Annual Report and
Financial Statements
2022
United Oil & Gas1
An oil and gas exploration
and production company
headquartered in Dublin
and listed on the AIM
market of the London
Stock Exchange. We have
exploration, appraisal,
development and
production interests in
Egypt, a large exploration
licence in Jamaica and
interests in development
assets in the UK.
Founding Year
2015
Oil & Gas Fields
8
Countries
3
2022 Average Net Production (boepd)
1,312
1 United Oil & Gas PLC (“United” or “the Company”) and its subsidiaries (together, “United” or “the Group”).
United Oil & Gas PLC Our purpose
Responsibly producing energy for communities
and stakeholders.
Our vision
To become a leading independent oil & gas
company focused on North and West Africa
and the Greater Mediterranean.
72
FINANCIAL REPORT
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash flows
72
82
83
84
85
86
Notes to the Consolidated Financial Statements
87
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Parent Company
Financial Statements
133
ADDITIONAL INFORMATION
Glossary
Company Information
120
121
122
133
134
2
STRATEGIC REPORT
Company Overview
Strategy
A Year in Review
Chair’s Statement
Market Overview
Chief Executive Officer’s Review
Investment Case
Business Model
Review of Operations
Financial Review
Principal Risks and Uncertainties
S172 Statement
Corporate Responsibility Report
54
GOVERNANCE REPORT
Corporate Governance Statement
Board of Directors
Director’s Report
Remuneration Committee Report
Audit and Risk Committee Report
ESG Committee Report
2
4
6
8
10
12
16
18
20
28
32
38
44
54
60
62
64
68
70
2022 Annual Report and Financial Statements
1
COMPANY OVERVIEW
2022 group highlights
LTIF1
(per million man hours)
2021: 0
Average Net Production
(boepd)
2021: 2,327
0
Cash Opex
($/boe)
10.3
Gross Profit
($m)
12.9
1 Lost Time Injury Frequency Rate
2
1,312
2021: 5.9
Profit After Tax
($m)
2021: 3.6
2.3
2021: 12.3
Revenue
($m)
2021: 19.2
15.8
United Oil & Gas PLC Our Portfolio
Egypt
Jamaica
Abu Sennan
Our producing asset.
Walton Morant
Our high-impact exploration asset
with a drill ready prospect.
Interest: 22%
Interest: 100%
Operational Phase: Production/
Development/Appraisal/Exploration
Operator: Kuwait Energy Egypt
Operational Phase: Exploration
Operator: United Oil & Gas
United Kingdom
In January 2023 United announced that it had entered into an agreement for the
conditional sale of its only remaining North Sea licence. The Company continues
to hold a 26.25% interest in the UK onshore Waddock Cross licence, operated by
Egdon Resources UK.
3
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION STRATEGY
Our strategy
Create value by actively
managing our existing
assets whilst growing our
business through additional
high-margin opportunities.
2
United’s growth
strategy is
supported by
five key pillars 1
Value and strength of our
existing assets
• Egypt gives us low-cost production
leveraged to high oil prices that
continues to deliver strong operating
cashflow providing a solid base from
which to grow
• Jamaica provides exciting exploration
upside, with > 2.4 billion barrel potential
• We actively manage our portfolio
to unlock the value of each asset
throughout its life-cycle
4
United Oil & Gas PLC 3
4
Commitment to managing a
responsible business
• Producing energy in a safe and responsible way
• Creating a safe work environment
• Excellent business ethics and good governance
Financial and risk management
• Disciplined allocation of capital where it generates the
• Ability to access finance to fund future growth opportunities
best returns
• Cost management
• Management of financial risk and mitigants
• Work programmes funded by cashflow generated from
existing operations
Experienced team
•
Leveraging breadth of experience and strong
industry relationships
• Strong technical, financial and commercial
capabilities - expertise in identifying new opportunities
• Track record of executing deals with large scale
E&P companies
• Demonstrated ability in financing significant
corporate growth
Growth through M&A
• Targeting opportunities that will deliver growth
and value
• Focused on North and West Africa and the Greater
Mediterranean area, looking to build on presence in
Egypt and existing experience
• Remaining opportunistic for assets outside these areas
5
5
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION 2
A YEAR IN REVIEW
Our strategy
in action
1
Active portfolio
management
Progress in 2022
We manage our portfolio by acquiring, investing, and then unlocking
the value created. Licence P2519, containing the Maria Discovery
was awarded to United by the OGA in the 32nd Licencing round in
December 2020. United carried out a value-adding low-cost work
programme, resulting in an agreed sale of United’s 100% ownership of
the licence for a total consideration of up to $7m (£5.7m).
Looking forward
In Jamaica the farm-out campaign for the Walton Morant licence,
which has over 2.4 billion barrels of unrisked mean prospective
resources, remains a key focus as we seek to move this potentially
transformational project forward within our licence term. Energy
Advisors Group have been engaged alongside our existing advisors,
Envoi, and a number of companies are currently evaluating the
opportunity with a deadline for indicative offers set for Q2 2023.
6
United Oil & Gas PLC
Abu Sennan:
generating cash to invest in growth
Progress in 2022
It was another active operational year in Egypt. In 2022, a total of five wells at Abu Sennan were
drilled. Two of these were exploration wells and three were development wells. In addition a
number of workovers were carried out. Production averaged 1,312 boepd net (2021: 2,327 boepd
net). This decrease reflects the substantial decline in production that occurred during H2 2021
as water broke through at the ASH Field, as well as expected decline from the existing well-stock
during 2022, partially offset by additional production from drilling activity and workovers.
Looking forward
• The 2023 drilling programme consists of two firm development wells with additional drilling
activity contingent on well results.
• Flexibility in the work programme means we can tailor capital allocation to match
projected cashflows.
• Abu Sennan is transitioning to a phase in its development where operations are focused on
maintaining and extending long term production rates to generate operational cashflows for
many years to come. Egypt remains an integral part of our business providing cashflow which
supports the wider asset portfolio of the Company and our strategy to grow through M&A.
3
Strict capital
allocation
and financial
resilience
Progress in 2022
United has a strong focus on capital discipline, resilience
and the mitigation of downside risk ensuring that the
business preserves capital and balance sheet strength.
Our producing asset in Egypt is resilient in a low-price
oil environment and we are currently benefitting from
higher commodity pricing.
Looking forward
• The capital programme is fully funded from
operating cashflow.
• The financing facility put in place to fund the Abu
Sennan acquisition will be fully repaid in 2023 providing
a re-financing opportunity due to the long term nature
of the cashflows generated from Abu Sennan.
• The proceeds of divestments will be deployed into
growth opportunities that generate the best returns
with consideration to be given to returning a portion of
capital to shareholders.
2022 Annual Report and Financial Statements
7
STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CHAIR'S STATEMENT
Cash flow to support
our operations
Dear Shareholders,
Introduction
2022 has been another active year for the Company
between our operations in Egypt, the progression
of our farm-out campaign for the high-impact
Walton Morant licence in Jamaica, and post year
end the announcement of the conditional sale of
our Maria licence. Although average production on
our non-operating position in Egypt is down in 2022
compared to 2021, it continues to generate positive
cashflows, and we see good potential from the
existing fields to maintain and potentially increase
production for many years to come. I feel we remain
well placed to capitalise on new opportunities which
we continue to explore in the Greater Mediterranean
and North and West African regions and that we
have a strong management and technical team
with the capability to realise our growth strategy.
In Jamaica we completed various technical studies
which lent support to the farm-out process which
continued throughout 2022. We have seen growing
momentum in the level of interest from parties that
possess both the technical and financial capacity
to add value to the project and discussions are
ongoing with a number of potential partners.
Business development opportunities across the full
cycle continued to be offered to and assessed by
the team in the course of 2022, and while a number
of such opportunities are still under consideration
only the most attractive ones consistent with our
strategy and investment criteria will be taken
forward. The war in Ukraine caused uncertainty in oil
and gas markets with prospective sellers and buyers
of assets having difficulty in forecasting prices with
enough certainty to complete transactions. There
are positive signs now that commodity markets
are settling down which should lead to more
opportunities being concluded.
Graham Martin
Non-Executive Chairman
8
United Oil & Gas PLC
Strategy
We are a full-cycle oil and gas company with
the operational cashflow to support our existing
business. We aim to create value by actively
managing our existing assets whilst growing
our business through additional high-margin
opportunities in the Greater Mediterranean and
North and West African area.
Post year end
The key event since the year end has been the
signing of an agreement for the sale of the licence
containing the Maria discovery for a consideration
of up to circa $7m (£5.7m), which is expected
to complete in May this year. This sale was at a
materially higher maximum consideration than we
had agreed in 2021, reflecting the increased value of
the asset following work by our technical team.
The proceeds from this sale will be used to
further our new venture activities and if market
conditions are right to fund a limited share buyback
programme for which we intend to seek shareholder
approval at our forthcoming AGM.
The Company remains focussed on reducing costs
and allocating capital where it delivers the best
returns. In anticipation of the Maria sale and the
reduction of our operational footprint in 2023 we
carried out a full review of our G&A expenditure in
late 2022, as a result of which we announced in our
Trading and Operations update, on 26 January 2023,
a programme to reduce our G&A by 15% across all
categories of expenditure. This programme is now
well underway.
Board and governance
David Quirke stepped down as CFO in June 2022
to pursue interests outside of the industry. We are
very grateful to David for the commitment and
professionalism he brought to the role and wish him
every success in his future endeavours. David was
replaced as CFO by Peter Dunne who comes with
a wealth of professional and industry experience
and has very quickly taken to the role with energy
and enthusiasm. In September 2022, Tom Hickey
stepped down as an independent non-executive
Director to take up an executive role outside the oil
and gas industry.
An internal Board and Committee evaluation
was carried out post-year end, the findings, and
conclusions from which are reported on page 59.
Despite only having two non-executives at the
moment, I believe that we continue to have a good
balance of technical, financial, commercial and
ESG experience on the Board, that all Committees
continue to function effectively and that the non-
executive Directors give appropriate support and
challenge to the executives both at and outside of
Board and Committee meetings.
Dialogue with shareholders
Shareholders’ views on the company, its strategy,
remuneration policy and indeed all aspects of
our business and operations are very important
to the Board and we welcome every opportunity
to engage. I can be reached via the Company
Secretary at info@uogplc.com.
Conclusion and outlook for 2023
2022 was another very active but challenging
year for the Company in the development and
pursuit of our strategy and I would like to record
my thanks once again to our executives and all our
staff for their continued commitment and energy
throughout the year.
We have a full-cycle portfolio, the cashflow to
support our operations, a farm-out process in
Jamaica is continuing and a variety of new venture
opportunities under consideration. We look forward
positively to the year ahead.
Graham Martin
Chair
27 April 2023
9
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION MARKET OVERVIEW
An increasingly stable
oil and gas market
2022 saw the tail-end of the COVID-19
pandemic, which quickly gave way to
the beginning of global geopolitical and
economic unrest.
The year began cautiously with steadily increasing
growth, as financial markets and economies began to
open up fully following two years of uncertainty caused
by COVID-19. The rapid global rollout of the vaccine
meant global travel was opening up, as was return to
the cities, as workers returned to the office. However, in
February 2022, global economies were rocked by the
invasion of Ukraine by Russia, which was the beginning
of economic uncertainty and the threat of recession,
which dominated the remainder of the year.
This volatility began to affect the financial markets in
the latter part of 2022, as the number of IPOs and M&A
transactions declined due to global uncertainty and
continued geopolitical unrest. United is acutely aware
of the current market conditions, and although we
continue to examine M&A opportunities, we do so with
the consideration of what is best for our shareholders.
The uncertainty of the last year continued as we
entered 2023. Despite this, the oil and gas market has
stabilised following significant fluctuation throughout
2022, ending the year at $86 a barrel.
10
United Oil & Gas PLC Political and economic
Global politics has been a prominent topic of
discussion during the year, with a focus on unrest. The
UK witnessed three different Prime Ministers over the
course of 12 months, resulting in a drop in confidence,
both domestically and from the wider global markets.
Following Russia’s invasion of Ukraine, many
countries began to rapidly reduce Russian oil and
gas imports leading to volatility in the oil price and
a widespread energy crisis, which saw the price of
fuel soar. Household bills and petrol prices surged to
extreme highs, which coupled with inflation rises, led
to a cost-of-living crisis. This unrest saw the value of
the British Pound fall dramatically.
Similarly, during the year, the Egyptian Pound
depreciated sharply due to global macroeconomic
volatility, and continued restrictions on US dollar
transfers implemented by the Central Bank of Egypt,
a trend that has continued into 2023. However, relief
has been delivered through the agreement with
the IMF in the last quarter of 2022, where a $3 billion
funding facility was agreed to promote stability.
In order to mitigate the effects of this ongoing
economic volatility, in Q4 2022 United opted not to
accept payment of USD denominated receivables
in Egyptian Pounds unless required for operational
purposes. While this policy resulted in an increase in
receivable balances during the last quarter, it was
put in place to protect the Company against further
exchange related losses.
Energy transition
COP27 was held in our host nation Egypt last year
under the theme "Together for Implementation"
with governments around the globe re-affirming
their commitments to fight climate change. The
spotlight fell firstly on the continued lack of funding
for developing countries with many calling on
governments globally to release funding packages to
support those facing losses due to climate change.
It was highlighted that many companies have
released climate pledges throughout the years,
and the consensus was that these pledges must be
upheld and the companies who have made them
held accountable. United remains committed to its
stance on climate change and the energy transition
and sees a place where it can be a responsible
producer of hydrocarbons during the energy
transition. We released our Climate Change and
Energy Transition Position Statement last year which
can be viewed on our website:
www.uogplc.com/wp-content/uploads/2022/06/
Climate-change-position-statement-003.pdf
Oil price
The global political and economic unrest in 2022
led to increased volatility of the oil price throughout
the year with the oil price climbing dramatically
following the invasion of Ukraine due to a squeeze
in supply. This, combined with further macro supply
risks, predominantly from China through its zero
Covid policy, resulted in Brent reaching a peak of
$139.13 a barrel, the highest price seen since 2008,
according to Reuters.
As the year progressed, weaker demand from
top importers due to the declining economic
environment caused prices to slide. Global prices
of fuel had risen to such an extreme that the UK
Government implemented monetary support to
subsidise the country’s heating bills as the colder
months began, to support the most vulnerable. In
addition, arguments continued across the political
parties as to whether the leading oil and gas
companies should have a windfall tax imposed,
following record profits for majors, with the UK
introducing an Energy Profits Levy in June 2022.
Despite the prevailing concerns of recession, Brent
prices recovered in the latter part of the year, closing
off at $85.91 a barrel, gaining approximately 10% YoY.
11
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CHIEF EXECUTIVE OFFICER’S REVIEW
A year of continuing
progress
2022 was filled with operational
activity across our portfolio, all
completed with zero LTI’s, TRIR’s
and environmental incidents. In
Egypt, five wells were drilled and
completed in addition to a number
of workovers. In Jamaica, the
farm-out efforts have continued
to be a focus with the addition of
a new advisor, and in the UK post
year end an agreement was put in
place for the conditional sale of the
Maria discovery.
Brian Larkin
Chief Executive Officer
12
United Oil & Gas PLC
Operationally, it was a challenging year for United,
delivering mixed results from our Egyptian drilling
campaign, following an exceptional 100% drilling
success during 2020 and 2021. The JV has executed
a number of targeted drilling campaigns since
2020 and having assessed the production and
exploration results from these, our expectation is
that operational activity at Abu Sennan will now
focus more on maintaining and extending long
term production rates to generate operational
cashflows throughout the period of the licence. We
continue to strive to execute our strategy to grow
our business and to drive business performance
against a global backdrop that highlighted the
importance of energy security both at home and
across the locations in which we operate.
Our place in the global energy transition
Reliable access to clean, affordable energy
supplies is required as a fundamental building
block to the delivery of sustainable development
of economies and society as we transition to a less
carbon intensive energy mix. What is required is
responsible, transparent, and safe investment in
traditional sources of energy given the absolute
need for clean, safe, reliable and affordable energy
supply to communities around the world. We see a
place for United to responsibly and safely develop
oil and gas resources to aid global economic
development, contribute to energy security and
the energy transition whilst delivering value for all
our stakeholders.
In 2022 we have also seen increased volatility in
global commodity prices with oil prices increasing
following the invasion of Ukraine. This, combined
with other macro supply risks, resulted in the Brent
benchmark price reaching a peak of nearly $125 a
barrel in March, with the Group realising on average
$96/bbl for our production in the period.
The fundamentals of the business and our business
model remain resilient against this backdrop of
oil price volatility, geopolitical shocks and the
macroeconomic challenges that have impacted
Egypt. Our portfolio of assets across the energy
life cycle mitigates risks; in Egypt our producing
asset provides important cashflows; in Jamaica
the exploration opportunity has the potential to be
transformative for both United and the region; and
in the UK our track record of adding value to and
realising value from assets means we can look to
invest further to grow the business.
Financial resilience
Revenue for the Company was approx. $16m (2021:
$19m) generated from Abu Sennan, which benefited
from the continued high oil price partially offsetting
the impact of lower production in the second half
of 2022. In the year we also continued to pay down
the BP facility which will be fully repaid during 2023.
There is potential in 2023 to consider refinancing
the asset given the long term cashflow forecast
to be generated from Abu Sennan. The Egyptian
pound devalued by circa 60% against the USD in
2022 but since the beginning of 2023 following the
announced agreement with the IMF, we have seen
improved USD liquidity and a recommencement
of regular payments from EGPC. The Group
remains focussed on the optimisation of the cost
base and as announced earlier in the year, we
are undertaking a Company wide review of G&A
targeting a reduction of 15% from 2022. For further
information see the Financial Review page 28.
Abu Sennan - maintaining and extending
long term production
Abu Sennan remains integral to our portfolio,
offering a low-cost onshore operating environment,
production and cashflows for the business which
has shown to be resilient even in a period of
prolonged oil price volatility. In addition, the flexibility
of the work programme means that we can tailor
our capital allocation as needed.
13
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CHIEF EXECUTIVE OFFICER’S REVIEW
continued
We remain committed
to our growth ambitions
Production in 2022 averaged 1,312 boepd net
compared to 2,327 boepd in 2021. This decrease
reflects the substantial decline in production that
occurred during H2 2021 as water broke through
at the ASH Field, as well as expected decline from
the existing well-stock during 2022, partially offset
by additional production from drilling activity and
workovers. In 2022 United and its Joint Venture (JV)
partners executed another active work programme
of five wells and a number of workovers. Although
the two exploration wells have not delivered on their
pre-drill potential, two of the three development
wells came on production in 2022 with the third one
commencing production following remedial works
carried out in 2023. Abu Sennan has been producing
since 2012 and has generated material cashflows
to United since we acquired it in 2019. As the fields
mature, the operational activities will focus more on
maintaining and extending long term production
rates to generate operational cashflows for many
years to come. For further information see the
Operations Review page 20.
Jamaica – accelerating the farm-out process
In the latter part of 2022 United engaged Energy
Advisors Group (EAG), a Houston based advisory
company to work alongside Envoi. EAG has the
potential to open up new pools of interest in North
America, and the United team met with a number of
potential parties in Houston at the beginning of 2023,
to market the Jamaican opportunity. The farm-out
of our high impact exploration licence with 2.4 billion
barrels of un-risked mean prospective oil resource
remains a key focus with a timetable for receipt of
indicative offers due in Q2 2023.
Portfolio Management – acquire and create value
Acquiring assets, adding value and monetising
them in excess of our investment has always been
part of United’s DNA. Licence P2519, containing the
Maria Discovery was awarded to United by the
OGA in December 2020. Following a low-cost work
programme conducted by the Company’s technical
team, adding immense value, United has agreed to a
conditional sale of 100% of our interest in this licence
for a total consideration of up to $7m (£5.7m).
Environmental and Social
Energy security, transition and climate change have
again been a focus this year, especially in Egypt
during COP27 which was held in Sharm El Sheikh.
United and our JV partners continue to work with EGPC
to identify and measure emissions, and initiatives
to reduce them. Further information is available in
our Corporate Responsibility report page 44. We are
pleased to report that the JV has had another year
of zero LTI’s and environmental incidents and the
community investment programmes have focused
on youth education, mentoring and empowerment.
Looking ahead – in good shape to execute
our strategy
There are a number of catalysts in 2023 that have
the potential to provide a material increase in the
Group’s value. During the first half of 2023, we look
forward to closing the conditional sale of the Maria
licence and to updating the market on progress
on the Jamaica farm-out. The work programme in
Egypt commenced in January. ASH-8, the first well in
the 2023 drilling campaign encountered 22 meters
of net pay and was brought on stream at nearly
3,000 bopd gross six weeks earlier than anticipated.
The ASD-3 development well commenced drilling
at the beginning of April, and we look forward to
providing updates on this well in due course.
We remain committed to our growth ambitions with a
focus on new ventures in the Greater Mediterranean
and North and West African regions, where the
Board’s experience and relationships can be
leveraged. We enter 2023 in a good place to execute
our strategy, and a business focussed on disciplined
capital allocation to generate the best returns. I
would like to take this opportunity to thank all our
stakeholders for their support and our employees for
their hard work, commitment and tenacity.
Brian Larkin
Chief Executive Officer
27 April 2023
14
United Oil & Gas PLC STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
2022 Annual Report and Financial Statements
15
INVESTMENT CASE
A focus
on future
growth
Reasons to invest
6
United Oil & Gas PLC
16
1
Value
opportunity
United can play its part
in energy security and in
being a responsible oil
and gas company during
the energy transition.
2
Production and cash
generative business with
managed risk across portfolio
Egypt is a low-cost, onshore
producing asset generating
operational cashflows.
4
Growth ambitions via further
inorganic growth
Focus on production within the
North and West Africa and Greater
Mediterranean regions whilst
remaining opportunistic for value-
accretive transactions.
5
Financial resilience
and disciplined capital
allocation
• Work programme funded by
operating cashflow.
• Balanced spend on exploration
and production.
• Flexible low capex commitments.
• BP facility to be fully repaid in the year.
3
Transformational potential
6
Underpinned by
Jamaica has an estimated 2.4 billion
barrels unrisked mean prospective
resources across the basin.
• Experienced Board and
entrepreneurial Executive team.
• Strong balance sheet.
• Commitment to running a
responsible business.
• Strong subsurface, commercial and
technical capabilities.
17
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
BUSINESS MODEL
Our business model
is to deliver value
What we need to execute our
business model
Our people, our strengths and capabilities
We rely on our people; their experience and diverse skill sets to
deliver for our stakeholders. We have:
• Highly skilled subsurface, commercial, finance and investor
relations teams who have considerable experience with
capital markets.
• Business ethics and integrity.
• A track record of delivery and strong industry relationships.
Our assets/portfolio
We have a full cycle oil & gas portfolio and are actively unlocking
value from our assets through targeted work programmes.
•
•
In Egypt we have a producing cash generative asset.
In Jamaica, we have an estimated 2.4 billion barrels unrisked
mean prospective resources across the basin.
• We actively manage our portfolio to optimise
commercialisation opportunities.
• We look to grow by pursuing new venture opportunities that
meet our investment criteria.
• We commit to working responsibly across all our activities.
This means working in a safe, secure, environmentally, and
socially responsible manner.
