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(Sharecast News) - United Oil & Gas announced the spudding of the ASD-1X exploration well in Egypt's Abu Sennan licence on Monday, where it holds a 22% working interest alongside operator Kuwait Energy Egypt.
The AIM-traded firm said the exploration well, which was being funded entirely from operational cash flow and would take up to 60 days to drill, would test a number of stacked reservoir targets.
It described ASD-1X as a vertical exploration well, located 12 kilometres to the north-east of the producing Al Jahraa Field and primarily targeting the sandstone reservoirs of the Abu Roash 'C' and 'E', with the Abu Roash 'G' reservoir providing a secondary target.
The targeted reservoirs were expected to be encountered between 3,000 and 3,500 metres measured depth.
United said the well was being drilled by the EDC-50 rig, which recently completed the successful ASH-3 development ahead of schedule and under budget.
It expected that the ASD-1X well, if successful, could be placed on production "rapidly" through existing infrastructure.
ASD-1X is the second well to be drilled in the 2021 campaign, which was being entirely funded from operational cash flow.
Subject to final approvals, the joint venture partnership had now agreed a third well for 2021, being the AJ-8 development well, which was originally scheduled for 2020 and deferred due to the lower oil price environment.
That well would target the Abu Roash and Bahariya reservoirs in an undrained area of the Al Jahraa Field, and would be drilled by the EDC-50 rig after completion of ASD-1X.
"There is considerable exploration potential in the Abu Sennan licence, and it is great to be actively drilling wells to unlock that potential," said chief executive officer Brian Larkin.
"We are delighted that the ASD-1X exploration well has been spudded and look forward to updating shareholders once the well has reached the target reservoirs.
"The improving oil price environment of recent months has significantly enhanced operational cash flows and improved the economics of additional development wells so it is also very pleasing to have confirmation of the drilling of the AJ-8 development well immediately after completion of ASD-1X."
At 1521 GMT, shares in United Oil & Gas were up 4.55% at 4.52p.
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