United Oil & Gas PLC ("UOG"), the growing oil and gas company with a portfolio of production, development, exploration and appraisal assets offers an update on the milestone payment from Hibiscus Petroleum Berhad's indirect wholly-owned subsidiary, Anasuria Hibiscus UK Limited ("Anasuria Hibiscus") for the purchase of Licence P2366, Blocks 15/18d and 15/19b, which include the Crown discovery.
On December 12th 2019, Anasuria Hibiscus completed the acquisition of 100% interest in the named blocks from United and Swift Exploration Limited ("Swift Exploration") for a total cash consideration of up to US$5 million, to be paid based on a series of planning milestones and production targets.
A payment of US$1m was received from Anasuria Hibiscus on completion in December 2019. A payment of US$3m (US$2.85m to United) is due to be paid within 7 days of the actual date of approval of the Marigold Field Development Plan ("FDP"), which includes the development of the Crown discovery as part of the overall Marigold development ("FDP Approval"), by the UK's Oil and Gas Authority ("OGA"). This approval was expected to be received by the end of 2020.
Anasuria Hibiscus is currently in advanced stages of drafting the final FDP and has been in pre-submission discussions with the regulator to ensure the FDP meets their requirements. As a result of delays, which are in large part due to the impact of Covid-19, we have been informed by Anasuria Hibiscus that whilst the FDP will be submitted on schedule by the end of December 2020 the project final investment decision ("FID") which triggers the OGA approval of the FDP is now expected to be around the end of March 2021. It is clear that Crown remains an important and value accretive part of the Marigold Development, and as a result of this delay and following recent discussions with Anasuria Hibiscus the US$2.85m payment is now expected to be in the second quarter of 2021.
In the event FDP Approval is not achieved, Anasuria Hibiscus may, at its discretion, proceed with the US$3 million payment or transfer License P2366 back to United and Swift Exploration at nominal consideration without any further payment obligation.
United Chief Executive Officer, Brian Larkin, commented:
"The short delay in this FDP Approval is understandable under the current circumstances where project timelines are being impacted by Covid-19 and does not have any impact on United's plans to recommence drilling in Egypt which will be funded from operating cashflow."