Financial flexibility and resilience
We apply strict capital discipline and investment criteria to our
investment decisions.
• We have a balanced capital allocation policy with the
majority of our capital focussed on growing our producing
business and 10% on high impact exploration assets.
• Our producing asset has a low operating cost by industry
standards.
• Work programmes for our current portfolio are funded by
cash generated from our producing assets.
• We have access to capital markets and have established
relationships with debt and equity providers.
What we do
Produce, develop
and explore
We drill wells with our Joint Venture
Partners on existing discovered
reserves and resources to produce oil
and gas. We maximise returns through
our low-operating costs and optimising
production. We explore for oil and gas
in our existing licences. We conduct
operations responsibly and safely.
Grow
Organic growth through disciplined
and careful reinvestment into
existing assets that will generate
value (drilling, work programmes,
workovers, operational efficiencies).
Inorganic growth via acquisitions
with a focus on production.
Monetise
We assess our portfolio regularly
and look for commercialisation
opportunities that can be monetised
at different stages of the oil and
gas cycle.
18
United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
We are an oil and gas company. United’s business model is to hold assets within
the oil and gas life cycle to deliver value for stakeholders. The cash flow from our
production funds our work programmes. We review our portfolio regularly and our
assets are monetised at different stages of the oil and gas cycle to optimise the
portfolio and value creation.
W hat w
o
e d
1. P r o
u c e ,
d
3
.
M
o
n
e
t
i
s
e
develop & e
x
pl
o
r
e
w
2. Gro
Responsible value
creation
We are committed to making a
positive contribution, wherever we
do business, by delivering tangible
benefits to our stakeholders. This
includes the value distributed
through salaries, taxes, payments
to authorities, contractors and
suppliers, capital spending and
social investment.
Shareholders and financing
partners
• Oil and Gas revenue and
cashflows.
Employees
• Zero incidents recorded for LTI’s.
• Salaries and benefits.
Business partners and suppliers
• Joint operating company
has contributed to national
economic growth through local
sourcing, employment and using
local suppliers.
Governments and regulators
• Payments to Governments via
royalties, taxes and levies.
•
100% oil and gas produced is sold
domestically.
Local community investment
• Social investment into capacity
building.
• Joint operating companies
have contributed to national
economic growth through
local employment, training and
industry upskilling.
2022 Annual Report and Financial Statements
19
REVIEW OF OPERATIONS
Significant
operational activity
Jonathan Leather
Chief Operating Officer
Walton Morant Licence
Offshore Jamaica
Introduction
There was a significant amount of
operational activity for United in 2022,
and it was very pleasing to once again
be able to report zero LTI’s, TRIR’s and
environmental incidents. In Egypt, five
wells were drilled and completed in
addition to a number of workovers.
In Jamaica, the farm-out efforts
continued, with the addition of a new
advisor, and in the UK an agreement is
in place for the conditional sale of the
Maria discovery.
20
United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
Countries
Licences
Oil & Gas Fields
3
4
8
P2519 Licence (Maria)
Offshore UK
Abu Sennan Licence
Onshore Egypt
Production
Development
Appraisal
Exploration
2022 Annual Report and Financial Statements
21
REVIEW OF OPERATIONS
continued
Egypt
Abu Sennan
Mediterranean Sea
Cairo
Abu Sennan
Licence
EGYPT
Red Sea
Egypt (22% non-operated working interest, operated by Kuwait Energy Egypt)
The Abu Sennan licence is located in the prolific Abu Gharadig Basin in the
Western Desert, onshore Egypt, circa 200km west of Cairo. United acquired its
22% working interest in the licence in April 2020. Since that time, we have seen
production and reserves growth, and although we are now entering a more
mature phase of the licence life cycle, the assets continue to offer low-risk
development and exploration opportunities. There are eight producing fields
within the licence, the largest of which are the Al Jahraa, ASD, and ASH fields.
22
United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
Average Net Production
(boepd)
1,312
Development wells drilled
in 2022
ASX
Al Jahraa
ASZ
3
Production
Group full-year 2022 production averaged 1,312
boepd net (1,137 bopd oil and 175 boepd gas) (2021:
2,327 boepd net). The 2021 figures are somewhat
skewed by the high production that was achieved
in H1 before the impact of water breakthrough at the
ASH wells that occurred in Q3 2021. Higher value oil
production from the asset in H2 2021 averaged 1,514
bopd net, compared to 1,137 bopd achieved in 2022,
reflecting decline from the existing well-stock partially
offset by additional production from drilling activity
– the main contributor being the ASD-2 well which
came onstream in March 2022. The 2022 average
production achieved is in line with the revised
guidance that was issued in November of last year.
2022 Abu Sennan work programme
The 2022 work programme consisted of three
development wells, two exploration wells and eight
workovers. The drilling programme achieved mixed
results, with production added from ASD-2 and
ASH-4, but with disappointing results from the two
exploration wells. A number of workovers which
were planned for late 2022 were delayed due to
operational issues and are now expected to be
completed in H1 2023.
ASD
ASA
El Salmiya
ASH
Exploration Concession
Development Concession
Producing Fields
Oil & Gas Producer
Oil Producer
0
10Km
Development drilling
The drilling programme commenced with the ASD-
2 development well. The well encountered over 25.5
metres of net pay and was brought onstream in
March 2022 at rates above expectations and has
continued to outperform projections throughout
the year, with over 400,000 barrels now produced
from the well. The AJ-14 development well found
7 metres of good quality net pay in the Abu
Roash-C (ARC) target, in line with the higher end
of the pre-drill estimates. However, due to near-
borehole formation damage, consistent flow was
not established. Workover activity required to bring
this well onstream was completed in April 2023,
with production commencing in late April. The
ASH-4 development well encountered 20 metres
of net pay in the Alam El Bueib reservoir in an area
that appears to be at least partially separated
from the previously producing wells. The well was
brought onstream in November 2022, and despite
a steep initial decline, production from the well had
stabilised by early 2023.
2022 Annual Report and Financial Statements
23
REVIEW OF OPERATIONS
continued
Egypt
Abu Sennan
Exploration drilling
Two of the larger, but higher risk, prospects in the Abu
Sennan exploration portfolio were drilled in 2022. The
ASV-1X well spud in April, and although there were
some encouraging signs indicating the presence
of hydrocarbons, the well did not flow on test. The
ASW-1X well did not encounter hydrocarbons in any
of the multiple pre-drill targets and was plugged and
abandoned at the beginning of 2023.
2023 work programme
The 2023 Egypt work programme consists of two
firm wells and at least eight workovers. In H1 2023
the focus will be on development drilling and in
optimising production from existing wells through
low-cost interventions. The first development well,
ASH-8, commenced drilling at the beginning of
the year and encountered 22 meters of net pay.
This well was brought onstream in March, with an
initial stabilised rate of circa 2,980 bopd and 2.64
mmscf/d gross (circa 656 bopd and 0.58 mmscf/d
net) achieved on a 32/64” choke. The second
development well, ASD-3, spud at the beginning of
April and is aiming to build on the success achieved
with ASD-2 in 2022. In parallel to the development
drilling, workovers in Q1 2023 have targeted
enhanced production from multiple reservoirs across
a number of wells. Although we have seen some
delays to the uplift in production expected from
these workovers due to a combination of permitting
and mechanical issues, the activity performed on
both ES-5 and AJ-14 is now contributing positively
to production from the asset. Additional potential
clearly remains in the targeted reservoirs, and
work is continuing to ensure that we maximise the
production potential from all of the existing wells.
In line with previous years, where there has been
flexibility in the drilling programmes, we expect
any additional drilling in 2023 to be finalised with
partners once we have seen the results of both of
the development wells. There remains a portfolio of
additional prospects within the Abu Sennan licence
that continues to benefit from the ongoing seismic
reprocessing efforts. The potential value that could
be added by future exploration drilling continues to
be considered carefully by the JV partners.
First half 2023 production guidance of 700-900 bopd
net was provided in January 2023. Unlike previous
years, where production has comprised circa 15% gas,
the guided range is based on 100% oil production,
as with the installation of pumps at the ASH Field
and expected recompletions, the lower-value gas
production in H1 2023 was expected to be negligible.
Oil production in Q1 averaged 841 bopd net. With the
ASH-8 well coming onstream in March at rates above
expectations and six weeks ahead of the anticipated
start-up, the exit rate from the quarter was 1,275 bopd
net, with an additional 170 boepd of gas.
The continuing development drilling in the first half of
the year has the potential to have a positive impact
on production levels in H2, and actual quarterly
production information will be provided in H2.
24
United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
Jamaica
Walton Morant
Jamaica
Walton Morant Licence
(100% working interest)
The Walton Morant licence is a 22,400 km2 offshore
exploration block situated to the south of the island
of Jamaica. The licence benefits from excellent
data coverage, including 2,250 km2 of 3D data, and
this has helped define multiple plays, and material
prospects within the acreage. Over 2.4 billion barrels
of recoverable unrisked potential has been identified
on the licence, including the 400 mmbbl drill-ready
Colibri prospect. United is currently running a farm-
out campaign to attract a partner to accompany us
in drilling Colibri – and potentially unlock the huge
value that lies in this under-explored area.
The farm-out campaign remains a key focus as we
seek to move this potentially transformational project
forward within the current phase of our licence
term, which expires at the end of January 2024.
Energy Advisors Group (EAG) have been engaged
alongside our existing advisors, Envoi Ltd, with the
aim of accessing capital from US companies and
investment funds. There are a number of companies
currently evaluating the opportunity and a deadline
for indicative offers has been set for Q2 2023.
Windsor-1
GCA PRR 2020 Prospect/Lead
Additional leads
0
45Km
Hertford-1
Retreive-1
Cockpit-1
Content-1
Santa Cruz-1
Portland Ridge-1
billion barrels of recoverable
unrisked potential
Colibri
406 mmbbls
Thunderball
603 mmbbls
2.4
2022 Annual Report and Financial Statements
25
REVIEW OF OPERATIONS
continued
UK
P2519 and PL090
UK Central North Sea
Maria Discovery, Licence P2519
(100% working interest)
Licence P2519 containing the Maria discovery covers
an area of circa 225 km2 in the Outer Moray Firth
Basin of the UK Central North Sea (CNS).
UK Onshore
Waddock Cross, Licence PL090
(26.25% working interest, non-operator)
Licence PL090 containing the shut-in Waddock Cross
Field is situated circa 11 km to the east of Dorchester,
in the onshore Wessex Basin, UK.
In January 2023, the Company announced that it
had entered into an Asset Purchase Agreement
(APA) with Quattro Energy Limited (Quattro) to
sell Licence P2519 for a maximum consideration
including contingent bonus payments of up to £5.7
million (circa US$7.0 million).
The divestment of the Licence reflects United's
strategy to focus its new ventures programme on
opportunities in the Greater Mediterranean and
North and West African regions whilst remaining
opportunistic for value accretive transactions
outside of these core areas.
Recent work that has been completed by the
operator, Egdon Resources U.K. Limited, has clearly
shown the commercial viability of a phased
development of Waddock Cross. Work continues on
securing planning and permitting consents, finalising
the site facilities and well designs, ahead of a
potential 2024 drilling campaign. Although Waddock
Cross remains non-core to United, there is clearly
value within this asset, and United will continue to
evaluate all the alternatives for realising this potential.
P2519 Licence
UK
Waddock Cross
26
United Oil & Gas PLC
Health, Safety and Environment
While United had no field activity in 2022 in which
we were the operator, we continued to work with
our Joint Venture partners and as part of the
Joint Operating Company (JOC) in Egypt. It is very
pleasing to be able to report that our operator in
Egypt maintained another year of zero Fatalities,
Medical Treatment Cases, Restricted Work Injuries
and a zero rate for Lost Time Injury frequency
and Total Recordable Incidents Frequency or
environmental spills. There were two minor incidents
reported from Abu Sennan – one involving property
damage, and the other a small fire that was
extinguished by the emergency team. Both of these
were fully investigated to provide lessons learnt and
to allow mitigation measures to be put in place.
Group reserves and resources
Country
Asset
Working Interest
Net 2P Reserves
(mmboe)
Net 2C Resources
(mmboe)
Net Prospective Resources
(mmboe)
Egypt
Jamaica
UK
UK
Abu
Sennan1
Walton
Morant
Maria
Waddock
Cross
22%
2.3 1
-
8.4 3
100%
100%
26.25%
-
-
-
10.2 5
2,421 2
-
-
0.4 4
2.3 3
Total
2.3
10.6
2,431.7
1 ERCE reserves report, April 2023. Reserves of 2.3 MMboe are Net Working Interest and do not represent the Net Entitlement
share of future production legally accruing under the terms of the development and production contract.
2 GaffneyCline & Associates report, December 2020; Summation of Walton Morant Prospective Resources completed by
United.
3 Figures based on United interpretation and calculations.
4 ERCE Competent Persons Report, December 2019.
5 GaffneyCline & Associates report, January 2023; Converted to mmboe by United
2022 Annual Report and Financial Statements
27
STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION FINANCIAL REVIEW
Highly cash generative
and profitable
This Financial Review provides an
overview of the Group’s Financial
Performance for the year end 31
December 2022 and of United’s
financial position as at that date.
The Groups operations have continued
to be both highly cash generative and
profitable in the year, with Operating
Cashflow of $8.7m (2021: $9.1m) and
EBITDAX of $13.3m (2021: $13.6m) being
generated. This strong cashflow and
profitability has enabled the Group
to fund an extensive $8.6m capital
programme in the year to maximise
the long-term value of the Group’s
assets whilst at the same time
continuing to pay down the Group’s
debt, with the current BP facility to
be fully repaid in 2023. The Group’s
financial performance in the year has
been impacted by the reduction in Net
Average production compared to the
prior year which has resulted in an 18%
reduction in revenue.
Peter Dunne
Chief Financial Officer
28
United Oil & Gas PLC Cash Opex ($/boe)
2021: 5.9
Revenue ($m)
2021: 19.2
10.3
15.8
Gross Profit ($m)
2021: 12.3
Profit After Tax ($m)
2021: 3.6
12.9
2.3
Financial results summary
Net average production volumes (boepd)
Oil price realised ($/bbl)
Gas price realised ($/mmbtu)
Revenue
Gross profit
Cash operating cost per boe 1
Exploration costs written off
Profit after tax
Basic profit per share (cents)
Capex
EBITDAX 2
Cashflow from operating activities
1 22% interest net of government take
2 See Non-IFRS measure
2022
1,312
96.10
2.63
$15.8m
$12.9m
$10.30
$0.7m
$2.3m
0.36
$8.6m
$13.3m
$8.7m
2021
2,327
68.90
2.63
$19.2m
$12.3m
$5.90
$0.4m
$3.6m
0.64
$6.9m
$13.6m
$9.1m
29
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION FINANCIAL REVIEW
continued
Group production and commodity prices
Total group working interest production for 2022
was 1,312 boepd, a decrease of 44% for the year
(2021: 2,327 boepd). This decrease reflects the
substantial decline in production that occurred
during H2 2021 as water broke through at the ASH
Field, as well as expected decline from the existing
well-stock during 2022, partially offset by additional
production from drilling activity and workovers.
The Group’s average realised oil price was $96/bbl
representing an increase of 39% on the prior year,
and the fixed gas price was $2.63/mmbtu. Group
revenue for the year totalled $15.8m representing a
reduction of 18% on the prior year with the increase
in commodity prices being offset by the impact
of declining production in the year. Revenues
from the Abu Sennan concession are stated after
accounting for government entitlements under the
production sharing contract. Crude oil from Abu
Sennan is sold as Western Desert Blend and the
average discount to Brent was $4/bbl.
Group operating costs
Total group cash operating costs were $4.9m (2021:
$4.9m). The cash operating cost per barrel has
increased to $10.3/boe in 2022 (2021: $5.9/boe) with
this increase primarily relating to the increase in
variable costs due to higher fuel costs coupled to a
reduction in production compared to the prior year.
Group DD&A
Group DD&A associated with producing and
development assets amounted to $3.3m (2021:
$4m). DD&A per boe is currently $6.72/boe.
Administrative expenses
Administrative Expenses for the year totalled $3.6m
(2021: $3.8m restated). Adjusting for the non-cash
items under IFRS 2 Share Based Payment and IFRS
16 Leases, the administrative expense is $3.2m (2021:
$3m). Included in Administrative expenses are
foreign exchange losses of $1.1m (2021: $0.4m) with
the increase being due primarily to realised losses
on the devaluation of the Egyptian pound versus
the USD during the year.
As previously announced in January 2023, the
Group is currently implementing a number
of initiatives to further reduce General and
Administration costs whilst ensuring continuity of
operational capability. Following a detailed review
the Group’s cost base a programme is now in
place for 2023 that is targeting a 15% reduction
compared to 2022.
Divestments
During 2022 the Group completed the sale of UOG
Italia Srl to Prospex Energy for a total of $2.5m.
In addition the Group entered into a settlement
agreement with Anasuria Hibiscus UK relating to the
Crown milestone payments for a total of $2.5m, with
all payments being settled in the period.
Post year end, in January 2023, the Company
signed an agreement with Quattro Energy for the
conditional sale of UK Central North Sea (UK CNS)
Licence P2519 for a consideration of up to £5.7m
(c. $7m). This maximum consideration consists
of a c. $3m payment on completion with an
additional c. $1.1m due on approval of the Field
Development plan expected in late 2023. Additional
contingent payments are due upon reaching
gross production thresholds from the field. The
exploration asset value of P2519 remains capitalised
as Intangible, as no agreement was in place prior to
year end, and therefore no disposal costs or profits
on disposal have been recognised in 2023. The
carrying value of the Maria licence in the Balance
Sheet as at 31 December 2022 is $1.2m.
Derivative financial instrument
On January 31 2022 the Company and BP extended
the maturity of the pre-payment facility that was put
in place to support the acquisition of Rockhopper
Egypt in 2020, to 31 December 2023 to create further
financial flexibility for the Company. The new terms
provide downside protection by effectively hedging
a volume of barrels at $70/bbl per month through
to December 2023. As at 31 December 2022, an
unrealised loss of $1.5m has been recognised as a
result of oil price movements in the period.
Taxation and other income
The Egypt concession is subject to corporate
income tax at the standard rate of 40.55%. However,
responsibility for payment of corporate income
taxes falls upon EGPC on behalf of UOG Egypt
Pty Ltd. The Group records a tax charge with a
corresponding increase in other income for the tax
paid by EGPC on its behalf.
Profit/loss post tax
The profit for the year from continuing operations
was $2.3m (2021: restated: $3.6m).
Cash flow
Net cashflow from continuing operations amounted
to $8.7m (2021: $9.1m), a small decrease of 3%
compared to 2021. Cost control and liquidity
management both served to protect the cashflows.
30
United Oil & Gas PLC Capital investment
Total capital expenditure on continuing operations
for the year amounted to $8.6m (2021: $6.9m), with
$2.4m incurred on the three successful development
wells, $1.4m on two exploration wells, and $3.2m on
other development and infrastructure projects in
Abu Sennan. The remaining $1.6m was invested in
other assets across the remainder of the portfolio.
The Group will continue to focus on capital
discipline with 2023 capital investment largely
directed at maximising value from the Group’s
producing assets. The Group’s cash capital
expenditure for the full year is forecasted to be
approx. $5.0m, fully funded from existing operations,
with c. $4.5m to be invested in Egypt and up to
$0.5m across the other assets in the portfolio.
Balance sheet
Intangibles Assets increased during the year to
$7.4m (2021: $5m). Additions for the year amounted
to $1.4m in Egypt, $0.8m Jamaica and $0.7m on
UK assets. The Group has written off $0.5m on
unsuccessful exploration drilling costs in Egypt.
The movement in Property, Plant and Equipment
was $2.5m which represents cost in relation to
three development wells, additional facilities and
workovers on the Abu Sennan producing assets in
Egypt. Additions were $5.8m in total, with a DD&A
charge of $3.3m on a unit of production basis.
Trade and other receivables amounted to $4.4m
and included $0.9m of accrued income on oil and
gas sales. At year end, cash and cash equivalents
were $1.3m and borrowings were $2.8m.
Going concern
The Group’s business activities, together with the
factors likely to affect its future development,
performance and position are set out in the Chair’s
statement and the Strategic Report.
United regularly monitors its business activities,
financial position, cash flows and liquidity through
the preparation and review of detailed forecasts.
Scenarios and sensitivities are also regularly
presented to the Board, including changes in
commodity prices and in production levels from
the existing assets, plus other factors which could
affect the Group’s future performance and position.
A base case forecast has been considered which
uses budgeted commitments and prevailing
forward curve assumptions for oil prices. The key
assumptions and related sensitivities include a
“Reasonable Worst Case” (RWC) sensitivity where
the Board has considered a scenario with significant
aggregated downside, including a delay in the
payment of receivables in Egypt, a reduction in
forecasted revenue of 12% and an increase in
forecast capital expenditure in Egypt by 15%. The RWC
incorporates a scenario whereby the sale of Maria
P2519 l to Quattro does not complete in the period.
Under the combined RWC, the Group forecasts there
will be sufficient resources to continue in operational
existence for the foreseeable future.
The likelihood of all these downside sensitivities
taking place simultaneously and lasting for the
entire forecast period is considered to be remote.
Under such a RWC scenario, we have identified
appropriate mitigating actions, including the
deferral of additional uncommitted capital
expenditure, seeking a restructuring of debt
arrangements and adjustment of the Group cost
base, which would be available to us and have
been demonstrated as effective strategies in
previous periods of low oil prices. Our business in
Egypt remains robust given cash operating costs
of less than $11/boe, flexible drilling contracts and
downside price protection on our hedged volumes
and gas contracts that are fixed price in nature.
There are limited capital commitments in the
other assets in our portfolio. The forecasts outlined
above show that the Group will have sufficient
financial headroom for the 12 months from the
date of approval of the 2022 Accounts. Based
on this analysis, the Directors have a reasonable
expectation that the Group has adequate
resources to continue in operational existence for
the foreseeable future. Therefore, they continue
to use the going concern basis of accounting in
preparing the annual Financial Statements.
Financial outlook
United’s financial strength is founded on our long-
term approach to prudently managing capital
to generate value. United has a streamlined
portfolio of assets which are funded from operating
cashflow. We have taken significant steps to
strengthening our balance sheet and generate
investment flexibility, via the completion of two of
our asset divestments, extending the maturity on
our pre-paid swap facility with the ongoing support
of our debt provider BP and the conditional sale
of the Maria P2519 licence to Quattro which is due
to be completed in May. The measures that we
have taken and the value of our stable low-cost
production benefitting from the prevailing stronger
commodity price environment ensures that our
balance sheet provides a stable platform for growth
from both organic and inorganic opportunities.
31
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION PRINCIPAL RISKS AND UNCERTAINTIES
A consistent approach
to risk
United continuously monitors and assesses the Principal and Emerging risks
faced across the Company. During 2022, these risks included the war in Ukraine
and the impact this had on the wider global macroeconomic/geopolitical-
environment. The Audit and Risk Committee has delegated powers from
the Board for oversight of Risk Management including risk management
assessment criteria, decision making on how to increase the effectiveness
of risk mitigations and oversight of the Group risk register. The Audit and Risk
Committee reports to the Board regarding the adequacy of Risk Management
measures ensuring that the approach to risk is consistent with the Group’s
strategy and risk appetite.
