United Oil & Gas reports successful Salmiyah-5 development well in Egypt
The United Oil & Gas (UOG) AIM listed oil and gas exploration, development and production company reports that the El Salmiyah-5 development well on the Abu Sennan concession in Egypt early analysis of logging and testing suggests that the Well significantly exceeds pre - drill estimates, further building on the success of the last 12 months which has seen UOG's share of production increase significantly. UOG holds a 22% working interest on the Well.
El Salmiyah-5 was spudded on 3 February 2020, and reached total depth of 4,400m MD (3,911m TVDSS) on 17 April 2020. The Well was targeting previously undrained reservoirs of the El Salmiyah Field, with the primary focus being the Kharita Formation, and secondary objectives in the Abu Roash C and Abu Roash E. After logging, testing, and completion, the rig was released on 21 May 2020.
Net pay was encountered in all of the targeted intervals, totalling in excess of 120m for the Well and exceeding pre-drill expectations significantly. The main Kharita target interval was encountered some 16m shallow to prognosis, indicating a larger than expected undrained area updip of the existing wells in the field. This was further supported by the encouraging well-test results, which achieved flow rates of 4,100 bopd, with a further 18 mmscf/d gas (c. 8,700 boepd in total).
With further testing planned, it would be premature to draw any further conclusions on the oil volumes associated with the Well. United's expectations are that although the Well may initially be brought onstream close to the headline test rate, in the longer-term, it is likely to be choked back to lower levels for sustainable production through the existing facilities. Production from El Salmiyah-5 is expected to generate solid operating margins even at low oil price levels due to Abu Sennan's low operating costs of around $6.5/bbl.
Brian Larkin CEO, United Oil & Gas said: "As a development well into a known field, the El Salmiyah-5 well was always expected to encounter hydrocarbons. However, with a headline figure of c. 8,700 boepd achieved on test from the primary target in the Kharita, it is fair to say the results have significantly exceeded our pre-drill expectations.
When coupled with the outstanding result from the ASH-2 well, which was announced in January, and which is still producing at over 3,000 bopd, from a production point of view, the timing of our entry into the Abu Sennan licence could not have been better. The Well result is a further realisation of the value we identified in the licence, and is likely to lead to our net production levels from the licence rising to over 2,500 boepd in the coming weeks - a significant increase from January 2019, the effective date of the purchase of the asset. Importantly, with operating costs of around $6.5/bbl, this production is highly profitable at today's oil prices.
We firmly believe there is significant additional potential across the Abu Sennan licence - and with further development going ahead to bring gas from the ASH field into production this year, and with a deferred drilling programme ready to be re-instated should market conditions improve, we are looking forward to further activity and newsflow from the asset."