United Oil & Gas (LSE:UOG) told investors a seismic programme has begun at the Walton-Morant licence it co-owns with Tullow Oil (LSE:TLW) in Jamaica. A boat contracted to acquire 2,250km2 of 3D-seismic departed for deployment at the licence late last month and began acquiring data earlier this week.
The programme, which involves generating and recording seismic data, at the 32,000km2 offshore site is expected to take around eight weeks. It will be centred on the Colibri prospect, which has been estimated to hold gross mean-case prospective resources of more than 200MMbbls. An active offshore oil seep was also recently identified near Colibri. United’s shares were down 3pc, or 0.2p, to 4.9p at the time of writing.
The news comes a month after United announced that the Petroleum Corporation of Japan approved the transfer of a 20pc interest in Walton-Morant to United’s control from operator Tullow, which owns the remaining 80pc. According to United, a decision on whether or not to develop the Colibri lead is required by the end of next year. If data if positive, an exploration well would be drilled in 2020.
To date, 11 wells have been drilled at Walton-Moran, the most recent in 1983. Although none have tested valid structures, all but one has contained hydrocarbons. Since getting into the licence in 2014, Tullow has bought the existing 2D seismic data, shot and interpreted a further 3,650km of 2D seismic, and conducted extensive studies. This has identified numerous structures, including Colibri. As a result, United says any success at Colibri would substantially de-risk the rest of the area.
United Oil & Gas chief executive Brian Larkin said: ‘We are very pleased with the progress to date on our Jamaica licence and we look forward to seeing the initial results. We will update shareholders on completion of the survey in approximately eight weeks. In addition, we continue to evaluate similar high impact licences in neighbouring regions, which we believe could offer transformational growth opportunity, as we look to develop our business.’
Today’s news also comes just one day after United announced an extension to its option to buy an additional 10pc stake in southern UK oil and gas assets from Corallian Energy. The option was granted in January 2018 when United entered a farmout agreement with Corallian to buy an initial 10pc interest in three licences held by a joint venture between Corallian and Corfe Energy. The option expired at the end of March this year but has been renewed until the end of this month on the same terms while United waits for the transfer of the initial interest from the UK Oil and Gas authority to complete.
The Corallian licences are located next to Wytch Farm, the largest onshore oil field in Europe, which has produced more than 450m barrels of oil. To get the initial stake in the licences, United paid 13.33pc, around £1m, of the costs associated with the Colter well, which is planned for Q2 2018.
United enjoyed a strong boost in January when it announced strong gas flows from the successful flow test of its recently drilled Podere Maiar exploration well on the Selva gas field in northern Italy.