The Board has closely considered the potential impact of these risks and related
events on its corporate strategy, and stakeholders’ perspectives of the Company.
Emerging risks
Within the Company Risk
Management, emerging risks
are considered as part of the
identification phase. These are
risks that cannot yet be fully
assessed, risks that are known but
are not likely to have an impact
for several years, or risks which
are unknown but could have
implications for the business
going forward.
The macro-economic situation in
Egypt continues to be impacted
by the effects of the war in
Ukraine and its consequences
on the global economy. In
particular in Egypt, this has
resulted in reduced USD liquidity,
increased local inflation and a
devaluation of the EGP versus
the USD throughout 2022. Whilst
this has not impacted the Joint
Ventures ability to execute its
work programme and budget
throughout the period, it has
resulted in an increase in costs.
Whilst inflation and USD liquidity
challenges are likely to impact
Egypt in the short to medium
term, given the importance of
the energy sector to the broader
Egyptian economy we expect that
there will be limited disruption to
our business operation.
The speed of energy transition
away from fossil fuels is
watched closely by oil and gas
independents. Climate change,
changes in public perceptions,
investors’ attitudes, energy and
climate policy, carbon pricing
and the development of new
technologies to reduce CO2
emissions are all combining to
change the landscape for all
oil and gas companies and this
emerging risk is a subset of the
principal risk of climate change.
The following pages provide
a summary overview of the
principal risks to the Company
at the end of 2022, the potential
impacts, causes and the
mitigation measures.
32
United Oil & Gas PLC Corporate Risk Matrix
Plots the likelihood of each risk that the management believe could
influence performance
High
d
o
o
h
i
l
e
k
i
L
5
4
3
2
1
1
4
5
3
6
10
8
2
7
9
Low
1
2
3
4
5 High
Impact
Strategic
1. Insufficient capital available
to complete further
acquisitions in line with
growth strategy
2. Health, Safety, Environmental
and Social risk
3. Climate change and energy
transition
Financial
4. Commodity price risk
5. Liquidity risk for completion of
planned work programmes
and going concern
Operations
6. Unable to achieve production
targets / recover reserves
7. Misalignment of joint venture
partners causing impact on
work programmes and cash
flow
Reputational
8. Reputational damage
9. Business conduct & bribery
10. Political / regional risk
These risks are similar to those faced by many companies in the oil and gas industry. A description of the
principal risks, impact, cause and mitigating factors and controls, are set out in the table on page 34. The risks
in the table are not in order of priority nor is it an exhaustive list of all risks that may impact the Group, but
rather the Board’s view of principal risks at this point in time.
33
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION PRINCIPAL RISKS AND UNCERTAINTIES
continued
The principal risks and their mitigations are detailed below:
STRATEGIC
Risk
Insufficient capital available to complete further
acquisitions in line with growth strategy
Health, Safety, Environmental (HSE) and Social risk
Impact
Causes
Mitigation
• Work programme restricted by reduced capital
• Equity and debt markets reducing investment in oil and
• Regular review of funding options
availability
• Inability to grow in line with growth strategy
• Failure to replenish the portfolio
• Loss of value
• Inability to replace reserves and sustain production
levels
• Serious injury or death
• Environmental impacts
• Reputational damage
• Regulatory penalties and clean-up costs
• Operational outages leading to lower production
Climate change and energy transition
• Providers of capital limit exposure to fossil fuel projects
• Climate-related policy changes
• Reputational damage
• Retaining and attracting talent
• Risk of additional impairment of assets
gas activities
• Proactive discussions with equity and debt providers
• Pressure on capital providers to avoid fossil fuel projects
• Seek to ensure adequate returns are generated for
• Commodity prices/economic conditions
investors
• Geopolitical risks
• HSE risks or environmental and safety incidents
• Better understanding and input into our operator’s health
• Climate change impacts on the sector
and safety processes and metrics
• Preclusion from activity due to governmental/societal
• Insurance procured to address insurable risks
view of industry
• Comply with all legislative/regulatory frameworks where
applicable
• Engage more widely to advocate the continuing
importance of the role of oil and gas in the global
energy mix
• ESG Committee of the Board
• Pressure on investors to divest out of fossil fuel
• Using our influence with the Joint Venture (JV) partner to
companies/projects
identify emissions, and emissions reduction plan
• Inability to find economically viable CO2 reduction
• Being a responsible operator and owner of hydrocarbon
solutions
assets
• Global transition to a lower carbon intensity economy
• Building in a carbon intensity study and mitigations into
• Increased climate regulation and disclosure
any new exploration development scenario
• Increase in carbon taxes/decarbonisation charges
• The importance of energy security throughout the
• Consumer sentiment, potentially causing radical/
energy transition period
transformational shifts in consumption of fossil fuels
FINANCIAL
Risk
Commodity price risk
Impact
Causes
Mitigation
• Reduction in future cash flow
• Uncertainty in planning
• Inability to fund work programme or invest for growth
• Value impairment of development exploration projects
• Oil and gas market volatility
• Lower long-term prices
Currency risk
• Reduced USD liquidity
• Restrictions implemented by the Central Bank of Egypt
• Majority of costs in Egypt can be settled in Egyptian
relating to remittances of USD outside of the country
pounds
Liquidity risk for completion of planned work programmes
and going concern
• Work programme restricted by reduced capital
• Delay in the payment of receivable balance due from
• Capital Allocation ensuring only robust investments are
availability
• Inability to grow in line with growth strategy
• Loss of value
• Inability to replace reserves and sustain production
levels
EGPC
• Cost inflation
• Oil hedging framework in place which complies with
lending obligations
• Close monitoring of business activities and cashflows
including downside oil price scenarios
• Fixed price gas sales
• Capital discipline with focus on progressing investments
that are robust in a low oil price environment
• Oil and gas sector given preferred treatment for transfer
of USD to offshore parent company
• USD denominated receivable
approved
• Active management of discretionary costs
• Effective cashflow forecasting and liquidity management
• Maintain effective systems and controls
34
United Oil & Gas PLC The principal risks and their mitigations are detailed below:
STRATEGIC
Risk
acquisitions in line with growth strategy
availability
Health, Safety, Environmental (HSE) and Social risk
• Inability to grow in line with growth strategy
• Failure to replenish the portfolio
• Inability to replace reserves and sustain production
• Loss of value
levels
• Serious injury or death
• Environmental impacts
• Reputational damage
• Regulatory penalties and clean-up costs
• Operational outages leading to lower production
• Climate-related policy changes
• Reputational damage
• Retaining and attracting talent
• Risk of additional impairment of assets
Insufficient capital available to complete further
• Work programme restricted by reduced capital
• Equity and debt markets reducing investment in oil and
gas activities
• Pressure on capital providers to avoid fossil fuel projects
• Commodity prices/economic conditions
• Geopolitical risks
• Regular review of funding options
• Proactive discussions with equity and debt providers
• Seek to ensure adequate returns are generated for
investors
Impact
Causes
Mitigation
• HSE risks or environmental and safety incidents
• Climate change impacts on the sector
• Preclusion from activity due to governmental/societal
view of industry
• Better understanding and input into our operator’s health
and safety processes and metrics
• Insurance procured to address insurable risks
• Comply with all legislative/regulatory frameworks where
applicable
• Engage more widely to advocate the continuing
importance of the role of oil and gas in the global
energy mix
• ESG Committee of the Board
Climate change and energy transition
• Providers of capital limit exposure to fossil fuel projects
• Pressure on investors to divest out of fossil fuel
• Using our influence with the Joint Venture (JV) partner to
companies/projects
identify emissions, and emissions reduction plan
• Inability to find economically viable CO2 reduction
• Being a responsible operator and owner of hydrocarbon
solutions
assets
• Global transition to a lower carbon intensity economy
• Increased climate regulation and disclosure
• Increase in carbon taxes/decarbonisation charges
• Consumer sentiment, potentially causing radical/
transformational shifts in consumption of fossil fuels
• Building in a carbon intensity study and mitigations into
any new exploration development scenario
• The importance of energy security throughout the
energy transition period
FINANCIAL
Risk
Commodity price risk
Impact
Causes
Mitigation
• Reduction in future cash flow
• Uncertainty in planning
• Inability to fund work programme or invest for growth
• Value impairment of development exploration projects
• Oil and gas market volatility
• Lower long-term prices
• Oil hedging framework in place which complies with
lending obligations
• Close monitoring of business activities and cashflows
including downside oil price scenarios
• Fixed price gas sales
• Capital discipline with focus on progressing investments
that are robust in a low oil price environment
Currency risk
• Reduced USD liquidity
• Restrictions implemented by the Central Bank of Egypt
relating to remittances of USD outside of the country
• Majority of costs in Egypt can be settled in Egyptian
pounds
• Oil and gas sector given preferred treatment for transfer
of USD to offshore parent company
• USD denominated receivable
Liquidity risk for completion of planned work programmes
• Work programme restricted by reduced capital
• Delay in the payment of receivable balance due from
• Capital Allocation ensuring only robust investments are
and going concern
• Inability to grow in line with growth strategy
• Inability to replace reserves and sustain production
availability
• Loss of value
levels
EGPC
• Cost inflation
approved
• Active management of discretionary costs
• Effective cashflow forecasting and liquidity management
• Maintain effective systems and controls
35
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION PRINCIPAL RISKS AND UNCERTAINTIES
continued
OPERATIONAL
Risk
Unable to achieve production targets/recover reserves
Impact
• Future cashflow depend on production/ reserves
• Negative impact on asset value
• Liquidity issues
• Reputational damage
Misalignment of joint venture partners impacting on the
work programme and cash flow
• Cost/schedule overruns
• Poor performance of assets
• HSE performance
• Delay in oil from development projects
• Negative impact on asset value
REPUTATIONAL
Risk
Reputational damage
Impact
Causes
Mitigation
• Loss of value
• Stakeholder relations breakdown
• Social licence to operate damaged
• Sub-optimal capital allocation
• High grading opportunities based on clear financial
• Activities run by asset operators causing safety or
metrics such as NPV, IRR and payback
environmental issues
Business conduct and bribery
• Fines
• Criminal prosecution
• Reputational damage
Political/regional risk
• Higher operating costs adversely effect operations
• Compliance and taxation
• Uncertain financial outcomes
Mitigation
Causes
modelling
• Subsurface uncertainty and inaccurate field/reserves
• Engagement of reputable reserves auditors with focus
• Disruption to facilities/equipment (e.g., from adverse
• Appropriate disclosures on reserves movements
weather, mechanical failure etc)
• Challenging technical engagement with operators of
• Lack of success from development drilling and field
producing assets
on consistency and transparency
interventions
• Over-reliance on single asset
• Timely production reporting from Operators
• Maintenance of company technical analysis and
understanding of assets
• Adequate technical resources in place
• Expand production base to spread production across a
larger number of assets
• Joint venture partners having different views on drilling
• Active participation in joint venture process
risk and work programme
• Manage own technical work and asset understanding
• Financial capability of joint venture partners
• Financial capability assessment on current and potential
joint venture partners
• Seek to maximize influence on HSE planning and
performance of operators of our producing assets
• Maintain a balanced portfolio across both oil and gas
and producing, development and exploration assets
• Active and regular dialogue with Shareholders
• Present in countries in challenging regulatory and
• Usage of in country and international professional
political environments
advisers
• Transacting with counterparties with sub-optimal
• Ensure adequate due diligence prior to on-boarding
reputational and compliance record
counterparties including external compliance reports
• Annual training in Anti-Corruption and Bribery
• Geopolitical issues
environments
• Operations in challenging regulatory and political
stakeholders
• Maintain positive relationships with governments and key
• Ongoing monitoring of the political and regulatory
environments in which we operate
• Sudden changes to fiscal regimes
• Government reform, political instability, civil unrest
36
United Oil & Gas PLC OPERATIONAL
Risk
Unable to achieve production targets/recover reserves
• Future cashflow depend on production/ reserves
• Subsurface uncertainty and inaccurate field/reserves
• Engagement of reputable reserves auditors with focus
• Negative impact on asset value
• Liquidity issues
• Reputational damage
modelling
on consistency and transparency
• Disruption to facilities/equipment (e.g., from adverse
weather, mechanical failure etc)
• Appropriate disclosures on reserves movements
• Challenging technical engagement with operators of
• Lack of success from development drilling and field
producing assets
Impact
Causes
Mitigation
Misalignment of joint venture partners impacting on the
• Cost/schedule overruns
work programme and cash flow
• Poor performance of assets
• HSE performance
• Delay in oil from development projects
• Negative impact on asset value
REPUTATIONAL
Risk
Reputational damage
Impact
• Loss of value
• Stakeholder relations breakdown
• Social licence to operate damaged
Business conduct and bribery
• Fines
• Criminal prosecution
• Reputational damage
Political/regional risk
• Higher operating costs adversely effect operations
• Compliance and taxation
• Uncertain financial outcomes
interventions
• Over-reliance on single asset
• Timely production reporting from Operators
• Maintenance of company technical analysis and
understanding of assets
• Adequate technical resources in place
• Expand production base to spread production across a
larger number of assets
• Joint venture partners having different views on drilling
risk and work programme
• Financial capability of joint venture partners
• Active participation in joint venture process
• Manage own technical work and asset understanding
• Financial capability assessment on current and potential
joint venture partners
Causes
Mitigation
• Sub-optimal capital allocation
• Activities run by asset operators causing safety or
environmental issues
• High grading opportunities based on clear financial
metrics such as NPV, IRR and payback
• Seek to maximize influence on HSE planning and
performance of operators of our producing assets
• Maintain a balanced portfolio across both oil and gas
and producing, development and exploration assets
• Active and regular dialogue with Shareholders
• Present in countries in challenging regulatory and
• Usage of in country and international professional
political environments
advisers
• Transacting with counterparties with sub-optimal
reputational and compliance record
• Ensure adequate due diligence prior to on-boarding
counterparties including external compliance reports
• Annual training in Anti-Corruption and Bribery
• Geopolitical issues
• Operations in challenging regulatory and political
environments
• Sudden changes to fiscal regimes
• Government reform, political instability, civil unrest
• Maintain positive relationships with governments and key
stakeholders
• Ongoing monitoring of the political and regulatory
environments in which we operate
37
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION S172 STATEMENT
In accordance with section 172(1) of the
Companies Act 2006, The Directors of
the Company have a statutory duty to
promote the success of the Company.
How management/Directors engaged
Issues considered/key topics of engagement
Outcomes of engagement and examples of such
Given the Company’s relatively small size,
communication and exchange of information
amongst functions is very fluid. We have an open,
collaborative, and inclusive management structure
and engage very regularly with our employees. Formal
and informal meetings take place.
• Regular in person and online group staff meetings;
• one to one in-person and online meetings; and
• team building events.
• Our comprehensive investor relations programme
is designed to provide public disclosure on the
Company’s results and other material developments
within the business. In addition ensuring that
shareholders’ views are communicated to the Board
and are considered in the Company’s decision making.
• Our investor relations programme includes regular
updates via RNS, webcasts, calls, meetings, investor
roadshows, social media and our Annual General
Meeting as well as participation in investor and industry
conferences.
• Regular contact is maintained with our lenders through
a combination of physical and virtual meetings.
• Maintaining a healthy, safe, and secure working
• The Company’s initiatives supported, informed, and
environment.
• Strategy.
• Company news.
• Ways of working.
• Anti-Corruption and Bribery.
• Lessons learned from past projects.
• Collaboration across teams.
• Treating all employees in a fair manner.
• Retaining and embedding the culture of respect,
integrity, honesty, and transparency.
• Being a successful company which our employees are
proud to be part of.
• Remuneration and benefits.
• Awareness and alignment with the strategy.
• Opportunities for employees to share ideas for
business improvements with senior management.
• Strategy.
• Operational and financial performance.
• Investment returns.
• Risk management and funding.
• Corporate governance.
• Board composition/remuneration.
• Delivery of long-term share price performance and
adoption of a strategy, culture and business model
designed to enable this.
engagements
and performance.
discussion.
collaboration.
motivated our employees throughout the year. They
helped the business to continue to function with
negligible disruption during 2022 despite the continued
impact of the COVID-19 pandemic earlier in the year.
• Enhanced communication of our strategic priorities
• Annual in-person Anti-Bribery staff training session and
• Team events were held to strengthen cross-functional
• United employees, including the Board, came together
for a corporate day for the discussion of business
• Hybrid working is a new working model with employees
working part of the week in the office and part in the
matters.
office.
• Shareholders and lenders were keen to participate in
regular communication with the Company, with both
physical and virtual meetings and investor roadshows
well attended.
• 2022 was a very active year for the Company seeing
over 30 RNS announcements covering all aspects
of the business in a very transparent manner. These
included announcements on governance, technical,
financial, strategic and portfolio management
matters. All shareholders are invited to participate in
shareholder calls hosted by the executive Directors at
• Over 30 investor interactions with the executive team;
• Over 25 one-to-one meetings with current and
potential shareholders including group meetings;
• Four webcasts for analysts and shareholders to take
• Numerous virtual conferences and interviews on
part in; and
retail platforms.
• Maintaining an appropriate operational, financial and
least four times a year.
sustainability reporting procedures.
• Actively engaging with lenders regarding servicing
existing debt facilities.
included:
• Our annual investor programme, which during 2022
was managed in person and using virtual technologies,
Stakeholder
Employees
• United remains a relatively small company in terms of
its full-time staff of seven employees (excluding the
board Directors) in Dublin and a Country Manager
supported by a small team in Cairo.
Why we engage
• We recognise that employees are a valued and key
part of our business.
• We are dependent on employees’ performance.
• We have a legal and ethical responsibility towards their
well-being.
• Employees bring a diverse perspective, and a broad
range of experience and expertise to the identification
of opportunities and ways of working which is essential
to the delivery of our strategic objectives.
• To ensure that our employees are well informed and
motivated to execute our strategy such that we can
deliver on the long-term goals of the business.
Shareholders and financing partners
• Our shareholders include institutional and retail
investors and high net-worth individuals who are
principally based in the UK.
• The Board has maintained its strong relationship with
BP throughout 2022 and regards BP as a highly valued
stakeholder.
Why we engage
• Our strategic and operational decision-making is
influenced by our investors’ views.
• We are dependent on access to funding.
• We are accountable to our shareholders.
• We believe that maintaining a regular and transparent
dialogue with our shareholders and finance providers is
essential to earn and retain their confidence. In line with
the QCA Corporate Governance Code, the Board must
manage shareholders’ expectations and should try to
understand the purpose behind their voting decisions.
• The lenders are an important source of funding for the
Group’s operations.
38
United Oil & Gas PLC The duty under S172(1) is applied in addition to the other duties of a Director. Each Director must discharge
these duties in accordance with the duty of care, skill and diligence both objectively and to a subjective
standard. The Board at United, as individuals and collectively consider that they have acted in a way that
would most likely promote the success of the Company, to deliver the goals and objectives.
The Board of Directors of United recognises the importance of building and sustaining relationships with all
of its stakeholders, considering the long-term consequences of our decisions, and the need to foster a good
culture and good business conduct.
The Board of Directors have identified the following stakeholder groups as being important to our success
and we set out below the methods by which we engage with them.
Stakeholder
Employees
• United remains a relatively small company in terms of
its full-time staff of seven employees (excluding the
board Directors) in Dublin and a Country Manager
supported by a small team in Cairo.
Why we engage
• We recognise that employees are a valued and key
part of our business.
• We are dependent on employees’ performance.
• We have a legal and ethical responsibility towards their
well-being.
• Employees bring a diverse perspective, and a broad
range of experience and expertise to the identification
of opportunities and ways of working which is essential
to the delivery of our strategic objectives.
• To ensure that our employees are well informed and
motivated to execute our strategy such that we can
deliver on the long-term goals of the business.
Shareholders and financing partners
• Our shareholders include institutional and retail
investors and high net-worth individuals who are
principally based in the UK.
• The Board has maintained its strong relationship with
BP throughout 2022 and regards BP as a highly valued
stakeholder.
Why we engage
• Our strategic and operational decision-making is
influenced by our investors’ views.
• We are dependent on access to funding.
• We are accountable to our shareholders.
• We believe that maintaining a regular and transparent
dialogue with our shareholders and finance providers is
essential to earn and retain their confidence. In line with
the QCA Corporate Governance Code, the Board must
manage shareholders’ expectations and should try to
understand the purpose behind their voting decisions.
• The lenders are an important source of funding for the
Group’s operations.
Given the Company’s relatively small size,
communication and exchange of information
amongst functions is very fluid. We have an open,
collaborative, and inclusive management structure
and engage very regularly with our employees. Formal
and informal meetings take place.
• Regular in person and online group staff meetings;
• one to one in-person and online meetings; and
• team building events.
• Our comprehensive investor relations programme
is designed to provide public disclosure on the
Company’s results and other material developments
within the business. In addition ensuring that
shareholders’ views are communicated to the Board
and are considered in the Company’s decision making.
• Our investor relations programme includes regular
updates via RNS, webcasts, calls, meetings, investor
roadshows, social media and our Annual General
Meeting as well as participation in investor and industry
conferences.
• Regular contact is maintained with our lenders through
a combination of physical and virtual meetings.
How management/Directors engaged
Issues considered/key topics of engagement
• Maintaining a healthy, safe, and secure working
environment.
• Strategy.
• Company news.
• Ways of working.
• Anti-Corruption and Bribery.
• Lessons learned from past projects.
• Collaboration across teams.
• Treating all employees in a fair manner.
• Retaining and embedding the culture of respect,
integrity, honesty, and transparency.
• Being a successful company which our employees are
proud to be part of.
• Remuneration and benefits.
• Awareness and alignment with the strategy.
• Opportunities for employees to share ideas for
business improvements with senior management.
• Strategy.
• Operational and financial performance.
• Investment returns.
• Risk management and funding.
• Corporate governance.
• Board composition/remuneration.
• Delivery of long-term share price performance and
adoption of a strategy, culture and business model
designed to enable this.
• Maintaining an appropriate operational, financial and
sustainability reporting procedures.
• Actively engaging with lenders regarding servicing
existing debt facilities.
Outcomes of engagement and examples of such
engagements
• The Company’s initiatives supported, informed, and
motivated our employees throughout the year. They
helped the business to continue to function with
negligible disruption during 2022 despite the continued
impact of the COVID-19 pandemic earlier in the year.
• Enhanced communication of our strategic priorities
and performance.
• Annual in-person Anti-Bribery staff training session and
discussion.
• Team events were held to strengthen cross-functional
collaboration.
• United employees, including the Board, came together
for a corporate day for the discussion of business
matters.
• Hybrid working is a new working model with employees
working part of the week in the office and part in the
office.
• Shareholders and lenders were keen to participate in
regular communication with the Company, with both
physical and virtual meetings and investor roadshows
well attended.
• 2022 was a very active year for the Company seeing
over 30 RNS announcements covering all aspects
of the business in a very transparent manner. These
included announcements on governance, technical,
financial, strategic and portfolio management
matters. All shareholders are invited to participate in
shareholder calls hosted by the executive Directors at
least four times a year.
• Our annual investor programme, which during 2022
was managed in person and using virtual technologies,
included:
• Over 30 investor interactions with the executive team;
• Over 25 one-to-one meetings with current and
potential shareholders including group meetings;
• Four webcasts for analysts and shareholders to take
part in; and
• Numerous virtual conferences and interviews on
retail platforms.
