Oil search extended to 2026
United needs US$3m for new works
UNITED OIL and Gas Plc will seek funding of US$3 million ($460 million) to carry out final seafloor tests offshore Jamaica, after receiving a two-year extension of its licence, which was due to expire at month end.
The company is packaging the funding requirement alongside an opportunity to buy into its licence, which it fully holds.
“In exchange for funding this final US$3million work programme and a contribution towards United’s costs of US$5.5 million, a partner can earn a material equity interest in the licence,” said an updated oil prospect document from US-based Energy Advisors Group, which acts as a consultant to United Oil.
It’s the second extension for United Oil, but the third if one includes its search alongside former majority partner Tullow Oil, which exited the project in 2020.
The new works involves the collection of core samples of the seabed floor to show the presence of oil. It would augment the 2D and 3D models obtained over the years.
“This final programme includes acquiring seabed piston cores to unequivocally prove the existence of migrated hydrocarbons in the offshore basins,” said Energy Advisors Group.
United OIl also wants to do additional work to map source rocks.
The United Kingdombased company holds the licence to explore two large offshore blocks south of St
Thomas and Westmoreland, called the Walton Morant licence. It covers 22,400 square kilometres. An independent assessment of 11 zones within the area points to a combined estimated 2.4 billion barrels of substances that resemble oil.
On Monday, United Oil indicated that it received an extension to its licence in principle, but that the final sign-off from the Ministry of Science, Energy, Telecommunications and Transport is still pending.
“Following final signature on an amendment to the production-sharing agreement, the licence will run to 31 January 2026,” said Brian Larkin, CEO of United Oil, in a market filing.
The company is listed on the London Stock Exchange.
Full details of the production-sharing terms were not immediately available, but the Government would earn “40 per cent” as its take, according to previous filings and updated documents.
“The support from the Government of Jamaica underscores our relationship and the optimistic industry outlook in Jamaica,” said Larkin. Importantly, United still needs to find a drilling partner to build a test well estimated to cost US$30 million. That’s more cash than United Oil holds on its books.
“We will continue to focus on the recent positive interest that has been shown by a number of parties, and with the extended licence, this is a significant opportunity for the benefit of all stakeholders,” added Larkin. “This extension will empower us to confidently continue our farm-out campaign, seeking a strategic partner to unlock the immense potential in this region,” he said. Last November, United Oil said that it “was engaged in discussions with a preferred potential partner”, but said a month later that the prospective partner had walked away, but no explanation has been forthcoming on the reason for the collapsed talks.
The company plans to focus drilling within the most viable zone called the Colibri prospect, found in the Walton block offshore Westmoreland. Colibri holds about 406 million barrels of resources that resemble oil. Over the past decade, US$40 million was spent on exploring for oil in the Walton block, with Tullow spending the bulk of the funds. In 2020, United Oil, which then held a 20 per cent stake in the licence, took full control, allowing Tullow to exit its 80 per cent position to focus on debt management. The licence was extended from August 2020 to March 2022, and then to January 2024. And now to 2026. United Oil, through its consultant, recently updated filings stating that the company can generate US$3.9 billion from its most promising zone, Colibri, at a price point of US$80 a barrel. Last year, when oil fell to US$60 per barrel, it was estimated that United could generate US$2.5 billion from the zone.