Email to company1 Aug 2022 22:41
I sent an email to the company asking for clarification on cash balances and ASD-2, why production guidance had not been raised.
I have sent a reply asking if the other wells are reducing at the same rate that ASD-2 is producing.
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The cash balance as at 30 June, is a function of the cash balance at 31 December and the operational activity, capex expenditure and debt repayments in addition to divestment proceeds and other movements in working capital and FX in the period. As noted on the call, the funds generated in Egypt are used to cover the cost of activity on both the Jamaican and North sea licences and work carried out to evaluate new venture opportunities in addition to the cost of running the G&A for the group.
Cash capex for the full year remains as guided at $7.2 million.
Revenue, as Peter explained on the call, is a function of oil and gas (15%) production , realised oil price and contractors take c.42%.
We will be providing a fuller update to the market at our half years results in September.
We remain fully funded for our work programmes for all of our assets. Our production guidance for the full year is unchanged. Our capex programme allows us to invest into our assets to maximise value from them. Drilling wells is important in any asset to deliver the maximum long term value from the assets, and this includes both reserve replacement and also enhanced production rates. Please also note that the capital expenditure programme this year is expected to deliver returns to the company over many years.
On the production, the ASD-2 initial production was 462 boepd, and like all wells, this numbers stabilises as production continues. So it may not be useful to think of the initial production rate as the rate everyday for the rest of the wells life. This applies to all wells in the industry. Rather, the production guidance of an oil and gas company is much more useful metric. United is producing in line with its guidance. I.e United have guided that its production will be for the whole of 2022 will be between 1500-1650 boepd, and that is something that we are producing in line with. I hope that alleviates your concerns.
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