39
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION S172 STATEMENT
continued
Stakeholder
How management/Directors engaged
Issues considered/key topics of engagement
Outcomes of engagement and examples of such
• In Egypt where we are a non-operator, United uses its
relationships and influence as Joint Venture partner
and its role in the Joint Operating Company to monitor
the operator’s performance and adherence to Health,
Safety, and Environmental policies and procedures.
• KEE have been operating in Egypt for over a decade.
They have a constructive and positive approach to
working with local communities, seeking to maintain
good relationships with them
• Our Country Manager in Egypt and Senior Management
engage with the operator on a daily basis.
• Corporate responsibility.
• Environmental management.
• Access to employment and business opportunities.
• Protection of resources and livelihoods.
• Community development and social investment.
• Striving to deliver local and national economic benefits.
• Safeguarding the environment.
• Acting as a responsible neighbour and good corporate
citizen.
engagements
• The engagement process further strengthened the
existing relationships between the Joint Venture
partners and the local communities in Egypt.
• Community investment focused around supporting
industry capacity to build industry specific skills.
• Contribution, as part of the Joint Operating agreement,
into a training fund for capacity building in Egypt and
for Training and Education in Jamaica. Read more in
our Corporate Responsibility Report page 44.
• We take a constructive and positive approach to
working with national and local authorities, as well as
regulators in both countries, seeking to maintain good
relationships with them all.
• We contribute to government and local authorities in
the countries in which we have assets in the form of
royalties, taxes and fees every year.
• Board members meet with the Egyptian General
Petroleum Corporation (EGPC) and the Ministry of
Petroleum and Mineral Resources (Ministry) each
time an executive Director visits Egypt. The Country
Manager maintains an ongoing dialogue, including
meetings with both EGPC and the Ministry. In relation
to Jamaica in 2022 monthly video conferences have
taken place with the Ministry for Science, Energy and
Technology as per previous years. In 2022 the CEO
and COO visited Jamaica and met with the Prime
Minister of Jamaica and the Minister for Science,
Energy and Technology.
• Interacting in an appropriately open and transparent
• Reviewing feedback and commentary from
manner with these stakeholders.
• Having in place the policies and procedures to ensure
government and regulatory bodies regarding
performance expectation.
internationally recognised practices are followed by
• Maintaining strong, productive and collaborative
our employees and that local laws are complied with.
working relationships with the various government
• Operating in a healthy, safe, and secure manner.
• Contributing towards national and local economic
development.
• Securing required approvals and licence renewals
from regulatory bodies to maintain our regulatory
agencies we interact with in Egypt and Jamaica.
• In 2022, the executive Directors of United have made
several in person trips to Egypt, and two trips to
Jamaica to meet with our stakeholders in addition to
regular video conferences.
• A number of senior management attended the Egypt
Petroleum Show in February 2022.
license to operate.
• Legal matters.
• Asset management.
• Social initiatives.
• Revenue collection.
• Legal compliance.
• Major accident prevention.
• Investment and economic growth.
Local Communities
• Our host countries are currently Egypt, Jamaica and
the UK.
• In Egypt the operations are on-shore and the operator
(KEE) works closely with the local communities in our
areas of business.
• In Jamaica we have a licence offshore and we are in
the first exploration stage and work primarily comprises
desktop studies.
Why we engage
• Engagement is key to maintaining our social licence
to operate. United is committed to being a positive
presence in the regions where we do business.
• Our corporate responsibility ethos is that our projects
should benefit all of our stakeholders, in particular our
host countries and the local communities.
• Acting in a responsible way towards our stakeholders
is seen as critical to the ongoing effectiveness of
our business. Local communities provide a diverse
perspective leading to new understanding of situations
and the mitigation of tensions.
• We have an ethical responsibility to minimise impact
on livelihoods and the environments in which we
operate – and where we are a non-operator, United
will use its relationships and influence as Joint Venture
partner and its role in the Joint Operating Company to
achieve these aims.
Governments and Regulatory Agencies
• In Egypt, United has good relations with the Egyptian
General Petroleum Corporation (EGPC) and the Ministry
of Petroleum and Mineral Resources and in Jamaica
the Ministry for Science, Energy and Technology (MSET).
Why we engage
• Maintain collaborative partnerships with government
agencies that generates value for both parties.
• We are responsible to them for compliance with local
and/or international laws.
• Their permissions are required for us to access
acreage and operate.
40
United Oil & Gas PLC Local Communities
the UK.
• Our host countries are currently Egypt, Jamaica and
• In Egypt the operations are on-shore and the operator
(KEE) works closely with the local communities in our
areas of business.
• In Jamaica we have a licence offshore and we are in
the first exploration stage and work primarily comprises
desktop studies.
Why we engage
• Engagement is key to maintaining our social licence
to operate. United is committed to being a positive
presence in the regions where we do business.
• Our corporate responsibility ethos is that our projects
should benefit all of our stakeholders, in particular our
host countries and the local communities.
• Acting in a responsible way towards our stakeholders
is seen as critical to the ongoing effectiveness of
our business. Local communities provide a diverse
perspective leading to new understanding of situations
and the mitigation of tensions.
• We have an ethical responsibility to minimise impact
on livelihoods and the environments in which we
operate – and where we are a non-operator, United
will use its relationships and influence as Joint Venture
partner and its role in the Joint Operating Company to
achieve these aims.
Why we engage
• Maintain collaborative partnerships with government
agencies that generates value for both parties.
• We are responsible to them for compliance with local
and/or international laws.
• Their permissions are required for us to access
acreage and operate.
Stakeholder
How management/Directors engaged
Issues considered/key topics of engagement
• In Egypt where we are a non-operator, United uses its
relationships and influence as Joint Venture partner
and its role in the Joint Operating Company to monitor
the operator’s performance and adherence to Health,
Safety, and Environmental policies and procedures.
• KEE have been operating in Egypt for over a decade.
They have a constructive and positive approach to
working with local communities, seeking to maintain
good relationships with them
• Our Country Manager in Egypt and Senior Management
engage with the operator on a daily basis.
• Corporate responsibility.
• Environmental management.
• Access to employment and business opportunities.
• Protection of resources and livelihoods.
• Community development and social investment.
• Striving to deliver local and national economic benefits.
• Safeguarding the environment.
• Acting as a responsible neighbour and good corporate
citizen.
Outcomes of engagement and examples of such
engagements
• The engagement process further strengthened the
existing relationships between the Joint Venture
partners and the local communities in Egypt.
• Community investment focused around supporting
industry capacity to build industry specific skills.
• Contribution, as part of the Joint Operating agreement,
into a training fund for capacity building in Egypt and
for Training and Education in Jamaica. Read more in
our Corporate Responsibility Report page 44.
Governments and Regulatory Agencies
• In Egypt, United has good relations with the Egyptian
General Petroleum Corporation (EGPC) and the Ministry
of Petroleum and Mineral Resources and in Jamaica
• We take a constructive and positive approach to
working with national and local authorities, as well as
regulators in both countries, seeking to maintain good
relationships with them all.
the Ministry for Science, Energy and Technology (MSET).
• We contribute to government and local authorities in
the countries in which we have assets in the form of
royalties, taxes and fees every year.
• Board members meet with the Egyptian General
Petroleum Corporation (EGPC) and the Ministry of
Petroleum and Mineral Resources (Ministry) each
time an executive Director visits Egypt. The Country
Manager maintains an ongoing dialogue, including
meetings with both EGPC and the Ministry. In relation
to Jamaica in 2022 monthly video conferences have
taken place with the Ministry for Science, Energy and
Technology as per previous years. In 2022 the CEO
and COO visited Jamaica and met with the Prime
Minister of Jamaica and the Minister for Science,
Energy and Technology.
• Interacting in an appropriately open and transparent
• Reviewing feedback and commentary from
government and regulatory bodies regarding
performance expectation.
• Maintaining strong, productive and collaborative
working relationships with the various government
agencies we interact with in Egypt and Jamaica.
• In 2022, the executive Directors of United have made
several in person trips to Egypt, and two trips to
Jamaica to meet with our stakeholders in addition to
regular video conferences.
• A number of senior management attended the Egypt
Petroleum Show in February 2022.
manner with these stakeholders.
• Having in place the policies and procedures to ensure
internationally recognised practices are followed by
our employees and that local laws are complied with.
• Operating in a healthy, safe, and secure manner.
• Contributing towards national and local economic
development.
• Securing required approvals and licence renewals
from regulatory bodies to maintain our regulatory
license to operate.
• Legal matters.
• Asset management.
• Social initiatives.
• Revenue collection.
• Legal compliance.
• Major accident prevention.
• Investment and economic growth.
41
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION S172 STATEMENT
continued
Stakeholder
How management/Directors engaged
Issues considered/key topics of engagement
Outcomes of engagement and examples of such
Joint Venture Partners, Peers, Business partners
• Meetings with partners, peers and contractors with
• KEE are the operator of the Abu Sennan licence in
Egypt. The Joint Operating Company consists of
KEE, Global connect Ltd, Dover Investment and the
Company. In Jamaica, United are the operator of
the licence.
Why we engage
• Their performance directly impacts our financial,
operational and corporate responsibility performance.
• We are reliant on viable partners in joint ventures.
• We are commercially responsible to contractors,
suppliers and partners.
board members and senior management in addition
to regular joint venture operations, and technical
planning meetings.
• Maintaining membership of industry bodies.
• Active management of key projects and assets
(including alignment of project deliverables).
Suppliers
• Interaction in 2022 was via:
• United does not require a large network of suppliers
• Video conferencing;
due to our position as a non-operator for our
producing and development assets and with
limited activities taking place on our exploration and
appraisal assets suppliers are used by the Company
predominantly in support activities.
Why we engage
• Maintain good working relationships with our key
suppliers.
• We require the ongoing support from a small number
of key suppliers to ensure continuity in delivery of
business activities.
• Email;
• Telephone;
• Written communications; and
• Face to face meetings.
• Interaction with government and regulatory agencies.
• Asset planning.
• Budget planning.
• Billings and cash calls.
• Operations and health and safety.
• Policies and standards.
• Industry reputation.
• Investment opportunities for growth.
• Long-term relationships.
• ESG matters.
• Policies and standards.
• Industry reputation.
• Long-term relationships.
• Technical, Regulatory, Financial and Legal Support.
• ESG matters.
engagements
• Ongoing close collaboration with JV partners to
successfully deliver objectives.
• Our senior management engages in regular meetings
with our customers, suppliers and partners and we also
participate in local industry events. The purpose of this
engagement is to establish and maintain relationships
with these important stakeholder groups.
• Operators of our assets host Technical Operating
Committees and Operating Finance Committees
over the course of the year and which the executive
Directors attend.
• There are routine interactions over the course of the
year on budget, technical and financial matters.
• Ongoing regular engagement with suppliers and
contractors including periodic review of supplier terms
and conditions.
42
United Oil & Gas PLC Stakeholder
How management/Directors engaged
Issues considered/key topics of engagement
Joint Venture Partners, Peers, Business partners
• Meetings with partners, peers and contractors with
• KEE are the operator of the Abu Sennan licence in
Egypt. The Joint Operating Company consists of
KEE, Global connect Ltd, Dover Investment and the
board members and senior management in addition
to regular joint venture operations, and technical
planning meetings.
Company. In Jamaica, United are the operator of
• Maintaining membership of industry bodies.
• Active management of key projects and assets
(including alignment of project deliverables).
the licence.
Why we engage
• Their performance directly impacts our financial,
operational and corporate responsibility performance.
• We are reliant on viable partners in joint ventures.
• We are commercially responsible to contractors,
suppliers and partners.
Suppliers
• Interaction in 2022 was via:
• United does not require a large network of suppliers
• Video conferencing;
due to our position as a non-operator for our
producing and development assets and with
limited activities taking place on our exploration and
appraisal assets suppliers are used by the Company
predominantly in support activities.
• Email;
• Telephone;
• Written communications; and
• Face to face meetings.
Why we engage
suppliers.
• Maintain good working relationships with our key
• We require the ongoing support from a small number
of key suppliers to ensure continuity in delivery of
business activities.
• Asset planning.
• Budget planning.
• Billings and cash calls.
• Interaction with government and regulatory agencies.
• Operations and health and safety.
• Policies and standards.
• Industry reputation.
• Investment opportunities for growth.
• Long-term relationships.
• ESG matters.
• Policies and standards.
• Industry reputation.
• Long-term relationships.
• Technical, Regulatory, Financial and Legal Support.
• ESG matters.
Outcomes of engagement and examples of such
engagements
• Ongoing close collaboration with JV partners to
successfully deliver objectives.
• Our senior management engages in regular meetings
with our customers, suppliers and partners and we also
participate in local industry events. The purpose of this
engagement is to establish and maintain relationships
with these important stakeholder groups.
• Operators of our assets host Technical Operating
Committees and Operating Finance Committees
over the course of the year and which the executive
Directors attend.
• There are routine interactions over the course of the
year on budget, technical and financial matters.
• Ongoing regular engagement with suppliers and
contractors including periodic review of supplier terms
and conditions.
43
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CORPORATE RESPONSIBILITY REPORT
United Oil and Gas is an oil and
gas exploration, development
and production company whose
strategic purpose is to responsibly
produce natural resources for
communities and stakeholders.
Our Code of Business Conduct and Ethics (CBCE)
sets out our expectations for how we do business,
clarifying our commitments to ethical, social
and environmental performance. Our corporate
standards, procedures and guidelines support the
policies. We manage our risks and seek to minimise
any potential adverse impacts we may have.
The Company’s Health, Safety and Environment
Management System (HSES MS) describes the
Group’s internal processes to manage risks and is
based on a number of guidelines and standards
including the internationally recognised standard,
ISO 14001.
The Chief Executive Officer is accountable to the
Board for implementation of the various policies.
The ESG Committee oversees the adequacy
and effectiveness of our policies, standards and
management system for HSES.
Doing business with integrity, ethically and safely
is our priority. We also understand the importance
of reporting transparently. United’s corporate
responsibility is integrated within the business and
focuses on four key areas; People and Communities,
Health and Safety, Environment, and Values and
Governance. To demonstrate our commitment to
corporate responsibility and how it is embedded
within the organisation specific ESG (Environment,
Social and Governance) Key Performance Indicators
(KPI’s) are linked to executive bonus payments.
Corporate KPI’s are based on Production reserves,
Portfolio management, Financial Corporate activity,
and ESG. Further details can be found in the
Remuneration Report (page 64) and ESG Committee
Report (page 70).
Currently United’s main activities are as a non-
operating partner in an oil and gas development
and production asset in Egypt, and as an operator
of an exploration licence in Jamaica. As an active
non-operator we use our relationships and influence
as a Joint Venture partner and our role in the Joint
Operating Committee to conduct business ethically.
Both as an operator and non-operator United
is committed to conducting our operations in a
safe and responsible manner to deliver long term
growth, while complying with all applicable laws and
regulations and limiting our environmental impact.
We contribute to host country development goals,
help with access to affordable energy and supporting
local communities where we have business activities.
44
United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
Structure of the HSES
Management System
1. Code of Business Conduct and Ethics
2. Key CR/HSES policies/statements and
guidelines supporting the CBCE
Anti-Corruption and Bribery Policy
Diversity and Inclusion Policy
Human Rights Policy
Whistleblowing Policy
Corporate Responsibility Policy
Community Investment Policy
Health & Safety Policy
Environmental Policy
Slavery and Human Trafficking Statement
Disaster Response Plan
Climate Change and Energy Transition
Statement
Human Rights Guidelines
3. Standards, procedures and guidance support
the policies.
See www.uogplc.com/policy-statements for
the full text of the current versions of each of
these policies.
2022 Annual Report and Financial Statements
45
CORPORATE RESPONSIBILITY REPORT
continued
Employees
(excluding non-executive Directors)
7
46 United Oil & Gas PLC
Our people and communities
Our people
United remains a relatively small company in terms of its full-time staff, however we are committed to
creating a safe work environment. We are an equal opportunity employer promoting diversity and treating all
employees with respect and fairness. We have technical, engineering, finance, commercial, investor relations
and administrative teams. Our employees have a diverse range of skill sets, backgrounds and expertise which
help deliver our strategy. We have a culture conducive to working cross functionally and the encouragement
of constructive debates. Our number of direct employees facilitates daily direct dialogue amongst personnel
and executive Directors.
Local capability building
We are committed to providing meaningful opportunities for technical co-operation, training and capability
building in host countries. All our licence agreements require a high degree of local content be utilised in
operations, which commits us to hire locally where possible and provide training to develop new skills. In Egypt,
as part of the Abu Sennan Concession Agreement, the Company commits a total of $50,000 per annum
for training and development of employees to support developing future Egyptian expertise in the industry.
Similarly in the Jamaican Production Sharing Agreement, United commits $100,000 per annum to a Training
and Education Fund.
Community and social investment
Our social investments have been based on the needs of the local communities where we have licences.
We believe social investment is part of being a good corporate citizen where stakeholders can benefit from
United’s business activities. Our country manager in Egypt identified that social investment into projects
focusing on Health and Education would be most beneficial to the local community.
In 2022 United supported a number of social programmes in Egypt:
• Capacity Building Sponsor at the Upstream Technical Convention in Egypt; and
• The Al Amal Mentoring Programme Sponsorship supporting 40 students to find jobs in international oil
companies.
2022 Annual Report and Financial Statements
47
STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CORPORATE RESPONSIBILITY REPORT
continued
Al Amal
Al Amal (meaning hope) has been
established for 14 years and has a yearly
cohort of about 40 students, 30-40% of
which are women. The programme consists
of workshops and sessions over a number
of months with an aim to provide Egypt’s
future geoscientists the support to improve
their skills to qualify them to meet the
requirements of today’s petroleum industry.
Several technical topics were presented by
key professionals and experts.
In addition to this the Joint Venture partners in
Egypt contribute to a social investment fund. In 2022
projects focussing on youth education, development
and empowerment were supported.
Sponsorship of the Energy4Her event
The event aims to highlight the impact of women’s
inclusion and empowerment in the oil and gas
sector and provides them with an opportunity
to connect with female leaders to learn from
their expertise and experience. There were over
50 participants and over 200 hours of learning/
workshops were provided.
Sponsorship of the Engery4me programme
As a part of Energy4me programme, the school visits
program aimed to increase awareness of renewable
resources of energy and spread the awareness
of environmental preservation for a better future.
Students were given information on how to invest in
their soft skills such as communication, presentation,
language learning, and teamwork.
hours of learning/
workshops provided
200
48 United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
Sponsorship of the Society of Exploration Geophysicists “SEG Field Camp 2022”
The field camp is a geophysical trip organised in collaboration between six SEG university student chapters
in Egypt. This year, the camp took place at Wadi El Rayan, Fayoum province, Egypt. The camp's target was
to explore underground water and find Wadi El Rayan's aquifer by using four different geophysical methods.
There were 39 participants who collected, analysed and then presented their data.
Aswan Flood’s Petroleum Initiative
In 2022 an initiative between a number of oil and gas companies, under the patronage of the Ministry of
Petroleum, joined the Aswan Flood’s Petroleum Initiative and supported the rebuilding of the homes in
the Khor Awada village, Aswan city, destroyed by a wave of severe weather. In partnership with Orman
Association, 50 new houses were built at Khor Awada village for families that were homeless due to the
unprecedented floods. The houses were furnished and each family is involved in a goat breeding project,
funded within the initiative, to help generate a sustainable income.
new houses built
after Aswan floods
50
2022 Annual Report and Financial Statements
49
CORPORATE RESPONSIBILITY REPORT
continued
Health and Safety
United is focused on ensuring that all employees have awareness, information, and resources to be able
to prioritise health and safety and implement best practice to ensure that the chances of any incidents
are minimised.
Our Health and Safety policy commits us to: protecting the health and safety of our employees; providing
a workplace free of discrimination where diversity is valued and to ensuring that we consult and engage
with our employees.
Our operators in Egypt maintained another year of zero Fatalities, Medical Treatment Cases, Restricted
Work Injuries and a zero rate for Lost Time Injury frequency and Total Recordable Incidents Frequency.
There were two minor incidents, one involving property damage, and the other a small fire that was
extinguished by the emergency team. Both of these were fully investigated to provide lessons learnt and
to allow mitigation measures to be put in place.
LTIF1 (per million man hours)
2021: 0
0
TRIR2 (per million man hours)
2021: 0
0
1 Lost time injury frequency rate: Number of lost time injuries per
million man-hours for both employees and contractors.
2 Total Recordable Injury rate: Number of recordable injuries per
million man-hours for both employees and contractors
50 United Oil & Gas PLC
Safety indicators (reported by operator) 2022
Indicator
Lost time injury frequency rate - LTIR1
Total recordable incident frequency rate - TRIR2
Fatal accidents
Medical treatment cases
Restricted work injury
Number of motor vehicle incidents
Property damage/fire
Near misses
Security breaches
2022
2021
0
0
0
0
0
0
2
0
0
0
0
0
0
0
3
1
0
0
EAS’s employees’ and contractors’ YTD man-hours worked
1,315,792
1,511,005
1 Lost time injury frequency rate: Number of lost time injuries per million man-hours for both employees and contractors.
2 Total Recordable Injury rate: Number of recordable injuries per million man-hours for both employees and contractors.
Human Rights
United subscribes to Principle One of the United Nations Global Compact: Human Rights. This Principle sets
out the UN Global Compact’s over arching expectation of business on human rights, namely, to respect and
support human rights.
United's Human Rights guidelines provide information and ensures we follow relevant industry guides and
international standards on Human Rights. The appraisal of any potential human rights issues is included in the
scope of work of all Environmental and Social Impact Assessments (ESIA’s) commissioned by United for any
exploration or production project. We take steps to ensure our agents, contractors and suppliers are aware of
and comply with our policies and seek to use our influence with our Joint Venture partners to ensure the same.
51
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CORPORATE RESPONSIBILITY REPORT
continued
Environment
United places great importance on limiting the
impact our activities have on the environment. The
Company complies with all of the environmental
regulatory requirements in each country that
it is present in order to ensure that all activity
is undertaken safely. While United had no field
activity in 2022 in which we were the operator, we
continued to work with our partners in the Joint
operating company to use our relationship and
influence to promote best practice.
We are pleased to report that in 2022 the operator
reported no spills.
Values/Governance
United is committed to operating responsibly and
ethically across our business activities and does
not tolerate bribery or corruption. We expect our
employees to adhere to high ethical standards and
host an annual training session with employees
on all our policies, procedures, guidelines and
standards. This also offered the opportunity for
discussion and feedback.
The board believe that ESG and all it entails is integral
to any organisation. As such the Director's bonus
pay remuneration is not only linked to corporate key
performance indicators but also ESG targets.
Indicator
2022
2021
Spills to the environment
0
0
Climate risk and global energy transition
Climate change is considered a principal risk to
United and its business over the medium and long
term, and this is discussed in more detail in the Risk
Report on page 32.
