United seeks more funds to support Jamaica
Published:Sunday | December 22, 2024 | 12:07 AM
United Oil & Gas plc, a London-based oil and gas exploration firm, plans to raise £700,000 - roughly J$140 million - in a share offer to fund its operations, including activities in Jamaica.
Shareholders will “vote in relation to certain resolutions, including those in connection with the Conditional Fundraising”, at its upcoming annual general meeting in January, according to the company in a statement.
Earlier in the month, the company announced the halt of all its non-core activities to preserve cash. This included halting talks with potential drilling partners offshore Jamaica until 2025. Now, the company has decided to raise funds from the market as a way to fortify its operations.
“This fundraising is a pivotal moment for United as we position the company for exploration-led growth. The funds raised will enable us to fulfill our work programme obligations in Jamaica and strengthen our farmout efforts,” stated United Oil CEO Brian Larkin in his release.
Earlier in the year, the company raised £1.0 million in a share offer largely to support exploration activities in Jamaica. Larkin explained to shareholders that the second share offer reflected the limited options available to the company.
“We fully acknowledge the dilution this fundraising creates, following an earlier raise,” stated Larkin. “The decision to raise capital at this level was not taken lightly. However, it was necessary to ensure that United remains financially equipped to pursue value-creating opportunities, particularly in Jamaica, where we see significant potential to unlock shareholder returns.”
The Jamaican asset represents a major opportunity for the company. The potential value of its most promising reservoir was independently estimated at US$23 billion, which could be extracted over a span of 25 years. United Oil requires a test drill to determine whether the substances are crude oil or underground water.
United, listed on the AIM market of the London Stock Exchange, has been exploring offshore Jamaica for years. However, operations have scaled back this year following its exit from Egypt due to currency challenges.
United Oil has one year remaining under its two-year licence extension that expires in January 2026. The company holds a licence to explore 22,400 square kilometres offshore along the island’s southern coast, known as the Walton-Morant zone. The company conducted a series of 2D and 3D tests and uncovered substances resembling oil, but further investigation was needed.
Two weeks ago, United announced that its chairman, Graham Martin, will step down in January 2025 for personal reasons. The company is actively seeking a successor to guide its next growth phase.
“We remain focused on preserving our financial position through ongoing cost reductions while ensuring that our focus on Jamaica remains a key priority,” stated United Oil.