Is United Oil & Gas’s stock price on the mend?
Shares in the energy minnow plunged to a new low at the end of March – 1.15p – but gradually rose up through April and are now resting at 1.85p.
Down from close to 5p a year ago, United’s current value is far from ideal for its long-standing investors, but they’ll be hoping the firm can continue to climb in the coming months.
Who are United Oil & Gas?
Set up by a group of former Tullow Oil employees, United was founded and floated on the London Stock Exchange in 2015.
An oil and gas exploration, development, and production company, United currently has assets in Egypt, the UK, Italy, and Jamaica.
The firm is led by chief executive Brian Larkin, a founder director, who formerly worked for Tullow and Providence Resources.
How has its share price performed?
After a tough start on the stock exchange after its 2015 listing, United was doing well in early 2018, with its share price topping 6p.
But after a gradual decline through the rest of 2018 and 2019, shares in the firm – along with its market rivals – fell off a cliff this spring as oil prices tanked.
What has the company said?
United’s last update to the market came in early April. It appears to have sparked something of a revival of confidence in the company, with its stock rising throughout the month.
The focus of the update was on the commencement of gas production at the on-shore Al Jahraa Field in the Abu Sennan concession, in which United owns a 22 per cent interest.
CEO Larkin said: Rising production in Egypt was “helping to compensate for the lower oil prices”.
He said that gross production has more than doubled, to 8,400boepd, since United’s effective date of acquisition of the site from Rockhopper Exploration in January 2019.
He added that its low operating costs mean it is still profitable despite oil prices.
What about Covid-19?
Larkin also addressed coronavirus and oil prices in the update.
“Post completion of the Egyptian acquisition, we indicated our intention to review our portfolio and to optimise our investment strategy,” he said.
“The economic and political uncertainty created by Covid-19 and the current low oil prices have created considerable challenges for our industry.
United’s leadership team has reviewed our business in-depth and has mapped out what we believe is a sensible course through the months ahead.
“We are focussing on investment which we believe will deliver the most immediate return for our business.”
He added that United’s aim is to “focus expenditure where it can deliver immediate benefit, maintain cashflow and emerge from this period of uncertainty in a position of strength, relative to the industry”.
As noted above, United’s share price has been in recovery mode over the last month or so, despite oil price turbulence. This suggests that investors may be beginning to buy into United’s results and strategy after a tough couple of years.
United’s near future on the stock market could be heavily influenced by oil prices.
On Monday, the firm’s Twitter account highlighted a recent Goldman Sachs research note stating that its analysts are “patiently bullish” on oil prices.
United bosses and shareholders will hope that confidence is well placed.
Brian last spoke to our friends at Proactive back in December 2019 here.