United Oil finds potential partner for Jamaican exploration licence
Published:Sunday | November 12, 2023 | 12:06 AM
United Oil and Gas Plc wants the Jamaican government to further extend the timeline of its licence to explore for oil offshore.
The company has now identified a preferred potential partner for the Walton-Morant licence to explore the block, it said in a statement on Thursday.
The licence expires in January and follows previous extensions related to market disruption caused by the pandemic. The firm holds the right to search for oil in the Walton-Morant area, which runs along the southern coast of the island from Morant Bay in St Thomas to Walton in Westmoreland. The zone for exploration spans 22,400 square kilometres offshore.
“Furthermore, the company is engaging with the Jamaican authorities to secure an extension to the current licence period, which expires at the end of January 2024, so as to provide sufficient time to progress additional technical work on the block to support the drilling of an exploration well,” stated United Oil, which gave no indication how much more time it required.
United Oil holds oil and gas assets in Egypt, United Kingdom and a high-impact exploration licence in Jamaica. Its net worth, at US$27.7 million, is less than the cost to drill a test well, which it estimates at some US$30 million. It therefore needs a partner to share the costs.
“We are encouraged by the continued progress in relation to the farm-out process in Jamaica, as we look to unlock the material value contained in this block and deliver value to our stakeholders, including the people of Jamaica. We are entering a critical stage in the farm-out process and will provide an update to the market as this progresses,” said United Oil CEO Brian Larkin.
Independent assessments put one section of the zone holding over 400 million barrels of substances resembling oil that could yield US$2.5 billion. That estimate was based on oil at US$60. World prices for crude are currently hovering at US$80.