United Oil values repository south of Westmoreland at US$23b
Published:Friday | February 2, 2024 | 12:09 AMSteven Jackson - Senior Business Reporter
United Oil and Gas (United Oil) has valued the largest repository within its wider zones of oil exploration offshore Jamaica as being worth J$3.5 trillion, or US$23 billion, at current oil prices.
It still, however, needs to prove that substances that resemble oil are indeed oil, and will require investments to dig the ocean floor for core samples.
“The potential net present value at a 10 per cent discount [is] US$23 billion to United at 100 per cent working interest over the 25-year production life of the licence,” according to United Oil in a statement from CEO Brian Larkin.
The oil quantum figure comes in at current oil prices, once discounted for inflation at 10 per cent.
The region that it focuses on is called the Colibri zone, which holds 2.4 billion barrels of substances that resemble oil. It forms part of its vast exploration zone that spans 22,400 kilometres, or essentially the entire south of the island called the Walton-Morant licence.
Colibri is south of Westmoreland in the Walton portion of the licence.
The company also stated that its break-even point for drilling is a fraction of the current US$77 a barrel oil on the world market.
“Success case [is] break-even oil price of US$25 per barrel,” stated the company.
All these elements favour the company finding a drilling partner to cut down on the US$30-million estimated cost to drill. But Larkin mentioned a series of global shocks that have affected oil exploration.
He, however, added that the Government remains supportive of the search, based on its potential to transform the fortunes of the historically cash-strapped nation.
“The Government of Jamaica remains supportive of hydrocarbon exploration and achieving the potential of this licence. Against the global backdrop of geopolitical instability, exploration and development success on the licence could be transformational for the nation, delivering long-term energy security, generating significant revenue and creating economic opportunities for the nation, in line with Jamaica’s National Energy Policy,” stated Larkin in a statement.
During this extension, United will undertake additional technical studies, including “piston core sampling and seismic reprocessing”, aimed at further de-risking the petroleum system and better defining the prospects and leads identified on the licence, it stated in a release.
The company advisers are Energy Advisors Group from Texas, United States, and Envoi from London, United Kingdom.
“[We] will now continue in efforts to secure a partner, in a market that the board believes holds renewed interest in exploration opportunities worldwide, driven by the strong future demand for oil and gas,” stated the company.