United Oil and Gas has taken over the running of Jamaica’s Walton Morant oil field from fellow explorer Tullow Oil, it was announced today.
This morning, the firm announced that the Jamaican government had given it permission to take forward the reserve on a 100 per cent basis.
The deal will give United 18 months to explore the prospect further, with a “drill or drop” decision expected in January 2022.
United already had a 20 per cent stake in the firm, with City broker Cenkos saying that the decision to award it the full license was a “huge endorsement” of the firm.
On the back of the decision, Cenkos raised its valuation of the company to 9.5p, prompting shares to surge 11 per cent in early trading.
United’s stock pared most of its gains as the day went on, closing 1.8 per cent up.
At 22,400 square km, the Walton Morant block is approximately 187 times the size of the average North Sea block – hence the excitement of analysts.
Cenkos said that “given the scale of the upside potential, a successful result at Colibri could open up a new multi-billion barrel hydrocarbon play”.
United said that the field was a “highly prospective frontier basin with compelling evidence for the presence of a working petroleum system”.
It added that a work programme was underway to “further de-risk the Colibri prospect and other targets ahead of a drill decision”.
Chief executive Brian Larkin said: “Walton Morant has the potential to have a major impact on United Oil & Gas and we are delighted to have successfully concluded an agreement with the Jamaican Government to take on operatorship and to develop this licence for the benefit of all stakeholders.
“We will move ahead with a cost-effective programme of activity, building on the significant work that Tullow and United had completed over the last two years and the feedback from a very active farm-down process.
“Our goal will be to further de-risk the asset, bring in partners and move ahead to plan a well on the Colibri prospect”, he added.