank of approximately USD $1.3 million.
In early November 2023, the JOA partners on the Abu Sennan
concession received a request from the Operator to make a material
USD payment to support the operational needs of the joint venture.
Since this time, United has engaged with EGPC to seek a USD
remittance against our outstanding USD receivable position to
satisfy this demand from the Operator. In parallel, United has
engaged with the Operator to seek alternative solutions to this USD
demand, which included a continuation of the agreed position that
had previously been accepted by the Operator, whereby the JOA
partners settle the Operator cash calls in EGP.
United is currently reviewing the Default Notice in consultation
with its legal advisers. In parallel, we will continue to engage
with the Operator to seek a solution and/or explore other options.
Further information will be provided in due course.
The Company is in discussions with its debt provider (current
balance owing USD $1.089 million) and will update the market in due
course.
United Chief Executive Officer, Brian Larkin commented:
"We are very disappointed that we could not reach agreement with
United Energy Egypt Limited to sell the Abu Sennan concession. We
had worked tirelessly from early December and over the holiday
period to finalise the Sale and Purchase Agreement ("SPA") and
engaged external lawyers to assist through the whole process at a
significant cost. We had agreed the commercial terms, however,
based on external legal advice, we were unable to sign the SPA in
the form that United Energy Egypt Limited presented to us. However,
we believe the differences could have been easily resolved and this
commercial issue avoided."
END
This announcement contains inside information for the purposes
of Article 7 of Regulation 2014/596/EU which is part of domestic UK
law pursuant to the Market Abuse (Amendment) (EU Exit) regulations
(SI 2019/310).
Enquiries
United Oil & Gas Plc (Company)
Brian Larkin, CEO brian.larkin@uogplc.com
Beaumont Cornish Limited (Nominated
Adviser)
Roland Cornish | Felicity Geidt
| Asia Szusciak +44 (0) 20 7628 3396
Tennyson Securities (Joint
Broker)
Peter Krens +44 (0) 020 7186 9030
Optiva Securities Limited (Joint
Broker)
Christian Dennis +44 (0) 20 3137 1902
Camarco (Financial PR)
Andrew Turner | Emily Hall
| Sam Morris +44 (0) 20 3757 4983
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's
Nominated Adviser and is authorised and regulated by the FCA.
Beaumont Cornish's responsibilities as the Company's Nominated
Adviser, including a responsibility to advise and guide the Company
on its responsibilities under the AIM Rules for Companies and AIM
Rules for Nominated Advisers, are owed solely to the London Stock
Exchange. Beaumont Cornish is not acting for and will not be
responsible to any other persons for providing protections afforded
to customers of Beaumont Cornish nor for advising them in relation
to the proposed arrangements described in this announcement or any
matter referred to in it.
Notes to Editors
United Oil & Gas is a high growth oil and gas company with a
portfolio of cash generative production, development, appraisal and
exploration assets across Egypt, UK and a high impact exploration
licence in Jamaica.
The business is led by an experienced management team with a
strong track record of growing full cycle businesses, partnered
with established industry players and is well positioned to deliver
future growth through portfolio optimisation and targeted
acquisitions.
United Oil & Gas is listed on the AIM market of the London
Stock Exchange. For further information on United Oil and Gas
please visit www.uogplc.com
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END
MSCEAXFAAFXLEEA
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