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View From The City: United Oil & Gas building a ‘formidable’ and ‘increasingly well balanced’ portfolio (UOG)

22 Jul 2019 | by: Richard Mason

United Oil & Gas (LSE:UOG) has taken significant steps forward in the development of its business since the beginning of 2019. Alongside licencing milestones and reserve/resource upgrades at its appraisal/development assets in the UK, Italy, and Jamaica, the firm has expanded its interests with new exploration properties, including one in Benin.

In a recent research note, Optiva Securities hailed United’s ‘formidable’ progress and ‘increasingly well-balanced’ portfolio before giving it a risked and un-risked valuation of 11.4p and 51p per share respectively. Meanwhile, the broker also valued United’s portfolio at £49.6m.

At 3.85p per share, United’s market capitalisation is £13.48m. If Optiva’s “sum of the parts” estimates for the value of the business stand true, the then path to value creation is clear. In the attached report, we demonstrate how Optiva reached its encouraging valuation by running through United’s portfolio on an asset-by-asset basis. We also take a look at the broker’s encouraging outlook for United’s finances and the praise it has heaped on to the business’s highly-experienced managing team, comprising several former Tullow Oil executives.

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