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(Sharecast News) - United Oil & Gas updated the market on Friday on the milestone payment from Hibiscus Petroleum's indirect wholly-owned subsidiary, Anasuria Hibiscus UK, for the purchase of licence P2366, blocks 15/18d and 15/19b, which include the Crown discovery.
The AIM-traded firm said that, on 12 December 2019, Anasuria Hibiscus completed the acquisition of a 100% interest in the named blocks from United Oil and Swift Exploration, for total cash of up to $5m, to be paid based on a series of planning milestones and production targets.
A payment of $1m was received from Anasuria Hibiscus on completion, and a payment of $3m, of which $2.85m would be due to United, was to be paid within seven days of the date of approval of the Marigold field development plan, which includes the development of the Crown discovery as part of the overall Marigold development, by the UK Oil and Gas Authority.
That approval was expected to be received by the end of 2020.
United Oil said Anasuria Hibiscus was currently in the "advanced stages" of drafting the final field development plan, and had been in pre-submission discussions with the regulator to ensure the plan met requirements.
As a result of delays, which it said were in large part due to the impact of Covid-19, it had been informed by Anasuria Hibiscus that while the plan would be submitted on schedule by the end of December, the project's final investment decision, which would trigger OGA approval, was now expected to be around the end of March.
It said it was "clear" that Crown remained an "important and value-accretive" part of the Marigold development, and as a result of the delay and following recent discussions with Anasuria Hibiscus, the $2.85m payment was now expected to be in the second quarter of 2021.
In the event that field development plan approval was not achieved, Anasuria Hibiscus could, at its discretion, proceed with the $3m payment, or transfer license P2366 back to United and Swift Exploration at nominal consideration, without any further payment obligation.
"The short delay in this field development plan approval is understandable under the current circumstances where project timelines are being impacted by Covid-19, and does not have any impact on United's plans to recommence drilling in Egypt which will be funded from operating cash flow," said chief executive officer Brian Larkin.
At 1049 GMT, shares in United Oil & Gas were down 1.89% at 2.75p.
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