United Oil gets extension to drill in Jamaica
Published:Wednesday | August 5, 2020 | 12:13 AM
The Jamaican Government has granted United Oil & Gas Plc, UOG, an extension to January 2022 to find a drilling partner and start extracting oil from the Walton-Morant Basin offshore Jamaica, according to the company’s latest filing.
United now holds the full licence for Walton-Morant, having acquired the 80 per cent interest held by Tullow Oil Plc, the former lead partner in the exploration project.
“The United team knows this licence well, having worked on it for many years. Our experience and understanding of the licence and conviction about it was critical to the Jamaican Government’s decision to grant us operatorship, 100 per cent interest, and an 18-month extension,” United Oil CEO Brian Larkin in his statement to shareholders for the company listed on the London Stock Exchange. Both UOG and Tullow are based in the United Kingdom.
“We are confident in the quality of this licence and in the opportunities that exist not only in the Colibri prospect, but across the full 22,400-square-kilometre area,” he said.
With the 18-month extension by the Government of Jamaica, United Oil said it has until January 31, 2022, “before the drill-or-drop decision is required”.
The Walton-Morant Basin originally covered 32,065km2 and included 10 full blocks and part of a block in shallow waters to the south of Jamaica. However, the amended agreement with United resulted in the voluntary relinquishing of a portion of the licence, leaving a more focused area of about 22,400km2 which includes its key area of interest, the Colibri area. The company stated that it will also perform detailed interpretation of the numerous follow-on targets, including Moonraker, Thunderball, Moneypenny, Jaws, Goldfinger, Vesper, Oriole, Earspot and Rumpspot
Tullow Oil officially exited its search earlier this year. United said it paid “a nominal fee” for Tullow’s 80 per cent stake. It valued the investment conducted by Tullow in 2D and 3D mappings and other research at US$30 million.
Tullow Oil wrote off its oil exploration licence for the Walton-Morant Basin in March, from which it took a US$36-million hit. Tullow was already undergoing severe restructuring in the months leading up to the onslaught of COVID-19, which added to its challenges.
United plans to focus its initial work in the Colibri area, where it estimates it has a greater chance of success at hitting oil.
“The Colibri prospect has been independently estimated to contain gross unrisked mean prospective resources of 229 million stock tank barrels, or MMstb, and up to 513 MMstb in a high-case scenario,” the oil exploration company said.
United is the third company to lead the search for oil in Jamaica in a decade. Sagres Energy of Canada entered the market in 2010 and exited in 2012 after failing to secure a drilling partner; Tullow entered the market in 2014.