Global energy transition is a factor that impacts
many of the Group’s principal risks including
those associated with commodity price, reserves,
operations, political, stakeholder and reputational
issues. United’s approach to climate change and the
energy transition is set out in our position statement
available on our website: www.uogplc.com/policy-
statements/
Greenhouse gas emissions (GHG)
We are working with the operator in Egypt to identify,
quantify and categorise our emissions. We will
consider emissions scope, reporting boundary, and
methodology. Progress is being made to understand
the baseline and work with the Joint Venture partners
to assess the data and identify opportunities for
efficient decarbonisation. We intend to report on the
emissions baseline and an emissions reduction plan
as reported by the Joint Venture partner. We will be
very transparent in our disclosures and what can be
achieved with regards to emissions.
52
United Oil & Gas PLC
Business partners and influence
Relationships with business partners, host
governments and regulatory authorities where we
have assets are critical for our business. We are
committed to doing business honestly and ethically
and to complying with all applicable laws and
regulations. Our ability to influence our business
partners depends on our degree of ownership and
operatorship. Where we are the designated operator
(Jamaica) we fully apply the United HSES MS. Where
we a non-operating partner (Egypt and UK), we seek
to influence, make our views heard and ensure that
minimum standards are met in accordance with our
policies, statements and codes.
Preventing corruption
United maintains internal control systems to ensure
that our ethical business standards for relationships
with others are achieved. Bribery is prohibited
throughout the organisation, both by our employees
and by those performing work on our behalf. The
Anti-Bribery and Corruption policy is designed to
prevent corruption and ensure systems are in place
to detect, remediate and learn from any potential
violations. This includes due diligence on new
vendors, appropriate training for all personnel, and
our whistleblowing policy.
Payments to host governments
Revenues generated by a country’s natural
resources plays an important part in the
growth and development of countries in which
we have business. Revenues to governments
become payable by United due to oil production
entitlements, taxes, royalties, licence fees and
infrastructure improvements.
Objectives for 2023
We seek to continually improve and have identified objectives for 2023 in the four key areas in our corporate
responsibly.
Key Area
Objectives for 2023
People and Communities
• Continue investment in, and engagement with employees and local communities
• Formalise a social investment policy
Health and Safety
• Continue to use our influence and relationships to promote best practice in Health and
Safety as a Joint Venture partner
• Maintain dialogue with employees regarding their preference for home/office working
and wellbeing
Environment
• Continue to minimise the impact of our operations
• Work with the operator of the Egyptian assets to understand the GHG emissions at Abu
Sennan including: baseline of emissions data; methodology for recording; reporting
boundaries; emissions scope; water management and effluents; and waste
Values and Governance
• Review our policies, statements and procedures commensurate to our size and that
reflect our non-operating and operating licences
• Training for staff in relevant areas and polices
• Continue supplier due diligence
• All personnel to complete the annual Anti-Bribery and Corruption training
• Continue to review Anti-Bribery and Corruption programme and update as required
The Strategic Report was approved by the Board of Directors on 27 April 2023 and signed on its behalf by
Brian Larkin
Chief Executive Officer
53
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CORPORATE GOVERNANCE STATEMENT
Corporate Governance
Statement in respect
of United Oil & Gas PLC
Chair’s Corporate Governance Statement
As Chair of the Board of Directors of United Oil &
Gas PLC my role is to lead the Board, ensuring high
standards of corporate governance and establishing
a consistent and sustainable corporate culture of
respect, integrity, honesty, and transparency. We
believe that strong corporate governance underpins
our business to the benefit of all our stakeholders.
We are focussed on all aspects of ESG and
integrating it within the business. Where we are non-
operator, we will use our relationships and influence
to shape the ESG agenda. The Board are committed
to ensuring the health and safety of all who work with
us and in the communities in which we work.
Graham Martin
Non-Executive Chairman
Deliver growth
Principle 1
Establish a strategy and business model which promotes long-term value for shareholders
The Board has concluded that the highest medium and long-term value can be delivered to its shareholders
by the adoption of a strategy to create value by actively managing our existing assets whilst growing our
business through additional high-margin opportunities.
The Company’s interests currently consist of a multi-stage portfolio of low-cost producing assets with
significant development and exploration upside in Egypt and an exploration asset in Jamaica.
54 United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
The Board recognises the importance of sound corporate governance in the
management of the Company and in achieving its strategic goals. Accordingly,
the Company has adopted the Quoted Companies Alliance Corporate
Governance Code (the “QCA Code”) published in April 2018. The QCA code is
tailored to meet the needs of small and mid-size quoted firms and the Board
believe that this code provides the most appropriate framework for a company of
our size and stage of development. The Board annually assesses its compliance
with the QCA code and considers as part of that review, whether the QCA code
continues to remain the most appropriate code for the Company to adopt.
Principle 2
Seek to understand and meet shareholder needs and expectations
The Company communicates with shareholders primarily via regular announcements of operational and
corporate updates and semi-annual release of financial statements. The investor section of the Company’s
website (www.uogplc.com/investors/) is updated regularly and includes regulatory news announcements
(press releases), annual and interim reports, corporate presentations, and a list of major shareholders.
Shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings, in
presentations from the Company and on shareholder calls which are hosted a number of times a year.
The Company, through its public relations firm, attendance at shareholder events, website, conference calls
social media and its investor.relations@uogplc.com email address, seeks to provide multiple communication
lines through which private and institutional shareholders can engage with the Company.
The Company shall include, when relevant, in its Annual Report any matters of note arising from the Board
Committees.
Principle 3
Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the long-term success of the Company is reliant upon maintaining effective
working relationships across a wide range of stakeholder groups. These include the Company’s host
governments and regulatory authorities, employees and contractors, joint venture partners, suppliers,
shareholders and financing partners. The Board values feedback from all stakeholders and has systems in
place to ensure that there is oversight, accountability and contact with its key resources and relationships.
Principle 4
Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Company maintains a principal risks and mitigations register that is reviewed by the Audit and Risk
Committee on an annual basis. Risks are categorised as Strategic, Financial, Operational and Reputational
and an explanation is given on how these risks are mitigated to enable the Company to achieve its strategic
objectives. In addition, the management team meet quarterly to review the Risks and risk register.
55
2022 Annual Report and Financial Statements CORPORATE GOVERNANCE STATEMENT
continued
Maintain a dynamic
management framework
Principle 5
Maintain the Board as a well-functioning, balanced team led by the Chair
The Board comprises: an independent non-executive Chairman, Chief Executive Officer, a Chief Operations
Officer, a Chief Financial Officer and one independent non-executive Director. Biographies of the Board
appear both on the Company’s website and in the Annual Report.
Executive and non-executive Directors are subject to re-election at the Company’s Annual General Meeting
at intervals of no more than three years although in practice all Directors put themselves up for re-election
annually. The service agreements and letters of appointment of all Directors are available for inspection at the
Company’s registered office during normal business hours.
The Board expects to meet at least six times per annum. It has established an Audit and Risk Committee,
a Remuneration Committee, an Environmental, Social and Governance Committee and an AIM
Rules Compliance Committee. Full details of the number of Board and Committee meetings and the
attendance record of each Director are set out in the Annual Report on page 58. The terms of reference
for each Committee are set out on the Company’s website www.uogplc.com. The Board has agreed that
appointments to the Board at this stage would be made by the Board as a whole and so has not created a
Nominations Committee.
Principle 6
Ensure that between them the Directors have the necessary up to date experience, skills and capabilities
The Company believes that, at its current stage of development as an independent upstream oil and gas
company, the balance of skills on the Board as a whole, reflects a sufficiently broad range of technical,
operational, commercial, legal, financial and risk management experience, together with an in-depth
knowledge of the sector and experience of public markets, that are necessary to ensure the Company
is equipped to deliver its strategy. The composition of the Board is kept under review to ensure that the
necessary breadth and depth of skills are available to support the ongoing development of the Company.
The Directors have access to the Company’s Nomad, legal advisors, tax advisors and auditors and are able to
seek advice from other professional advisors as required.
Full Biographies of the Board are available on the Company’s website www.uogplc.com and in the Annual
Report page 60.
Principle 7
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual Directors is undertaken on an annual basis
by way of individual discussions between the Chair and each Director to determine the effectiveness and
performance of the Board. A Board evaluation was conducted in 2022 and an overview is provided in the
Annual Report on page 59.
The results and recommendations from the Board evaluation also identify the key corporate and personal
targets relevant to each Director. Progress against previous targets shall also be assessed where relevant.
56
United Oil & Gas PLC Principle 8
Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the
Company as a whole and that this will impact the performance of the Company. The Board is very aware that
the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way
that employees behave. The corporate culture places a strong emphasis on conducting business ethically,
transparently and with clear lines of responsibility. The corporate governance arrangements that the Board
has adopted are designed to ensure that the Company delivers long term value to its shareholders and that
shareholders have the opportunity to express their views and expectations for the Company in a manner that
encourages open dialogue with the Board.
The Company maintains an open and respectful dialogue with employees, partners and other stakeholders
acknowledging that sound ethical values and behaviours are crucial to the ability of the Company to
successfully achieve its corporate objectives. The Board places great import on this aspect of corporate life and
seeks to ensure that this flows through all that the Company does. The Directors consider that at present the
Company has an open culture facilitating comprehensive dialogue and feedback thus enabling positive and
constructive challenge.
The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for
Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded
on AIM and is in accordance with the requirements of the Market Abuse Regulation. Furthermore following an
extensive review of the corporate policies and procedures, United updated existing polices and implemented
a number of new policies, procedures and statements commensurate with our size. These are available on our
website and further information can be found in our ESG Committee report page 70 and Corporate Responsibly
report page 44. In line with our Anti-Bribery and Corruption policies, the executive Directors conducted an annual
in-person team training session on the application of the Anti-Bribery and Corruption policy with employees.
Principle 9
Maintain governance structures and processes that are fit for purpose and support good decision-making
by the board
Ultimate accountability for all aspects of the Company’s activities rests with the Board, the respective
responsibilities of the non-executive Chair and Chief Executive Officer arising as a consequence of delegation
by the Board. The non-executive Chair is responsible for the effectiveness of the Board together with the
responsibility to oversee the Company’s corporate governance practices. The Board has also established
appropriate Committees as detailed below to oversee the effectiveness of its operations and governance.
Terms of reference for each Committee are available on the Company’s website at www.uogplc.com.
Audit and Risk Committee
The Audit and Risk Committee comprises Graham Martin (Chair) and Iman Hill. This Committee has primary
responsibility for monitoring the quality of internal controls and ensuring that the financial performance of
the Company is properly measured and reported on and for reviewing reports from the Company’s auditors
relating to the Group’s accounting and internal controls. The Committee is also responsible for making
recommendations to the Board on the appointment of auditors, the audit fee and for ensuring that the
financial performance of the Group is properly monitored and reported. The Committee will meet no less than
three times a year.
Remuneration Committee
The Remuneration Committee comprises Graham Martin (Chair), and Iman Hill. This Committee is responsible
for ensuring that executive remuneration is appropriate for this stage of the Company’s growth. It has
established a Remuneration Policy which outlines the principles on which executive remuneration will be
structured, including an appropriately benchmarked base salary with bonus and share award opportunities
which reflect the performance of the Company and take account of the interests and experience of
shareholders. The Remuneration Policy also seeks to ensure that all employees have an opportunity to share
in the Company’s success. The Remuneration Policy is reviewed annually by the Committee. The Committee
will meet no less than three times a year.
57
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CORPORATE GOVERNANCE STATEMENT
continued
Principle 9 continued
AIM Rules Compliance Committee
The AIM Rules compliance Committee comprises Graham Martin (Chair), Brian Larkin and Peter Dunne and
its prime responsibility is to ensure the Company has sufficient procedures in place to ensure ongoing
compliance with the AIM Rules. The Committee will meet at least once a year.
Environmental, Social and Governance (ESG) Committee
The ESG Committee comprises Iman Hill (Chair), Graham Martin, Peter Dunne and Jonathan Leather. Its prime
responsibility is to ensure sufficient oversight in the following areas of key importance to the Company: the
environment, health and safety, corporate social responsibility, sustainability, reputation, diversity, equality and
inclusion, and community issues. The Committee will meet no less than three times a year.
Nominations Committee
The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not
created a Nominations Committee.
Meeting Attendance
Director’s attendance at meetings during each Director’s respective term of office in 2022:
Director
Brian Larkin
Jonathan Leather
Peter Dunne1
David Quirke2
Graham Martin
Iman Hill
Tom Hickey3
Board
9 of 9
9 of 9
5 of 5
4 of 4
9 of 9
9 of 9
6 of 6
Audit and Risk
Committee
Remuneration
Committee
ESG
Committee
-
-
2 of 2
1 of 1
1 of 1
3 of 3
2 of 2
-
-
-
-
4 of 4
4 of 4
3 of 3
-
4 of 4
3 of 3
1 of 1
4 of 1
4 of 1
-
1 Peter Dunne was appointed as Chief Financial Officer on 5 May 2022 and appointed as a Director of the Company and Company Secretary
on 1 June 2022.
2 David Quirke stepped down as Chief Financial Officer on 5 May 2022, Director of the Company and Company Secretary on 1 June 2022.
3 Tom Hickey stepped down as independent non-executive Director, Chair of the Audit and Risk Committee and a member of the Remuneration
Committee from the Board on 23 September 2022.
The executive Directors attended a number of meetings of Committees of which they were not members
during the course of the year at the invitation of the Committee Chair.
The Board generally meets bi-monthly. In addition to the scheduled meetings the Board also held additional
meetings and update calls throughout the year to closely monitor progress on key matters. If any Director was
unable to attend, full comments on papers were received from that Director in advance of the meeting.
Principle 10
Communicate how the company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
The Board recognises that a healthy dialogue should exist between the Board and all of its stakeholders,
including shareholders, to enable all interested parties to come to informed decisions about the company.
In particular, appropriate communication and reporting structures should exist between the Board and all
constituent parts of its shareholder base. This will assist the communication of shareholders’ views to the
Board; and the shareholders’ understanding of the unique circumstances and constraints faced by the
Company. The Corporate Governance section of the Annual Report includes disclosure of Board Committees,
their composition and where relevant, any work undertaken during the year.
58
United Oil & Gas PLC Principle 10 continued
The Company’s website includes all historic Annual Reports, results announcement, results presentations
and other governance-related material, including notices of all AGMs over the last six years.
To date, none of the resolutions proposed at the Company’s AGMs have resulted in a material proportion of
votes (e.g. 20% of independent votes) been cast against them, but were this to happen the Company would
announce this in a timely basis, including an explanation of what actions it intended to take to understand
the reasons behind such a vote result and, where appropriate, any action it had taken, or would take, as a
result of the vote.
Board evaluation
The Board considers that regular evaluation of the Board, its committees and each of the Directors is
essential to the proper governance of the Company and for its success. An internal evaluation was
carried out in early 2023 by the Chair of the Board of Directors in the form of individual discussions
between the Chair and each Director. The Chair then provided feedback to the Directors at the next
Board meeting and followed up where appropriate with further individual discussions.
Each discussion focussed on key agenda items circulated in advance by the Chair such as: the
appropriateness of our current vision and strategy; our culture and values; our corporate risk
matrix and the likelihood and impact of identified risks, the adequacy of internal controls and risk
management; the constitution and effectiveness of the Board committees and board administration
generally; and relationships with our major shareholders and other key stakeholders.
Each discussion was open, wide ranging and very constructive and covered all issues of concern
or improvement each Director wished to raise. The collective view of the Directors was that our
corporate vision and strategy remained appropriate, in particular its flexibility to react quickly to
events and business opportunities; that our culture and values were well aligned and reflected also
in our staff; and that while the current size of the Board and structure of the committees remained
adequate, it was acknowledged that in the short to medium term when circumstances permitted we
should seek to strengthen the Board by the addition of another non-executive Director with audit/
accounting experience. We also reviewed the areas suggested by the 2022 Board evaluation as
requiring attention.
There were no issues or concerns raised with our internal controls and risk management, and it was
felt that relations with our key stakeholders were maintained at a high level.
A number of areas where further improvements could be made to our structure, practices and
procedures were suggested and these will be a focus of my and the Board’s attention in 2023. These
included: ensuring more individual discussions among the executive and non-executive Directors
outside of formal Board meetings; keeping our “working from home” policy under review to ensure
it meets changing business requirements; continuing to seek opportunities for all our Directors to
engage with our key stakeholders; and continuing to ensure our policies, procedures, and headcount
are “fit for purpose” and aligned with the evolution of our assets and opportunities.
59
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION BOARD OF DIRECTORS
Experienced Board
Brian Larkin
Chief Executive Officer
Jonathan Leather
Chief Operating Officer
Peter Dunne1
Chief Financial Officer
M
M
M
Brian is the founding Director of
United Oil and Gas PLC.
Brian is a Qualified Accountant
and has an MBA from Dublin City
University. Brian has extensive
oil and gas industry experience
having worked for both Tullow Oil
plc and Providence Resources plc.
At Tullow Oil, Brian held positions
in both finance and commercial,
and worked on a variety of
production, development and
exploration projects in South
America and Asia and carried
out numerous investment case
recommendations.
At Providence, Brian worked in
senior finance and commercial
positions. During his time with
Providence, Brian worked on a
wide portfolio of assets in regions
including the Gulf of Mexico,
offshore Ireland, onshore United
Kingdom, and offshore Nigeria.
Jonathan has over 20 years
experience in the oil industry
and holds a Geology degree
from Oxford University, a PhD
in Sedimentology from Trinity
College, Dublin, and an MBA from
Warwick University. Jonathan
worked for Tullow Oil plc from
2007 to 2015, where he held
a number of senior positions,
including membership of the
Global Exploration Leadership
Team. Jonathan also managed
Tullow’s Subsurface Technology
Group – a team Jonathan
established and built up to provide
specialist technical input across
the company in both exploration
and development. As part of
this, Jonathan worked on global
assets and opportunities ranging
from onshore producing fields to
deepwater frontier exploration.
Prior to Tullow Oil, Jonathan
worked for Shell UK Ltd. During his
time there, Jonathan was involved
in a number of exploration and
development projects, and worked
on North Sea, European, Middle
Eastern and Malaysian assets.
Peter joins from Boru Energy
Limited, the West African focussed
private oil and gas company
where he was CFO and brings
over 20 years’ experience
of working in senior finance
leadership roles including over 14
years in the upstream Oil and Gas
sector. Prior to Boru, Peter was
Group Finance Director at Origin
Enterprises plc and before that
spent seven years with Petroceltic
International plc, latterly as
Corporate Finance Director.
During his time in Petroceltic, the
Company merged with Melrose
Resources plc, with the enlarged
group carrying out operations
across North Africa, the
Mediterranean Basin and Black
Sea, with operated production in
excess of 25,000 boepd.
1 Peter Dunne was appointed as Chief
Financial Officer on 5 May 2022 and
appointed a Director of the Company
and as Company Secretary on 1 June
2022.
60
United Oil & Gas PLC AIM Rules Committee
ESG Committee
Remuneration Committee
Audit Committee
Chair
Member
C
M
Graham Martin
Non-Executive Chairman
Iman Hill
Non-Executive Director
C
M
C C
C
M M
Graham is an experienced senior
natural resources executive and
brings a wealth of international
expertise. From 1997 to 2016 he
served as an executive Director
of Tullow Oil plc, an oil and gas
exploration, development and
production company listed in
London, Dublin and in Ghana. Prior
to Tullow, Graham was a partner
at the US energy law firm Vinson &
Elkins LLP, having started his legal
career in Scotland. He is currently
also a non-executive Director
of Kenmare Resources plc, one
of the leading global producers
of titanium minerals and zircon
listed in London and Dublin.
He holds a degree in Law and
Economics from the University of
Edinburgh.
Iman Hill is currently the CEO of
the International Association of Oil
& Gas Producers. She also serves
as non-executive Independent
Board Director of Oil Spill
Response Ltd and DHT Holding Inc.
David Quirke stepped down
as Chief Financial Officer on
5 May 2022 and Director of
the Company and Company
Secretary on 1 June 2022.
Tom Hickey stepped down as
independent non-executive
Director (NED), Chair of the
Audit and Risk Committee and
a member of the Remuneration
Committee from the Board on 23
September 2022.
Iman is a Petroleum Engineer with
30 years’ experience in the oil
and gas industry with extensive
global expertise in the technical
and commercial aspects of
the petroleum business, in
particular field development,
capital projects and production
operations. Iman’s experience
has been gained in the Middle
East, North and West Africa, South
America, the Far East, and the
North Sea in a number of diverse
settings from onshore to ultra-
deep water with companies that
include BP, Shell, BG Group and
Dana Gas, where as well as her
role as Technical Director, GM UAE
and President Egypt, she also ran
one of the Egyptian joint ventures
as Managing Director and Board
member of the Egyptian Bahraini
Gas Derivatives Company.
61
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION DIRECTORS’ REPORT
The Directors present their
report and the audited Financial
Statements of the Group for the
year ended 31 December 2022
Results and dividends
The profit for the year, after taxation, amounted to
$2.3m (2021 restated: $3.6m). The Directors do not
recommend payment of a dividend (2021: $Nil).
Directors
The business of the Company is managed by
the Directors who may exercise all powers of the
Company subject to the articles of association of
the Company and applicable law. Executive and
non-executive Directors are subject to re-election
at the Company’s annual general meeting at
intervals of no more than three years. No member
of the Board had a material interest in any contract
of significance with the Company or any of its
subsidiaries at any time during the year, except
for the interests in shares and in share option
awards under their service agreements and
letters of appointment disclosed in the Directors’
Remuneration report.
The Directors who served during the year were:
Director
Brian Larkin
Date of Contract
25 July 2017
Jonathan Leather
25 July 2017
Peter Dunne1
David Quirke2
1 June 2022
24 June 2019
Graham Martin
15 February 2018
Iman Hill
Tom Hickey3
7 September 2020
1 January 2021
Principal activities
The principal activity of the Company and
its subsidiary undertakings (the Group) is the
production, development and exploration of oil and
gas. The Company’s current operations are located
in Egypt, Jamaica, and the United Kingdom.
Business review and future developments
A review of the business and future developments
of the Group is presented the Strategic Report
(including the Chair’s Statement, Chief Executive
Officer’s Review, Review of Operations and Financial
Review) all of which together with the Corporate
Governance Statement, are incorporated by
reference into this Directors’ Report.
Financial instruments and risk management
An explanation of the Group’s financial risk
management objectives, policies and strategies and
information about the use of financial instruments
by the Group is given in note 24 to the financial
statements.
Share capital
Details of the shares in issue are set out in note 16 to
the financial statements. The Company currently has
one equity class of shares in issue, ordinary shares of
£0.01, all of which are fully paid.
Events since the balance sheet date
The events since the balance sheet date are
disclosed in note 30.
1 Peter Dunne was appointed as Chief Financial Officer on 5 May 2022 and appointed as a Director of the Company and Company Secretary
on 1 June 2022.
2 David Quirke stepped down as Chief Financial Officer on 5 May 2022 and Director of the Company and Company Secretary on 1 June 2022.
3 Tom Hickey stepped down as independent non-executive Director, Chair of the Audit and Risk Committee and a member of the Remuneration
Committee from the Board on 23 September 2022.
