London-listed United Oil & Gas has acquired its first African license.

The license was acquired with the signing of an option agreement with Elephant Oil to farm in to their Block B onshore acreage in Bénin, West Africa.

United will potentially be taking a 20pc interest in the production sharing agreement (“PSC”). 

The block is located in the Dahomey Embayment (Coastal Basin) and covers an area of 4,590 sq km (approximately 1.1 million acres).

The Dahomey Embayment of onshore Benin is a frontier area, with no wells drilled in it to-date.

At this point, the Block B licence data is limited to a single seismic line and a CGG-acquired airborne Falcon Gravity Gradiometer survey. 

This data suggests the presence of numerous large structures in the licence, with the potential to hold over 200 million barrels of oil reserves. The Allada structure has already been identified by Elephant Oil as a prospect. 

Under the farm in option agreement, United have agreed to fund passive seismic and field studies up to a value of $175,000. The completion of the passive seismic programme is being targeted for April. 

The goal of the proposed work programme will be to calibrate the depth to basement and obtain further information on the oil and gas seeps.  This will further de-risk maturity and migration in the area ahead of the completion of a final decision to exercise the farm in option.

If United chooses to exercise the option, the company will farm into the PSC for a 20pc interest and will be responsible to fund 30pc of the non-drilling and 20pc of the drilling costs in the Phase 1 work programme as approved under the PSC. 

United would also pay Elephant the sum of US$260,000, representing one quarter of the pro rata (20pc) past costs expended by Elephant on the prospect, with the remaining US$780,000 paid in three equal six monthly instalments.

United CEO Brian Larkin said: “We are delighted to take a position in this exciting new opportunity.”

“The new licence is a great fit with the United business model, where we are continuing to build a portfolio of near-term low risk assets and a viable producing business based in Europe, with carefully selected frontier exploration licences with transformational upside in South America and Africa.”

Founded in 2016, United initially raised funding through private investment. In 2017 the company listed on the London stock market.

Mr Larkin is a veteran of both Tullow Oil and Providence Resources.

Source: Read Full Article