United Oil agrees sale of Central North Sea assets

United Oil & Gas announced the signing of non-binding heads of terms on an agreement to sell UK Central North Sea licences P2480 and P2519 to Quattro Energy, it announced on Wednesday, for headline consideration of up to £3.2m.

The AIM-traded firm was awarded licence P2480 in the UK’s 31st licencing round in August 2019, and Licence P2519 in the 32nd round in December 2020.

It holds a 100% equity interest in each, with P2519 including the Maria Discovery in block 15/18.

The company said low-cost but important data analysis, carried out by the United team, had added “significant value” to the licences since award.

It described Quattro Energy as a new UK company incorporated in April by an “experienced” North Sea-focussed management team.

The acquisition of United's interests was a first step towards Quattro's objective to build a portfolio of oil and gas appraisal, development, and producing assets.

United said the transaction would result in an initial payment of £2m at completion, and subject to a field development plan being approved for block 15/18, an additional uplift amount of £1.2m would be paid.

This deal, which remained subject to the completion of satisfactory due diligence, definitive documentation and Oil and Gas Authority (OGA) approval, was expected to complete by 30 September.

The divestment of the licences, following a strategic review of the company's portfolio, would see United exit activities in the North Sea region.

It said the transaction proceeds would provide it with the financial flexibility to grow its low-cost production business in Egypt and the greater Mediterranean area, complemented with selected “high-impact” exploration opportunities in the Caribbean and Latin America.

“With this transaction we continue to demonstrate our ability to actively manage our portfolio of assets to unlock significant return in value for our shareholders in a short period of time,” said chief executive officer Brian Larkin.

“”In line with our stated strategy, the proceeds of this transaction will further strengthen our balance sheet to support the growth of the company.”

At 1336 BST, shares in United Oil & Gas were up 0.47% at 3.74p.