62
United Oil & Gas PLC Directors' interests
As at 31 December 2022, the beneficial interests of
the Directors and their connected persons in the
ordinary share capital of the Company were as
follows:
Director
Number of
Ordinary Shares
% of Ordinary
Share Capital
Brian Larkin
17,508,489
Jonathan Leather
8,581,989
Peter Dunne
644,641
Graham Martin
4,089,730
Iman Hill
Nil
2.67
1.31
0.1
0.62
Nil
None of the Directors who held office at the end of
the financial year had any disclosable interest in the
shares of other Group companies.
Rights to subscribe for shares in the Company that
were granted during the financial year are disclosed
in the Remuneration Report.
Auditor
KPMG were appointed during the year and a
resolution to reappoint them as auditor will be put to
the members at the Annual General Meeting.
Disclosure of information to auditors
The Directors who were members of the Board at
the time of approving the Director’s Report are listed
above. So far as each person who was a Director
at the date of approving this report is aware, there
is no relevant audit information, being information
needed by the auditor in connection with preparing
its report, of which the auditor is unaware. Having
made enquiries of fellow Directors, each Director has
taken all steps that he or she is obliged to take as a
Director in order to make himself or herself aware of
any relevant audit information and to establish the
auditor is aware of that information.
On behalf of the Board
Brian Larkin
Chief Executive Officer
27 April 2023
63
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION REMUNERATION COMMITTEE REPORT
The Remuneration Committee
is a standing Committee of the
Board comprising Graham Martin
(Chair) and Iman Hill
The current Remuneration Policy of the company (adopted in 2020, revised in early 2021 and reviewed in 2022)
sets out the principles of remuneration for the executive Directors and can be summarised as follows:
• an appropriately benchmarked salary;
• a 10% pension contribution;
• an annual bonus opportunity of 100% of salary, based 50% on Key Performance Indicators (KPI’s), 25% on an
absolute total shareholder return (TSR) metric and 25% on relative TSR against a peer group of companies;
• The Committee has discretion to adjust the formulaic outcome of the bonus scorecard if considered
appropriate taking into account all relevant factors affecting the company and its performance in the year;
• Where the bonus outcome exceeds 40% of salary, the excess shall be paid in shares until certain personal
shareholding targets of each executive is met, thereafter the excess over 50% shall be paid in shares;
• The consideration of an annual award of share options provided that the aggregate of all outstanding
employee share options does not ordinarily exceed 10% of the company’s issued share capital in any rolling
10-year period; and
• Setting appropriate minimum shareholding targets for each executive, recognising their different respective
tenures with the company.
The Remuneration Policy also sets out the fees payable to the non-executive Directors and confirms that non-
executives are no longer eligible for share awards of any type.
The Remuneration Policy is reviewed annually by the Committee, the last such review being in March 2022
when no changes were recommended.
64
United Oil & Gas PLC STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
Graham Martin
Remuneration Committee Chair
Dear Shareholders,
The purpose of the Committee is to assist the Board in discharging its oversight
responsibilities relating to the attraction, compensation, evaluation and
retention of its executive Directors and senior management. The Committee
aims to ensure that fair and competitive compensation is awarded to the
executives with appropriate performance and share acquisition incentives.
Summary of the work of the Committee in 2022
• reviewed the Remuneration Policy;
• monitored the 2022 executive KPI bonus scorecard on a quarterly basis and provided feedback to the
executives;
• benchmarked executive salaries and recommended no further increases to salaries beyond those set in
the 2021 Annual Report; and
• benchmarked and reviewed the fees payable to the Chair and the other non-executive Directors,
recommending no increases from those set out in the 2021 Annual Report.
Operation of the bonus scheme in 2022
As per the Remuneration Policy, the executives’ bonus opportunity was based 50% on the Total Shareholder
Return (TSR) performance of the company and 50% on Key Performance Indicators (KPI’s). The KPI’s set for 2022
related to: production and reserve targets; value-enhancing corporate activity; portfolio management; certain
financial metrics and ESG targets.
The TSR components of the bonus were not met but the Committee determined that certain of the portfolio
management, financial and ESG targets were met, resulting in an aggregate score of 12.50%.
However, the Committee then considered the share price performance over the year and all other factors
affecting the Company and its assets, including the post year-end announcement of a cost cutting programme
of 15% across all categories of expenditure and determined that no bonus should be payable to the executives in
respect of 2022.
Executive Director service contracts
Each of the Directors entered into an updated service contract in 2022 in similar form. The contracts stipulate
a notice period to be given by each of the executive and the company of six months.
65
2022 Annual Report and Financial Statements REMUNERATION COMMITTEE REPORT
continued
Executive Directors’ remuneration 2022
Salary
Pension
Benefits1
Total 2022
Total 2021
Brian Larkin
US$
Jonathan Leather
US$
David Quirke2
US$
Peter Dunne3
US$
264,800
26,480
8,053
299,333
332,072
211,840
21,184
6,357
239,382
270,394
123,573
12,357
3,708
139,639
266,459
139,319
12,357
3,179
154,855
-
1 The benefits received by the executive Directors include private medical insurance, permanent health assurance, life assurance cover and
a subscription to a sports club.
2 David Quirke has stepped down from the Board of Directors effective at the conclusion of the AGM on 1 June 2022.
3 Appointment of Peter Dunne, as Chief Financial Officer, effective from 5 May 2022, appointed to the Board of Directors effective at the conclusion
of the AGM on 1 June 2022.
All executive Directors’ remuneration is converted from EUR to USD at an average exchange rate for 2022 of 1.06
(2021: 1.18).
Executive Directors’ remuneration 20231
The salaries of the executive Directors for 2023, remain the same as for 2022 as follows:
Brian Larkin
EUR
Jonathan Leather
EUR
Peter Dunne
EUR
Salary
250,000
200,000
200,000
1
In January 2023 the Directors accepted a 15% reduction in salary and benefits with this reduction to be reviewed by the remuneration
committee in second half of 2023.
2022 Bonus scheme
As per the Remuneration Policy, the executive Directors are entitled to a 100% bonus opportunity in 2023,
50% of which is based on two TSR metrics, and 50% against the following KPI’s: Production and reserves (5%);
Corporate activity (12.5%); Financial (5%); ESG (10%); Portfolio management (7.5%) and Personal (10%). Details of
performance against these metrics will be disclosed in the 2023 Annual Report.
Non-Executive Directors’ remuneration 2022
Fees
Total 2022
Total 2021
Graham Martin
US$
Iman Hill
US$
Tom Hickey1
US$
49,835
49,835
54,964
31,147
31,147
34,353
22,045
22,045
34,353
1 Tom Hickey stepped down from the board effective 23 September 2022
Non-executive Directors are paid in GBP and the average exchange rates were 1.25 and 1.37 for 2022 and 2021
years respectively.
66
United Oil & Gas PLC Non-Executive Directors’ remuneration 20231
The fees payable to the non-executive Directors in 2023 remain the same as 2022, as follows:
Fees
Graham Martin
£
Iman Hill
£
40,000
25,000
1
In January 2023 the Directors accepted a 15% reduction in salary and benefits with this reduction to be reviewed by the remuneration
committee in second half of 2023.
No non–executive Director is entitled to an additional fee for chairing any Committee.
Share-option awards
The following share-option awards to Directors were in place as at 31 December 2022:
Director
Brian Larkin
Options
Option Price
Award Date
Vesting Date
Expiry Date
4,235,294
4,817,500
4.25p
02-Aug-2018
01-Aug-2021
30-Jul-2028
4.00p
17-Jun-2020
17-Jun-2023
16-Jun-2030
Jonathan Leather
4,058,824
4.25p
02-Aug-2018
01-Aug-2021
30-Jul-2028
Peter Dunne1
David Quirke2
Graham Martin
Iman Hill
Tom Hickey3
4,100,000
6,862005
3,666,667
4,100,000
1,176,471
1,000,000
1,481,481
1,342,282
4.00p
17-Jun-2020
17-Jun-2023
16-Jun-2030
2.47p
30-Sep-2022
31-May-2025
29-May-2032
3.00p
24-Jun-2019
23-Jun-2022
21-Jun-2029
4.00p
17-Jun-2020
17-Jun-2023
16-Jun-2030
4.25p
02-Aug-2018
01-Aug-2021
30-Jul-2028
4.00p
17-Jun-2020
17-Jun-2023
16-Jun-2030
2.70p
29-Sep-2020
29-Sep-2023
28-Sep-2030
2.98p
5-Jan-2021
5-Jan-2024
4-Jan-2031
1 Peter Dunne was appointed as Chief Financial Officer on 5 May 2022 and appointed as a Director of the Company and Company Secretary
on 1 June 2022.
2 David Quirke stepped down as Chief Financial Officer on 5 May 2022 and Director of the Company and Company Secretary on 1 June 2022.
3 Tom Hickey stepped down as independent non-executive Director, Chair of the Audit and Risk Committee and a member of the Remuneration
Committee from the Board on 23 September 2022.
Share-options have been awarded to Directors and current staff of the Company and the aggregate number of
options awarded as at 31 December 2022 is 61,648,984 which is 9.6% of the issued Share Capital of the Company.
Directors or employees are required to be employed by the company at the time of the vesting of the option to
exercise their option awards. At the discretion of the Board, this condition can be waived by up to 1 year from the
date of cessation of employment. No additional performance conditions are attached to the option awards.
Non-executive Directors are no longer eligible for future share option awards.
67
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION AUDIT AND RISK COMMITTEE REPORT
Dear Shareholders,
The Audit and Risk Committee’s primary responsibilities include the
monitoring of the integrity of the Group’s Financial Statements, the
effectiveness of the Group’s risk management and internal assurance
processes and related governance and compliance matters and
provide oversight on behalf of and to the Board in relation to the Group’s
Financial Reporting, Internal Controls and External Audit activities.
The Audit and Risk Committee is also responsible
for overseeing the relationship with the external
auditor, including ongoing assessment of their
independence and objectivity. During the year,
the Committee met three time, and the members
attendance record is set out in the Corporate
Governance section of the report.
Composition of the committee
I was appointed as Chair of the Audit and Risk
Committee in October 2022 following Tom Hickey
stepping down from the Board and Committees in
September 2022. Serving with me on the Committee
during 2022 was non-executive Director; Iman
Hill. The members of the Committee have been
chosen to provide the wide range of financial and
commercial experience needed to fulfil these duties.
At our request, the CFO along with senior members
of the finance department attend each meeting.
The external auditors attend when appropriate. The
Audit and Risk committee met three times in 2022
with meetings arranged around the key external
reporting dates. The first meeting focused on the
2021 year-end external audit process (reported
in the 2021 Annual Report and Accounts). The
second meeting was convened to consider the
tender proposals from Audit Firms in relation to the
appointment of an external auditor (see below).
The third meeting centred on the Group’s half year
reporting. Subsequent to the year end, a meeting
was held in January 2023 with the auditors to
facilitate the planning of the 2022 audit.
Responsibilities
The key responsibilities of the Committee are as
follows:
• monitor the integrity of the financial statements
of the Company including its annual and half
yearly reports and any other announcements
relating to its financial performance;
• review and report to the Board on significant
financial reporting issues and judgements
contained in the reports and announcements
having regard to matters communicated to it by
the auditor;
68
United Oil & Gas PLC • review and challenge the methods used to
account for significant transactions;
• keep under review the Company’s internal
financial control systems;
• consider and make recommendations to the
Board, to be put to shareholders for approval at
the annual general meeting, in relation to the
appointment, re-appointment and removal of
the Company’s external auditor;
• oversee the relationship and terms of
engagement with the external auditor including
fees for audit and non-audit services;
• review the findings of the audit with the external
auditor including a discussion on the major issues
which arose during the audit, key accounting
judgements and the auditors view of their
interactions with senior management; and
• annually review the Audit Committee’s Terms of
Reference.
The Audit and Risk Terms of Reference are available
on our website, https://www.uogplc.com/theboard/
Change of external Auditor
A key focus for the Committee during 2022 was the
competitive audit tender process undertaken with
a view to appointing a new external auditor for the
2022 financial year. The Committee was responsible
for the design and operation of the tender process
and our key objectives were to ensure that the
process was efficient, fair, effective, open and
transparent to enable the Committee to make a
reasoned recommendation for the appointment of
an external auditor. A number of firms were invited to
tender and following an evaluation of the proposals
and presentations from the firms, the Committee
recommended to the Board that KPMG be appointed
to succeed UHY Hacker Young as Group auditors.
Whilst the Committee appreciated the quality of the
proposals presented by all the firms, it believes that
the strength and experience of KPMG’s team best
met the predefined criteria it had set.
After considering the Committees recommendation,
the Board selected KPMG as United’s auditor for
the financial year ending 31 December 2022. The
appointment will be subject to a confirmatory
advisory vote at the 2023 AGM.
On behalf of the Committee, I would like to thank
each of the firms who participated in the tender
process. The external audit fees for 2022 were
US$90,000. There were no principal non-audit fees in
2022. Any non-audit services are pre-approved by
the Committee. The Committee has decided that
the size and scale of the Group’s activities does not
justify an Internal Audit function.
Conclusion
The Committee would like to thank our outgoing
auditors, UHY Hacker Young for their work with the
Company since their appointment in 2017 and
would like to thank our incoming auditor, KPMG for
their work on the 2022 financial statements. I would
also like to thank my fellow Committee member
for her commitment and input to the work of the
Committee during 2022 and the financial team for
their assistance, guidance, and support. Lastly, I
would like to thank Tom Hickey for his contribution
to the Committee and to wish him well in his future
endeavours.
Key judgments and estimates in financial reporting
Key Judgements
and Estimates in
Financial Reporting
Audit and Risk
Committee
Review
Outcomes
Impairment of
exploration and
evaluation assets
Impairment of
development assets in
the Group
Valuation of loan and
embedded derivative
in the Group
Yes
Yes
Yes
The treatment of exploration and evaluation asset balances across
the Group at the year-end to be materially correct. An impairment
expense of $483k was recognised in Egypt following the impairment of
exploration expenditure in the year (Note 10).
No issues were identified in relation to impairment of development
assets at the year end and continue to be held at Net Book Value in the
Balance Sheet (Note 11).
No issues were identified in relation to valuation of loan and embedded
derivative at the year end and disclosures in respect of the loan and
embedded derivative in the Balance Sheet and related note (Note 21)
are appropriate.
69
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) COMMITTEE REPORT
We are committed to
being transparent
Composition of the committee
I served as Chair of the ESG
Committee for the duration of
the year serving with me on the
Committee during 2022 was
Graham Martin, Chair of the
Board of Directors, the Chief
Financial Officer and the Chief
Operating Officer. At our request,
the Head of Investor relations and
ESG attends each meeting. The
ESG Committee met four times in
2022, once every quarter.
Responsibilities and activities
during the year
The terms of reference for the
Committee have been adopted
with the key responsibilities of the
Committee being:
• have oversight of the ESG
Strategy;
• have oversight of the
Company’s ESG targets and
key performance indicators;
• have oversight of the
Company’s ESG budget, as
well as major ad hoc pieces of
spending related to ESG;
• have oversight of third-party
partnerships entered in relation
to the ESG Strategy; and
• have oversight of how the ESG
Strategy is communicated
internally and externally.
The ESG Committee Terms of
Reference are available on
our website: www.uogplc.com/
wp-content/uploads/2022/05/
Enviromental-Social-and-
Governance-ESG-Committee-
Terms-of-Reference-Final-1.pdf
Iman Hill
ESG Committee Chair
Dear Shareholders,
It is fundamentally important to the Board that
the business is run ethically and in a transparent
manner. The ESG scorecard that is linked to
management reward drives accountability and
focus on moving forward with activities such as
emissions measurement and reduction and the
development of structured corporate responsibility
performance indicators.
As Committee Chair, I am pleased to able to report
on the activities of the Board ESG Committee
in 2022. Throughout 2022 the Committee
continued to be provided with regular updates by
management and the Operator in Egypt on safety
of the operations. Significant progress was also
made this year, on updating and implementing
several ESG related policies.
70
United Oil & Gas PLC Topics discussed in 2022
• Detailed review of policies,
standards and procedures and
additional policies, standards,
or procedures required that are
commensurate with the size
and maturity of the Company.
• Detailed review of current
Environmental and Social
investment projects
implemented by the Joint
Operating Companies.
• Review and discussion
of progress of ESG key
performance indicators for
2022.
• Discussion and review of
the Company’s risks and
discussions on the risk matrix.
• Discussion on working with
the operator to understand
emissions data collection,
reporting and emissions
reduction initiatives.
• Discussion on the health and
safety metrics reported by the
operator.
During the year the Committee
focused on the following matters:
Governance
The Group is committed to
the ethical conduct of the
Group’s business including
its corporate governance
framework and is guided by
the 10 principles set out in
the QCA code. We promote
a culture based on ethical
values and behaviours with
embedded risk management.
Board Committees have been
established for ESG, Audit and
Risk, Remuneration and AIM
Rules Compliance.
During 2022 a lot of work was
done around updating, and
implementing new policies,
guidelines, and procedures
to ensure that United has
best practice governance
commensurate to its size and
stage in the Company’s cycle.
The committee reviewed the
existing Health & Safety Policy,
Environmental Policy, Social Media
Policy, Share Dealing Policy and
supplemented these with; an
Anti-Corruption and Bribery Policy,
Code of Ethics and Business
Conduct, Diversity and Inclusion
Policy, Human Rights Policy,
Whistleblowing Policy, Corporate
Responsibility Policy, Community
Investment Policy, Slavery and
Human Trafficking Statement and
a Disaster Response Plan.
planting of trees and the use
of associated gas generators
(instead of diesel) to reduce or
offset the carbon emissions.
Where we are non-operator,
we will, seek to influence the
operators to understand how
emissions are measured, what
the measurements are, and what
the contributors are and any
mitigations measures that can
be applied.
We are pleased to report that
the new policies, standards
and procedures have been
implemented at United and the
external policies are available on
our website. We are also pleased
to have completed a training
session with all employees,
in person or remotely (where
required), on the above matters.
ESG KPI’s
The ESG KPI’s account for 20% of
the executive Directors corporate
KPI’s and flow through to executive
compensation. The ESG KPI’s for
2023 have been assessed by the
ESG Committee and approved by
the Remuneration Committee in
early 2023. Further details can be
found in the Remuneration Report
on page 64.
Environmental
Despite the current limited
footprint of United as an operator,
the Board and management
are fully aligned on the need to
also ensure that we are working
with the operator to understand
and explore ways to reduce
the environmental footprint of
our operations. This includes
investigating ways to reduce
greenhouse gas emissions,
energy efficiency and the
reduction and management of
waste. This applies to operated
and non-operated assets. In
Egypt, we are working with
the operator to understand
the emissions measurements,
and two initiatives such as the
We are committed to being
transparent in what we report and
what we can and cannot achieve.
Social
The Company is committed to
managing its relationships with its
workforce, the communities where
it has business activities, and
host Governments in line with the
highest standards of corporate
governance. At its core this
means full compliance with the
Health, Safety and Environmental
management system, the policies,
procedures, and standards
mentioned above. In addition,
United seek to ensure respect of
human rights and appropriate
labour standards in the supply
chain. The company understands
that good integration with local
communities is fundamentally
important to its ‘social license’
to operate. Similar to prior years
the Joint Operating Company
have invested in projects in
Egypt focussing on youth energy
education, development of
employment skills, and mentoring.
In 2022 an initiative between a
number of oil and gas companies
and under the patronage of the
Ministry of Petroleum, joined the
Aswan Flood’s Petroleum Initiative
and supported the rebuilding of
the homes in the Khor Awada
village, Aswan city, destroyed
by a wave of severe weather.
Further details can be found in the
Corporate Responsibility Report
page 44.
71
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UNITED OIL & GAS PLC
For the year-ended 31 December 2022
OPINION
We have audited the financial statements of United Oil & Gas PLC ("the Company") and its consolidated
undertakings ("the Group") for the year ended 31 December 2022 set out on pages 82 to 131, which comprise
the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Balance sheet, the Consolidated Statement of Changes in Equity, the Consolidated Statement
of Cash Flows, the Company Balance sheet, the Company Statement of Changes in Equity and related
notes, including the summary of significant accounting policies set out on page 87. The financial reporting
framework that has been applied in the preparation of the Group financial statements is UK Law, UK adopted
International accounting standards and, as regards the Company’s financial statements, UK Law and FRS 101
Reduced Disclosure Framework.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs
as at 31 December 2022 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards.;
• the Company financial statements have been properly prepared in accordance with FRS 101 Reduced
Disclosure Framework issued by the UK’s Financial Reporting Council; and
• the Group and Company financial statements have been prepared in accordance with the requirements
of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the Group in accordance with
ethical requirements that are relevant to our audit of financial statements in the UK, including the Financial
Reporting Council (FRC)’s Ethical Standard as applied to a listed entity, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
CONCLUSIONS RELATING TO GOING CONCERN
The Directors have prepared the financial statements on the going concern basis as they do not intend to
liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group
and the Company’s financial position means that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over their ability to continue as a going concern
for at least a year from the date of approval of the financial statements (the going concern period).
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. In our evaluation of the Directors'
conclusions, we considered the inherent risks to the Group and the Company’s business model and analysed
how those risks might affect the Group and the Company’s financial resources or ability to continue
operations over the going concern period.
Management have prepared detailed consolidated cash flow forecasts incorporating all entities within the
Group covering the period to 30 June 2024. These are based on their expectation of future income and costs,
including budgeted operating and capital expenditure on all licence areas and expectations of future oil and
gas production levels and commodity prices.
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ADDITIONAL INFORMATION
The key assumptions are considered to be the forecast production rates, commodity prices and capital
expenditure in Egypt. Management have considered the key assumptions to the forecasts and sensitivities
have been applied to the forecasts. The key assumptions and related sensitivities include a “Reasonable
Worst Case” (RWC) sensitivity with an aggregate set of sensitivities, including a 12% reduction in the production
forecasts, 15% decrease in capital expenditure, a reasonable delay in receivables collection and a delay in the
completion of the sale of the Maria licence to Quattro. Under the combined RWC, the Group forecasts that
there will be sufficient resources to continue in operational existence for the foreseeable future. Management
have also identified appropriate mitigating actions, should they be required, including the deferral of
additional uncommitted capital expenditure, restructuring of debt arrangements and adjustment of the
Group’s cost base, which would be available and have previously been demonstrated as efficient cashflow
management strategies.
Our audit included:
• Assessing the completeness and accuracy of the matters covered in the going concern disclosure by
evaluating management's cash flow projections for the forecast period and the underlying assumptions;
• Reviewing the cash flow forecasts, the methodology behind these, challenging the assumptions, and
ensuring they are arithmetically correct;
• Obtaining post year-end management information and comparing these to budget to ensure budgeting is
reasonable and results are in line with expectations;
• Reviewing management’s sensitivity analysis on the cash flow forecasts provided to assess the number of
factors that it would take to occur in tandem before the Group was pushed into a negative cash position
along with considering the mitigating actions available to management in such circumstances; and
• Discussing with management plans for the Group going forward, ensuring these had been incorporated
into the budgeting and would not have an impact on the going concern status of the Group.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group or the Company’s
ability to continue as a going concern for a period of at least twelve months from the date when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
However, as we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the time they were made, the
absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Group or the
Company will continue in operation.
