AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights:
- Cash Flow Concerns: United Oil & Gas has warned about its strained cash position, citing delayed payments from Egypt's EGPC.
- Cost-Cutting Measures: The company is slashing expenses to "bare minimum" levels to extend its financial runway.
- Jamaica Asset Negotiations Suspended: Farm-out talks for the Jamaican asset are postponed until 2025.
United Oil & Gas PLC (LSE:UOG) announced on Tuesday that it is taking drastic measures to address its cash flow crisis, driven by prolonged delays in payments from Egypt. Shares in the company plummeted 29%, trading at 0.13p, reducing its market value to just over £1 million.
Delayed Payments Strain Operations
The company revealed that payments owed by the Egyptian General Petroleum Corporation (EGPC), previously described as imminent, have yet to be received. This has placed significant pressure on United’s cash position. Talks with Egyptian authorities are ongoing as the company seeks a prompt resolution.
“The company is taking all necessary steps to secure prompt resolution," United said in a statement.
Cost-Cutting to Bare Minimum
In response to the financial challenges, United has initiated stringent cost-cutting measures, reducing operations to "absolute essential outgoings only." Chief Executive Brian Larkin emphasized the importance of these steps in preserving the company’s limited resources.
“We plan to significantly reduce the company's cost base to absolute essential outgoings only, in order to maximize the chances of securing a potential farm-out agreement within the constraints of our limited funds and timeframe,” Larkin stated.
Jamaica Asset Farm-Out on Hold
Adding to the challenges, United Oil & Gas disclosed that its farm-out negotiations for its Jamaican asset have been suspended until 2025. This delay reflects the company's focus on cash conservation and navigating its immediate financial constraints.
Market Reaction
The update triggered a sharp sell-off in United Oil & Gas shares, with the stock losing nearly a third of its value in early trading. The market reaction highlights investor concerns about the company's liquidity and its ability to sustain operations amid these challenges.
Outlook
Despite the immediate difficulties, United Oil & Gas remains committed to resolving its receivables issue with EGPC and progressing its portfolio. The company’s focus on minimizing costs and preserving cash is aimed at ensuring it can navigate this turbulent period and potentially secure farm-out agreements to support its long-term objectives.
