Investors in United Oil & Gas PLC (LON:UOG) will be encouraged that the recent recovery in oil prices has significantly enhanced cashflows and improved the economics of United Oil & Gas PLC‘s (LON:UOG) operations in Egypt, that’s according to Stockbroker SP Angel.
The broker, following the company’s financial results statement, in a note said that United “continues to maintain strong operational momentum” following the success of the ASH-3 and ASD-1X wells.
“Against the backdrop of an unprecedented year for the sector, UOG has emerged as a low-cost producer poised for significant growth this year,” SP Angel analyst Sam Wahab said in a note.
“Cash generation is expected to continue strongly throughout 2021 in line with increased production and pricing, particularly in the second half of the year as the capital expenditure associated with the drilling campaign is phased almost entirely in the first half.”
Wahab added: “Shareholders will also be encouraged that the recent recovery in oil prices has significantly enhanced operational cashflows and improved the economics of additional development wells and there will be further drilling activity with the AJ-8 development well in the near term.”
On Monday, United reported US$9.1mln of revenue and a US$0.85mln profit for the year.
It generated some US$4.8mln of cash from operating activities whilst it has cash capital expenditure of US$2.5mln. The company ended the year with US$2.2mln of cash.
The company described it as a “landmark year” as chief executive Brian Larkin highlighted that United had positioned itself as a full-cycle oil and gas company with strong production, diverse assets, and clearly defined avenues to deliver further material growth.
United’s acquisition of Rockhopper Egypt was a key event in the year, as it established a production base which exceeded expectations.