2022 Annual Report and Financial Statements
73
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UNITED OIL & GAS PLC
For the year-ended 31 December 2022
DETECTING IRREGULARITIES INCLUDING FRAUD
We identified the areas of laws and regulations that could reasonably be expected to have a material effect
on the financial statements and risks of material misstatement due to fraud, using our understanding of the
entity's industry, regulatory environment and other external factors and inquiry with the Directors. In addition,
our risk assessment procedures included:
•
•
•
Inquiring with the Directors and other management as to the Group’s policies and procedures regarding
compliance with laws and regulations, identifying, evaluating and accounting for litigation and claims, as
well as whether they have knowledge of non-compliance or instances of litigation or claims.
Inquiring of Directors and the audit committee as to the Group’s policies and procedures to prevent and
detect fraud, as well as whether they have knowledge of any actual, suspected or alleged fraud.
Inquiring of Directors and the audit committee regarding their assessment of the risk that the financial
statements may be materially misstated due to irregularities, including fraud.
• Reading Board and audit committee minutes.
• Considering remuneration incentive schemes and performance targets for management and Directors.
• Performing planning analytical procedures to identify any usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the
audit team.
The Group is subject to laws and regulations that directly affect the financial statements including companies
and financial reporting legislation. We assessed the extent of compliance with these laws and regulations as
part of our procedures on the related financial statement items, including assessing the financial statement
disclosures and agreeing them to supporting documentation when necessary.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial statements.
Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws
and regulations to inquiry of the Directors and other management and inspection of regulatory and legal
correspondence, if any. These limited procedures did not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an
opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk
of management override of controls and the risk of fraudulent revenue recognition. We did not identify any
additional fraud risks.
In response to risk of fraud, we also performed procedures including:
•
Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting
documentation.
• Evaluating the business purpose of significant unusual transactions.
• Assessing significant accounting estimates for bias.
• Assessing the disclosures in the financial statements.
As the Group is regulated, our assessment of risks involved obtaining an understanding of the legal and
regulatory framework that the Group operates and gaining an understanding of the control environment
including the entity’s procedures for complying with regulatory requirements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further removed non-compliance with laws and
regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards would identify it.
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FINANCIAL REPORT
ADDITIONAL INFORMATION
In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are
not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all
laws and regulations.
KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit
of the financial statements and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were
as follows:
Carrying value of production assets $20.3m
Refer to page 89 (accounting policy) and pages 106 - 107 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Group’s interests in the
production assets in Egypt require
an annual impairment review in
accordance with IAS 36 Impairment
of Assets. The Directors assessed the
production assets for impairment
and where appropriate, recognised
an impairment charge. This
involves significant judgements and
assumptions such as the timing, extent
and probability of future cash flows.
This area has been identified as a key
audit matter and a significant risk
because of the level of judgement
involved and the significance of the
caption to the balance sheet.
Our audit procedures included:
• We obtained and reviewed management’s assessment of the
carrying value of the production assets.
• We discussed the Abu Sennan concession with management
and we evaluated management’s assessment of impairment
in conjunction with the Competent Person’s Report and IAS 36.
• We reviewed management’s assessment of the current
activity in Egypt, setting out the current position and future
plans for the production assets.
• We reviewed reserves estimates at the year end for evidence
of recoverability of the production assets.
• We assessed the methodology used and the arithmetic
accuracy of the calculations underpinning the valuation of the
production assets.
• We challenged management’s assumptions used in the
impairment model of the production assets including the
discount rate, production levels, reserves and oil price and we
agreed these to board approved budgets, Competent Persons
Report, external oil price curves and information from the joint
operating partner.
• We performed sensitivity testing where we flexed key
assumptions to determine whether a reasonable change in
key assumptions would result in an impairment. We evaluated
the design and implementation of the control in place over the
impairment of production assets.
• We evaluated the completeness, accuracy and relevance of
disclosures required by IAS 36.
Based on evidence obtained, we found that management’s
key assumptions were reasonable. We found the disclosures
to be adequate in providing an understanding of the basis of
impairment.
2022 Annual Report and Financial Statements
75
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UNITED OIL & GAS PLC
For the year-ended 31 December 2022
Carrying Value of exploration and evaluation assets $7.4m
Refer to page 88 (accounting policy) and pages 104 - 105 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
Management reviews intangible
exploration assets for indicators
of impairment under IFRS 6 –
Exploration for and Evaluation of
Mineral Resources at the end of
each reporting period. Judgements
including whether renewal of licences
is planned, interpretation of the results
of exploration activity and the extent
to which the Group plans to continue
substantive expenditure on the assets.
In determining whether substantive
expenditure remains in the Group’s
plan, management considers factors
including future oil prices, plans to
develop or renew licences and future
exploration plans. If impairment
indicators exist, the assets are tested
for impairment and carried at the
lower of the estimated recoverable
amount and net book value.
This has been identified as a key audit
matter and a significant risk because
of the level of judgement involved and
the significance of the caption to the
balance sheet.
Our audit procedures included:
• We obtained and reviewed management’s and the Board’s
assessment of the carrying value of each of the Group’s
exploration and evaluation assets.
• We obtained and discussed each of the licences with
management. Our audit approach has taken account of
commercial and other developments – including for example
exploration results and other agreements and transactions
with third parties – as part of the Board’s formal annual review
of the carrying value of exploration and appraisal assets.
• Each exploration asset was assessed, taking account of key
milestone developments; future plans of funding, viability and
development; commercial arrangements; legislative and
regulatory matters; together with any indicators of impairment
as part of the assessment under IFRS 6 ‘Exploration for and
Evaluation of Mineral Resources’.
• We made inquiries of members of the Group finance team
to understand the performance of the Group and plans for
individual assets. We reviewed Board and Audit Committee
minutes to corroborate management’s plans and activities for
each of the assets.
• We challenged management’s conclusions in determining
whether impairment charges are required and evaluated if
there were indicators of possible management bias.
• We performed testing on the design and implementation of
the control in place over the impairment of exploration and
evaluation assets.
• We evaluated the completeness, accuracy and relevance of
disclosures required by IFRS 6.
Based on evidence obtained, we found that management’s
judgements were reasonable. We found the disclosures to
be adequate in providing an understanding of the basis of
impairment.
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ADDITIONAL INFORMATION
Revenue recognition IFRS 15 $15.8m
Refer to page 88 (accounting policy) and page 99 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
Revenue comprises invoiced sales of
hydrocarbons to customers. Revenue
is recognised at a point in time as
control passes to the customer,
which is typically the point of delivery
of hydrocarbons. The Group does
not have performance obligations
subsequent to delivery.
There is a risk of fraud at year end
that revenue has not been reported
in consolidated financial statements
in line with IFRS 15. There is a risk that
it has been misstated intentionally for
performance targets or in error through
the recording of a sale in the incorrect
period, specifically at year end.
This area has been identified as a
key audit matter and a significant
risk because judgement is required
in determining the timing of revenue
recognition at the year end.
Our audit procedures included:
• We discussed and reviewed the revenue recognition process
with management, ensuring it was in line with IFRS 15.
• We tested the completeness of revenue by performing
substantive testing over total revenue for the year.
• We assessed on a sample basis whether sales transactions
either side of the balance sheet date recognised in the correct
period by performing cut-off procedures. We assessed if
revenue has been recorded correctly through the review of
the self-billing invoices approved by the Egyptian General
Petroleum Corporation.
• We evaluated the design and implementation of the control in
place over the recognition of revenue and tested any manual
journals posted to revenue line by key management personnel.
• We considered the adequacy of the Group’s disclosures in
respect of revenue.
Based on the procedures performed, we did not identify any
material misstatements. We found the disclosures in respect of
revenue to be appropriate.
2022 Annual Report and Financial Statements
77
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UNITED OIL & GAS PLC
For the year-ended 31 December 2022
Valuation of the loan and embedded derivative $1.4m (Group and Company Key Audit Matter)
Refer to page 92 (accounting policy) and pages 113 - 114 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Company holds a loan from
Britannic Trading Limited. The loan has
a derivative element embedded which
falls under the scope of IFRS 9 Financial
Instruments. There is a risk that the
associated embedded derivative is not
appropriately valued.
The borrowing arrangement is
structured as a prepaid commodity
swap with monthly repayments
over 30 months with an embedded
derivative that is indexed to the price
of the commodity.
This has been identified as a key audit
matter and a significant risk because
of the complexity involved in the
derivative accounting treatment.
Our audit procedures included:
• We obtained and reviewed the loan agreement and derivative
documentation to confirm the value and terms and conditions
of the repayment period.
• We obtained and reviewed the fair value calculations of the
derivative to confirm the accuracy of the calculations at the
year-end date.
• We involved KPMG Financial Instrument specialists to
assess valuation methodology used, to review the fair value
calculation of the derivative and to review appropriate
accounting treatment.
• We recalculated the loss recorded on the modification of debt
in January 2022.
• We evaluated the design and implementation of the control
in place over the valuation of the loan and derivative by key
management personnel.
• We reviewed the application and valuation of IFRS disclosures.
Based on the procedures performed, found that the accounts
applied were appropriate. We found the disclosures in respect of
loan and embedded derivative to be appropriate.
Impairment of investments and loans due from subsidiary companies in United Oil & Gas Plc (Company key
audit matter only) $21.8m
Refer to page 123 (accounting policy) and page 127 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The investments and loans held by
United Oil & Gas Plc company only
are a significant caption with regards
to the Company only Balance Sheet.
The investments are held at cost less
impairment.
This area has been identified as a key
audit matter due to the significance
of the balance to the Company and
the judgement involved in forecasting
future cashflows when assessing
recoverability.
Our audit procedures included:
• We obtained and documented the process for impairment
considerations and tested the design and implementation of
the relevant control therein.
• We obtained and reviewed management’s assessment of
impairment indicators in accordance with IFRS 9.
• We compared the carrying value of investments to the net
assets of the subsidiary financial statements.
• We assessed the appropriateness of the methodology applied
by management in their assessment of the recoverable
amount of intragroup loans. We considered the audit work
performed in respect of the subsidiaries, including the
judgements and assumptions used in determining the value in
use of Production assets.
• We challenged management‘s evaluation of the recoverable
amounts of loans to subsidiaries including review the
impairment provisions and net asset values of components
that have intercompany debt.
Based on the procedures performed, we did not identify any
material misstatements. We found the disclosures in respect of
investments and loans due from subsidiary companies to be
appropriate.
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OUR APPLICATION OF MATERIALITY
Materiality for the Group financial statements and Company financial statements as a whole was set at $0.4m
and $0.2m respectively, determined with reference to benchmarks of net assets for the Group and Company
(of which it represents 1.5% and 1.5% respectively). We consider net assets to be the most appropriate
benchmark as it best reflects the operations of the Group and Company.
We applied Group and Company materiality to assist us in determining the overall audit strategy, what
risks were significant risks of misstatement and key audit matters, and the audit procedures to be
performed in response.
Performance materiality for the Group financial statements and Company financial statements as a whole
was set at $0.3m and $0.15m respectively, determined with reference to materiality of which it represents 75%
and 75% respectively. We use performance materiality to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. In applying
our judgement in determining performance materiality, we considered a number of factors including; the
low number and value of misstatements detected and the low number and severity of deficiencies in control
activities identified in the prior year financial statement audit.
We applied Group and Company performance materiality to assist us determine what risks were significant
risks for the Group.
We reported to the Audit and Risk Committee any corrected or uncorrected identified misstatements
exceeding $0.02m for the group and $0.01m for the company, in addition to other identified misstatements
that warranted reporting on qualitative grounds.
The Group’s 7 components were subject to full scope audits for Group audit purposes. Taken together, the
Company and the components accounted for 100% of Group revenue and 100% of Group net assets.
Other matter
The financial statements of the Group and Company for the year ended 31 December 2021 were audited by
another auditor who expressed an unmodified opinion on those statements on 25 April 2022
Other information
The Directors are responsible for the other information presented in the Annual Report together with the
financial statements. The other information comprises the information included in the company overview,
strategic report, governance report and the Directors’ report. The financial statements and our auditor’s report
thereon do not comprise part of the other information. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial
statements audit work, the information therein is materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on that work we have not identified material misstatements
in the other information.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
• we have not identified material misstatements in the Directors' report or the strategic report;
•
•
in our opinion, the information given in the Directors’ report and the strategic report is consistent with the
financial statements; and
in our opinion, the Directors’ report and the strategic report have been prepared in accordance with the
Companies Act 2006.
2022 Annual Report and Financial Statements
79
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UNITED OIL & GAS PLC
For the year-ended 31 December 2022
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
RESPECTIVE RESPONSIBILITIES AND RESTRICTIONS ON USE
Responsibilities of Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement set out on page 81, the Directors are
responsible for: the preparation of the financial statements including being satisfied that they give a true
and fair view; such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error; assessing the Group
and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless they either intend to liquidate the Group
and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud, other irregularities or error, and to issue an opinion
in an auditor’s report. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/
auditorsresponsibilities.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we
have formed.
Keith Watt, Senior Statutory Auditor
For and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
D02 DE03
27 April 2023
80 United Oil & Gas PLC
STRATEGIC REPORT
GOVERNANCE REPORT
FINANCIAL REPORT
ADDITIONAL INFORMATION
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE DIRECTORS’ REPORT
AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Directors’ report and the strategic report and the Group and
Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial
year. Under that law they have elected to prepare the Group financial statements in accordance with UK
adopted international accounting standards and the Company financial statements in accordance with FRS
101 Reduced Disclosure Framework and applicable law.
Under Company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and Company and of the Group's profit or loss
for that period. In preparing the Group and Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
• assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or Company or
to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that its financial statements comply with the Companies Act 2006.
They are responsible for such internal controls as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
On behalf of the board
Brian Larkin
Chief Executive Officer - United Oil & Gas PLC
27 April 2023
2022 Annual Report and Financial Statements
81
CONSOLIDATED INCOME STATEMENT
For the year-ended 31 December 2022
Revenue
Other revenue
Cost of sales
Gross profit
Administrative expenses:
Other administrative expenses
Impairment of intangible assets
Impairment of receivable
New Venture write offs
Foreign exchange (losses) / gains
Loss on non-current assets held for sale
Operating profit
Finance expense
Profit before taxation
Taxation
Note
2
2
3
12
4
6
7
Profit for the financial year attributable to the Company’s equity
shareholders
Earnings per share from continuing operations expressed in cents per share:
8
Basic
Diluted
31 December
2022
$
Retated (Note 1)
31 December
2021
$
15,831,237
19,228,698
5,181,458
1,940,574
(8,143,910)
(8,911,815)
12,868,785
12,257,457
(1,773,154)
(1,763,363)
(483,611)
(624,546)
-
(394,686)
(282,275)
(377,934)
(1,106,614)
(356,850)
-
(351,162)
9,221,131
8,388,916
(1,690,896)
(2,922,754)
7,530,235
5,466,162
(5,181,458)
(1,861,882)
2,348,777
3,604,280
0.36
0.36
0.57
0.54
82
United Oil & Gas PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year-ended 31 December 2022
Profit for the financial year
Foreign exchange gains / (losses)
Total comprehensive income for the financial year attributable to the
Company’s equity shareholders
31 December
2022
$
Retated (Note 1)
31 December
2021
$
2,348,777
3,604,280
337,866
(209,164)
2,686,643
3,395,116
83
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CONSOLIDATED BALANCE SHEET
For the year-ended 31 December 2022
Assets:
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventory
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Assets in disposal groups held for sale
Current liabilities:
Trade and other payables
Derivative financial instruments
Borrowings
Lease liabilities
Current tax payable
Liabilities associated with assets in disposal groups held for sale
Non-current liabilities:
Provisions
Lease liabilities
Net assets
Equity and liabilities:
Capital and reserves
Share capital
Share premium
Share-based payment reserve
Merger reserve
Translation reserve
Retained earnings
Shareholders’ funds
31 December
2022
$
Note
Retated (Note 1)
31 December
2021
$
10
11
13
14
21
15
12
18
21
21
20
12
22
20
16
16
17
7,385,326
4,970,091
20,368,299
17,990,809
27,753,625
22,960,900
268,859
4,469,493
120,168
145,570
7,702,021
-
1,345,463
397,308
6,203,983
8,244,899
-
2,091,437
6,203,983
10,336,336
(3,709,667)
(5,422,734)
-
(1,346,044)
(2,964,225)
(2,422,212)
(83,985)
-
(83,368)
(57,246)
(6,757,877)
(9,331,604)
-
(116,048)
(233,630)
-
(7,356)
(24,494)
26,958,745
23,825,090
8,839,679
16,798,823
8,416,182
16,215,361
2,547,688
2,247,465
(2,697,357)
(2,697,357)
(1,008,137)
(558,104)
2,478,049
201,543
26,958,745
23,825,090
The financial statements were approved by the Board of Directors and authorised for their issue on 27 April 2023
and were signed on its behalf by:
Brian Larkin
Chief Executive Officer
Registered number: 09624969
84
United Oil & Gas PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year-ended 31 December 2022
Share
capital
$
Share
premium
$
Share-
based
payments
reserve
$
Retained
earnings
$
Translation
reserve
$
Merger
reserve
$
Total
$
For the year ended
31 December 2022
Balance at 1 January 2022
8,416,182
16,215,361
2,247,465
201,543
(558,104)
(2,697,357) 23,825,090
Profit for the year
Foreign exchange difference
Total comprehensive
income
Foreign exchange
adjustment arising on
change of parent company
functional currency to USD
-
-
-
-
-
-
-
-
-
2,348,777
-
-
337,866
2,348,777
337,866
283,278
523,376
53,516
(72,271)
(787,899)
Shares issued
140,219
60,086
-
Share-based payments
(Note 17)
-
-
246,707
-
-
-
-
-
-
-
-
-
-
2,348,777
337,866
2,686,643
-
200,305
246,707
Balance at 31 December 2022
8,839,679
16,798,823
2,547,688
2,478,049
(1,008,137)
(2,697,357) 26,958,745
For the year ended
31 December 2021
Balance at 1 January 2021
8,138,619
16,047,975
1,922,090
(3,402,737)
(348,940)
(2,697,357)
19,659,650
Profit for the year (Restated,
Note 1)
Foreign exchange difference
Total comprehensive
income
-
-
-
-
-
-
Shares issued
277,563
167,386
-
-
-
-
Share-based payments
-
-
325,375
3,604,280
-
-
(209,164)
3,604,280
(209,164)
-
-
-
-
-
-
-
-
-
3,604,280
(209,164)
3,395,116
444,949
325,375
Balance at 31 December 2021
8,416,182
16,215,361
2,247,465
201,543
(558,104)
(2,697,357) 23,825,090
85
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION CONSOLIDATED STATEMENT OF CASH FLOWS
For the year-ended 31 December 2022
Cash flow from operating activities
Profit for the financial year before tax
Share-based payments
Depreciation and amortisation
Fair value loss on derivatives
Impairment of intangible assets
Loss on non-current assets / disposal groups held for sale
Interest expense
Foreign exchange movements
Tax paid
Changes in working capital
Increase in inventory
Decrease / (increase) in trade and other receivables
Decrease in trade and other payables
Cash inflow from operating activities
Cash outflow from investing activities
Proceeds received on disposal of non-current assets
Purchase of property, plant & equipment
Spend on exploration activities
Net cash used in investing activities
Cash flow from financing activities
Issue of ordinary shares net of expenses
Repayments on oil swap financing arrangement
Payments on oil price derivatives
Capital payments on lease
Interest paid on lease
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Effects of exchange rate changes
Cash and cash equivalents at end of financial year
86
31 December
2022
$
Retated (Note 1)
31 December
2021
$
7,530,235
5,466,162
246,707
3,309,940
325,375
4,111,670
1,562,467
1,527,250
483,611
-
128,429
1,106,614
624,546
325,479
1,395,504
356,850
(5,238,704)
(1,940,574)
9,129,299
12,192,262
(123,289)
(109,841)
732,529
(2,276,303)
(1,032,853)
(697,544)
8,705,686
9,108,574
4,887,275
160,404
(5,610,924)
(3,607,826)
(2,972,201)
(2,121,050)
(3,695,850)
(5,568,472)
200,305
444,949
(1,452,118)
(3,518,359)
(1,522,892)
(1,805,086)
(90,096)
(86,669)
(68,914)
(14,421)
(2,951,470)
(4,961,831)
2,058,366
(1,421,729)
397,308
2,188,903
(1,110,211)
(369,866)
1,345,463
397,308
United Oil & Gas PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
PRINCIPAL ACCOUNTING POLICIES
Company Information
United Oil & Gas plc ("United" or "the Company") is a public limited company incorporated and domiciled in
the United Kingdom. The address of the registered office is given on Page 134. United is the ultimate parent
company of the Group and except where otherwise indicated the following accounting policies apply to both
the Group and the Company.
Basis of Preparation
The financial statements have been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS as adopted by the United Kingdom.
IFRS is subject to amendment and interpretation by the IASB and the IFRS Interpretations Committee, and
there is an on-going process of review. These accounting policies comply with each IFRS that is mandatory for
accounting periods ending on 31 December 2022.
Joint Arrangements
The Group is engaged in oil and gas exploration, development and production through unincorporated joint
arrangements; these are classified as joint operations in accordance with IFRS 11. The Group accounts for its
share of the results and assets and liabilities of these joint operations. The Group’s arrangement in Egypt is a
joint operation and has been accounted as such. Throughout the annual report joint operations is referred to
as Joint Venture and joint operations partners are referred to as Joint Venture partners.
The principal accounting policies set out below have been consistently applied to all periods presented.
Basis of Consolidation
The financial statements for the year ended 31 December 2022 incorporate the results of United Oil & Gas
plc and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has
the power to govern the financial and operating policies of an investee entity so as to obtain benefits from
its activities.
All intra-Group transactions, balances, income and expenses are eliminated in full on consolidation.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance
and position are set out in the Director’s Report.
United regularly monitors its business activities, financial position, cash flows and liquidity through the
preparation and review of detailed forecasts. Scenarios and sensitivities are also regularly presented to the
Board, including changes in commodity prices and in production levels from the existing assets, plus other
factors which could affect the Group’s future performance and position. A base case forecast has been
considered which uses budgeted commitments and prevailing forward curve assumptions for oil prices.
The key assumptions and related sensitivities include a “Reasonable Worst Case” (RWC) sensitivity where the
Board has considered a scenario with significant aggregated downside, including a delay in the payment of
receivables in Egypt, a reduction in forecasted revenue of 12% and an increase in forecast capital expenditure
in Egypt by 15%. The RWC incorporates a scenario whereby the sale of Maria P2519 to Quattro does not
complete in the period. Under the combined RWC, the Group forecasts there will be sufficient resources to
continue in operational existence for the foreseeable future.
87
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
The likelihood of all these downside sensitivities taking place simultaneously and lasting for the entire forecast
period is considered to be remote. Under such a RWC scenario, we have identified appropriate mitigating
actions, including the deferral of additional uncommitted capital expenditure, seeking a restructuring of
debt arrangements and adjustment of the Group cost base, which would be available to us and have been
demonstrated as effective strategies in previous periods of low oil prices. Our business in Egypt remains robust
given cash operating costs of less than $11/boe, flexible drilling contracts and downside price protection on our
hedged volumes and gas contracts that are fixed price in nature. There are limited capital commitments in
the other assets in our portfolio. The forecasts outlined above show that the Group will have sufficient financial
headroom for the 12 months from the date of approval of the 2022 Accounts. Based on this analysis, the
Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Therefore, they continue to use the going concern basis of accounting in
preparing the annual Financial Statements.
Revenue
Revenue is recognised under the principals of IFRS 15, and comprises invoiced sales of hydrocarbons to
customers, excluding value added and similar taxes.
Revenue is recognised at a point in time as control passes to the customer, which is typically the point of
delivery of hydrocarbons. The Group does not have performance obligations subsequent to delivery.
Other Revenue – Tax Entitlement Volumes
Under the concession agreements in Egypt, income tax due on taxable profit is paid on the Group’s behalf by
EGPC. To achieve this through the agreements, the Group notionally receives a greater share of hydrocarbon
production in excess of the Group’s share of production equal to the amount required to cover the tax
payable. The oil is produced and sold on the Group’s behalf by EGPC acting as an agent and who discharge
the Group’s tax liability to the tax authorities. This income is therefore shown as other revenue with an equal
and opposite tax charge recorded through current taxation.
Foreign Currency
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the
year-end date. All differences are taken to the Income Statement.
Assets and liabilities of subsidiaries that have a functional currency different from the presentation currency
(US dollar), if any, are translated at the closing rate at the date of each balance sheet presented. Income and
expenses are translated at average exchange rates. All resulting exchange differences are recognised in other
comprehensive income (loss), if any.
When there is a change in functional currency (see note 1(b)), the change is accounted for prospectively from the
date of the change. All items at the date of change are translated into the new functional currency at the date of
change, and the resulting translated amounts for non-monetary items are treated as their historical cost.
Finance Income and Costs
Interest is recognised using the effective interest method which calculates the amortised cost of a financial
asset or liability and allocates the interest income or expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of
the financial asset or liability to the net carrying amount of the financial asset or liability.
Exploration and Evaluation Assets
The group accounts for oil and gas expenditure under the full cost method of accounting.
Costs (other than payments to acquire the legal right to explore) incurred prior to acquiring the rights to
explore are charged directly to the profit and loss account. All costs incurred after the rights to explore an area
have been obtained, such as geological, geophysical, data costs and other direct costs of exploration and
appraisal are accumulated and capitalised as intangible exploration and evaluation (E&E) assets.
88
United Oil & Gas PLC E&E costs are not amortised prior to the conclusion of appraisal activities. At the completion of appraisal
activities if technical feasibility is demonstrated and commercial reserves are discovered, then following
development sanction, the carrying value of the relevant E&E asset will be reclassified as a development and
production asset within tangible fixed assets.
If after completion of appraisal activities in an area, it is not possible to determine technical feasibility or
commercial viability, then the costs of such unsuccessful exploration and evaluation are impaired to the
Income Statement. The costs associated with any wells which are abandoned are fully amortised when the
abandonment decision is taken.
Development and production assets are accumulated generally on a field by-field basis and represent the costs
of developing the commercial reserves discovered and bringing them into production, together with the E&E
expenditures incurred in finding commercial reserves which have been transferred from intangible E&E assets.
The net book values of development and production assets are depreciated generally on a field-by field basis
using the unit of production method based on the commercial proven and probable reserves. Assets are not
depreciated until production commences.
Depreciation of Production Assets
Production assets are accumulated into cash generating units (CGUs) and the net book values are
depreciated on a prospective basis using the unit-of-production method by reference to the ratio
of production in the year and the related economic commercial reserves, taking into account future
development expenditures necessary to bring those reserves into production.
The gain or loss arising on disposal or scrapping of an asset is determined as the difference between the sales
proceeds, net of selling costs, and the carrying amount of the asset and is recognised in the income statement.
Each asset’s estimated useful life has been assessed with regard to both its own physical life limitations and
the present assessment of economically recoverable reserves of the oil and gas asset at which the item is
located, and to possible future variations in those assessments. Estimates of remaining useful lives are made
on a regular basis for all oil and gas assets, machinery and equipment, with annual reassessments for major
items. Changes in estimates which affect unit production calculations are accounted for prospectively.
Other Intangible Assets
Other intangible assets acquired separately from a business combination are capitalised at cost.
Intangible assets are amortised on a straight-line basis over their useful lives as follows:
Computer software 33%
The carrying value of intangible assets is assessed annually and any impairment is charged to the income
statement.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less depreciation. Depreciation is provided on a straight-line
basis at rates calculated to write off the cost less the estimated residual value of each asset over its expected
useful economic life. The residual value is the estimated amount that would currently be obtained from disposal
of the asset if the asset were already of the age and in the condition expected at the end of its useful life.
The annual rate of depreciation for each class of depreciable asset is:
Computer equipment 33%
The carrying value of property plant and equipment is assessed annually and any impairment is charged to
the income statement.
89
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held for sale when:
• They are available for immediate sale
• Management is committed to a plan to sell
•
It is unlikely that significant changes to the plan will be made or that the plan will be withdrawn
• An active programme to locate a buyer has been initiated
• The asset or disposal group is being marketed at a reasonable price in relation to its fair value, and
• A sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
• Their carrying amount immediately prior to being classified as held for sale in accordance with the Group's
accounting policy; and
• Fair value less costs of disposal.
Following their classification as held for sale, non-current assets (including those in a disposal group) are
not depreciated.
The results of operations disposed during the year are included in the consolidated statement of
comprehensive income up to the date of disposal.
A discontinued operation is a component of the Group's business that represents a separate major line of
business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that
has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.
Discontinued operations are presented in the consolidated statement of comprehensive income as a single
line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or
loss recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal
groups constituting discontinued operations.
Impairment of Non-financial Assets
At each balance sheet date, the Directors review the carrying amounts of the Group’s tangible and intangible
assets, other than goodwill, to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. If
the recoverable amount of a cash-generating unit is less than its carrying amount, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
of the unit pro rata based on the carrying amount of each asset in the unit.
90
United Oil & Gas PLC An impairment loss is recognised as an expense immediately.
An impairment loss recognised for goodwill is not reversed in subsequent periods.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset or cash-generating unit in prior periods. A reversal of an impairment loss is recognised in the
Income Statement immediately.
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Financial assets are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the Group does not have any financial assets categorised as FVOCI or FVTPL.
The classification is determined by both:
• the entity’s business model for managing the financial asset; and
• the contractual cash flow characteristics of the financial asset.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions:
• they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting
is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and
other receivables fall into this category of financial instruments.
91
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Impairment of Financial Assets
In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model to be applied.
The expected credit loss model requires the Group to account for expected credit losses and changes in
those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of
the financial assets.
IFRS 9 requires the Group to recognise a loss allowance for expected credit losses on trade receivables.
In particular, IFRS 9 requires the Group to measure the loss allowance for a financial instrument at an amount
equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased
significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired
financial asset. However, if the credit risk on a financial instrument has not increased significantly since initial
recognition, the Group is required to measure the loss allowance for that financial instrument at an amount
equal to 12 months ECL.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and embedded derivative
financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except
for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with
gains or losses recognised in profit or loss.
If the terms of financial liabilities are modified, the new terms are examined to assess whether the change
constitutes a substantial modification. If it does, for instance where the present value of new cash flows differs
by more than 10% from the present value of cash flows under the original arrangement, this is treated as
extinguishment of the old liability and recognition of a new liability. A gain or loss is recognised based on the
difference between the derecognised carrying amount of the original liability and the opening measurement
of the new liability.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit
or loss are included within finance costs or fair value gains/(losses) on derivative financial instruments.
Embedded derivative financial instruments and hedging instruments
A borrowing arrangement structured as a prepaid commodity swap with monthly repayments over 30
months has embedded in it a derivative that is indexed to the price of the commodity. This is considered to be
a separable embedded derivative of a loan instrument.
At the date of issue, the fair value of the embedded derivative is estimated by considering the derivative as a
series of forward contracts with modelling of the fixed and floating legs to determine a repayment schedule
and derive a net present value for the forward contract embedded derivative.
This amount is recognised separately as a financial liability or financial asset and measured at fair value
through the income statement. The residual amount of the loan is then recorded as a liability on an amortised
cost basis using the effective interest method until extinguished upon conversion or at the instrument’s
maturity date.
At inception of a hedge relationship, the Group documents the economic relationship between hedging
instruments and hedged items, including whether changes in the cash flows of the hedging instruments are
expected to offset changes in the cash flows of hedged items.
92
United Oil & Gas PLC For cash flow hedges, the portion of the gains and losses on the hedging instrument that is determined to be
an effective hedge is taken to other comprehensive income and the ineffective portion is recognised in the
income statement. The gains and losses taken to other comprehensive income are subsequently transferred
to the income statement during the period in which the hedged transaction affects the income statement.
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is determined using the weighted
average method. Net realisable value is the estimated selling price of inventory on hand less all further costs
to completion and all costs expected to be incurred in marketing, distribution and selling.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less losses provision, when required.
Trade and other payables
Trade and other payables are generally stated at amortised cost using the effective interest rate.
Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee.
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the lessee uses its incremental borrowing rate.
The lease liability is presented as a separate line in the statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the
lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use
asset) whenever:
• The lease term has changed in which case the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless the lease payments change is due to a change in a
floating interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which
case the lease liability is remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, prepayments
made on the lease at or before the commencement day, less any lease incentives received and any initial
direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
93
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past
event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Provisions for the costs to decommission oil and gas properties are recognised when the Group has an
obligation required by the terms and conditions of the agreements and when a reliable estimate can be
made. The provision for the costs of decommissioning oil and gas properties at the end of their economic lives
is estimated using existing technology, at future prices, depending on the expected timing of the activity, and
discounted using the nominal discount rate. Estimates are regularly reviewed and adjusted as appropriate
for new circumstances. This decommissioning provision is included in the group Balance Sheet due to the
structure of joint operations.
Taxation
Current taxation for each taxable entity in the Group is based on the local taxable income at the local
statutory tax rate enacted or substantively enacted at the balance sheet date and includes adjustments to
tax payable or recoverable in respect of previous periods.
Deferred Taxation
Deferred taxation is calculated using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred
tax arises from the initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.
Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred tax asset is realised, or the deferred
tax liability is settled.
Deferred tax liabilities are provided for in full.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Income
Statement, except where they relate to items that are charged or credited directly to equity in which case the
related deferred tax is also charged or credited directly to equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
Share-based Payments
Where share-based payments (warrants and options) have been granted, IFRS 2 has been applied whereby
the fair value of the share-based payments is measured at the grant date and spread over the period
during which they vest. A valuation model is used to assess the fair value, taking into account the terms and
conditions attached to the share-based payments. The fair value at grant date is determined including the
effect of market-based vesting conditions, to the extent such vesting conditions have a material impact.
The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over
the period in which the performance and/or service conditions are fulfilled, ending on the date on which the
holders become fully entitled to the award (the vesting date).
94
United Oil & Gas PLC The cumulative expense recognised for equity settled transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number
of equity instruments that will ultimately vest.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as
if the terms had not been modified. An additional expense is recognised for any modification, which increases
the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee, as
measured at the date of modification.
Where an equity-settled award (share options) is cancelled, it is treated as if it had vested on the date of
cancellation if it had not yet fully vested, and any expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for the cancelled award and designated as a
replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a
modification of the original award, as described in the previous paragraph.
Where an equity-settled award is forfeited, the cumulative charge expensed up to the date of forfeiture is
credited to the Income Statement. Upon expiry of an equity-settled award, the cumulative charge expensed is
transferred from the Share-based payment reserve to retained earnings.
Equity
Equity comprises the following:
• “Share capital” represents amounts subscribed for shares at nominal value.
• “Share premium” represents amounts subscribed for share capital, net of issue costs, in excess of
nominal value.
• “Share-based payment reserve” represents the accumulated value of share-based payments.
• “Retained earnings” represents the accumulated profits and losses attributable to equity shareholders.
• “Translation reserve” represents the exchange differences arising from the translation of the financial
statements of subsidiaries into the Group’s presentational currency.
• “Merger reserve” represents amounts arising from statutory merger relief arising on business combinations.
New and Amended International Financial Reporting Standards Adopted by the Group
The Group has adopted the following standards, amendments to standards and interpretations which are
effective for the first time this year. The impact is shown below:
New/Revised International Financial
Reporting Standards
Various
Amendments to IFRS 3 Business Combinations; IAS
16 Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; Annual
Improvements 2018-2020
Effective Date;
annual periods
beginning on or
after
UKEB
adopted
Impact on
the Group
1 January 2022
Yes
No material
impact
95
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
International Financial Reporting Standards in Issue But Not Yet Effective
At the date of authorisation of the consolidated financial statements, the IASB and IFRS Interpretations
Committee have issued standards, interpretations and amendments which are applicable to the Group. For
the next reporting period, applicable International Financial Reporting Standards will be those endorsed by the
UK Endorsement Board (UKEB).
Whilst these standards and interpretations are not effective for, and have not been applied in the preparation
of, these consolidated financial statements, the following could potentially have a material impact on the
Group’s financial statements going forward:
New/Revised International Financial
Reporting Standards
Effective Date;
annual periods
beginning on or after
UKEB
adopted
IAS 12
IAS 1
Amendments to IAS 12: Deferred Tax relating to Assets and Liabilities
arising from a Single Transaction
1 January 2023
Amendments to IAS 1: Classification of Liabilities as Current or Non-
current and Classification of Liabilities as Current or Non-current
1 January 2024
No
No
New / revised International Financial Reporting Standards which are not considered to potentially have a
material impact on the Group’s financial statements going forwards have been excluded from the above.
New/Revised International Financial
Reporting Standards
Effective Date;
annual periods
beginning on or after
UKEB
adopted
IFRS 17
Insurance contracts (and subsequent amendments to IFRS 17)
1 January 2023
IAS 8
Definition of accounting estimate (amendment to IAS 8))
1 January 2023
IFRS 16
Lease liability in a sale and leaseback (amendment to IFRS 16)
1 January 2024
IAS 1
Disclosure of accounting policies (amendments to IAS 1 and IFRS
Practice Statement 2)
1 January 2023
Yes
Yes
No
Yes
IFRS 10 and
IAS 28
Sale or contribution of assets between an investor and its associate
or joint venture
No confirmed date
No
Management anticipates that all relevant pronouncements will be adopted in the Group's accounting policies
for the first period beginning after the effective date of the pronouncement. New standards, interpretations and
amendments not listed above are not expected to have a material impact on the Group's financial statements.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements in conformity with generally accepted accounting practice requires
management to make estimates and judgements that affect the reported amounts of assets and liabilities as
well as the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts
of revenues and expenses during the reporting period.
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
The following are the key estimates used in applying the accounting policies of the Group that have the most
significant effect on the financial statements:
96
United Oil & Gas PLC Reserve Estimates
Reserves are estimates of the amount of product that can be economically and legally extracted from the
Group’s properties. In order to calculate the reserves, estimates and assumptions are required about a range
of geological, technical and economic factors, including quantities, production techniques, recovery rates,
production costs, transport costs, commodity demand, commodity prices and exchange rates.
Estimating the quantity and/or grade of reserves requires the size, shape and depth of fields to be determined
by analysing geological data such as drilling samples. This process may require complex and difficult
geological judgements and calculations to interpret the data.
Given that the economic assumptions used to estimate reserves change from year to year, and because
additional geological data is generated during the course of operations, estimates of reserves may change
from year to year. Changes in reported reserves may affect the Group’s financial results and financial position
in a number of ways, including the following:
• Asset carrying values may be affected by possible impairment due to adverse changes in estimated future
cash flows;
• Depreciation, depletion and amortisation charged in the Income Statement may change where such charges
are determined by the units of production basis, or where the useful economic lives of assets change.
Impairment of property, plant and equipment
The Group assesses at each reporting date whether there is any indication that these assets may be impaired
as indicated in note 11. If such indication exists, the Group estimates the recoverable amount of the asset. The
recoverable amount is assessed by reference to the higher of ‘value in use’ (being the net present value of
expected future cash flows of the relevant cash generating unit) and ‘fair value less cost to sell’. The Group
considers the quantities of the Proven and Probable Reserves, future production levels and future oil prices as
well as other IAS 36 criteria in their assessment of indicators of impairment. The Directors do not believe there
are any indicators of impairment in respect of the assets.
Valuation of embedded derivatives within financial liability and standalone derivatives
In determining the value of the embedded derivatives, the Group makes assumptions about future events
and market conditions. The fair value is determined using a valuation model which is dependent on further
estimates.
Such assumptions are based on publicly available information and are detailed further in note 21. Different
assumptions about these factors to those made by the Group could materially affect the reported value of
the embedded derivative liability.
As the financial liability is computed as the residual amount after deduction of the embedded derivative
valuation, any material difference in the value of the embedded derivative liability on initial recognition would
materially reduce (or increase) the loan financial liability thus increasing (or decreasing) the effective interest
rate applicable.
The following are the significant judgements used in applying the accounting policies of the Group that have
the most significant effect on the financial statements:
Impairment of exploration licences
Management reviews intangible exploration assets for indicators of impairment under IFRS 6 – Exploration for
and Evaluation of Mineral Resources at the end of each reporting period. This review of assets for potential
indicators of impairment requires judgement including whether renewal of licences is planned, interpretation
of the results of exploration activity and the extent to which the Group plans to continue substantive
expenditure on the assets. In determining whether substantive expenditure remains in the Group’s plan,
management considers factors including future oil prices, plans to develop or renew licences and future
exploration plans. If impairment indicators exist the assets are tested for impairment and carried at the lower
of the estimated recoverable amount and net book value.
97
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
1. RESTATEMENTS
a. Restatement of prior year financial statements: correction of error in accounting for the disposal of UOG Italia
The results for the year to 31 December 2021 have been restated to reflect final costs associated with
the Italian disposal within the group in the calculation of the loss in disposal of UOG Italia in 2021, and a
corresponding error in the amounts reported as non-current assets held for sale at 31 December 2021. In
the Balance Sheet the adjustment has been restated and reclassified from non-current to current assets.
The error has been corrected by restating each of the affected line items for the previous period as follows:
Balance sheet (extract)
Assets held for sale
Net assets
Retained earnings
Total equity
Income statement (extract)
2021
$
Decrease
$
2021 Restated
$
2,561,250
(469,813)
2,091,437
24,294,903
(469,813)
23,825,090
671,356
(469,813)
201,543
24,294,903
(469,813)
23,825,090
Profit/(loss) on non-current assets held for sale
118,651
(469,813)
(351,162)
Operating profit
Profit before taxation
Profit for the financial year
8,858,729
5,935,975
4,074,093
(469,813)
8,388,916
(469,813)
5,466,162
(469,813)
3,604,280
The restatement affecting profit also affects the statement of changes in equity. Basic and diluted earnings
per share, and the note reconciling the tax charge, have also been restated.
b. Effect of the change in functional currency of the Company on the Group’s financial statements
On 1 January 2022, the Company’s functional currency changed from GBP to USD reflecting the fact that
USD mainly influences both sales prices and costs. This has resulted in a restatement of equity items in the
consolidated balance sheet at the date of the functional currency change.
The quantitative effect on the components of equity in the consolidated financial statements is as follows:
2022
Increase/
(decrease)
$
283,278
523,376
53,517
(72,272)
(787,899)
-
Share capital
Share premium
Share-based payment reserve
Retained earnings
Translation reserve
98
United Oil & Gas PLC 2. SEGMENTAL REPORTING
Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources,
assessing the performance of the operating segment and making strategic decision, has been identified as
the Board of Directors.
The Group operates in three geographic areas – the UK/Europe, Latin America and Egypt. The Group’s revenue
from external customers and information about its non-current assets (other than financial instruments,
deferred tax assets and post-employment benefit assets) by geographical location are detailed below.
2022
Revenue
Other revenue
Non-current assets
2021
Revenue
Other revenue
Non-current assets
UK and EU
$
Latin America
$
Egypt
$
Total
$
-
-
-
-
15,831,237
15,831,237
5,181,458
5,181,458
1,340,605
5,228,625
21,184,395
27,753,625
-
-
-
-
19,228,698
19,228,698
1,940,574
1,940,574
579,403
4,460,303
17,921,194
22,960,900
Other Revenue
Under the concession agreements in Egypt, Income Tax due on taxable profit is paid on the Group’s behalf by
EGPC. To achieve this through the agreements, the Group notionally receives a greater share of hydrocarbon
production in excess or of the Group’s entitlement share of the production equal to the amount required to
cover the tax payable. The oil is produced and sold on the Group’s behalf by EGPC, who discharge the Group’s
tax liability. This income is shown as other revenue and an equal and opposite tax charge recorded through
the current taxation.
3. COST OF SALES
Production costs
Depreciation, depletion & amortisation
31 December
2022
$
31 December
2021
$
4,930,038
4,906,713
3,213,872
4,005,102
8,143,910
8,911,815
99
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
4. OPERATING PROFIT
Operating profit is stated after charging:
Depreciation:
Owned assets
Right of use leased assets
Amortisation
Share based payments
Foreign exchange losses
Fees payable to the Company’s auditors for the audit of the annual financial
statements
31 December
2022
$
31 December
2021
$
3,219,080
4,009,427
88,382
2,478
98,258
3,985
246,707
325,375
1,106,614
356,850
90,000
70,000
5. DIRECTORS AND EMPLOYEES
The aggregate payroll costs of the employees, including executive Directors and non-executive Directors,
were as follows:
Staff costs
Wages and salaries
Share-based payments
Pension
Social security
31 December
2022
$
31 December
2021
$
1,566,200
1,939,014
246,707
325,375
129,062
127,527
130,479
104,915
2,069,496
2,499,783
Average monthly number of persons employed by the Group during the year was as follows:
2022
2021
7
6
13
7
6
13
By activity
Administrative
Directors
100
United Oil & Gas PLC
Remuneration of Directors
Emoluments and fees for qualifying services
Share-based payments
Pension
Social security
Key management personnel are identified as all the Directors.
6. FINANCE EXPENSE
Fair value loss on loan and derivative
Effective interest on borrowings
Interest expense on lease liabilities
7. TAXATION
Profit before tax
Profit on ordinary activities multiplied by standard rate of corporation tax
in the UK of 19% (2021: 19%)
Tax effects of:
Foreign tax
Utilisation of tax losses
Adjustments in respect of prior periods
Double tax relief
Corporation tax charge / (credit)
31 December
2022
$
31 December
2021
$
842,559
890,604
153,458
238,360
72,379
60,891
76,694
41,396
1,129,287
1,247,054
31 December
2022
$
31 December
2021
$
1,562,467
1,527,250
41,760
1,381,083
86,669
14,421
1,690,896
2,922,754
31 December
2022
$
31 December
2021
$
7,530,235
5,466,162
1,430,744
1,038,571
5,181,458
1,940,574
-
-
(1,038,571)
(78,692)
(1,430,744)
-
5,181,458
1,861,882
The Group has accumulated tax losses of approximately $6.8m (2021: $5.5m). No deferred tax asset was
recognised in respect of these accumulated tax losses as there is insufficient evidence that the amount will be
recovered in future years.
101
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
8. EARNINGS PER SHARE
The Group has issued share warrants and options over Ordinary shares which could potentially dilute basic
earnings per share in the future.
Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the year.
There were 69,179,818 (2021: 113,697,454) share warrants and options outstanding at the end of the year that
could potentially dilute basic earnings per share in the future.
Basic and diluted earnings per share:
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
2022
Cents
0.36
0.36
2021
Cents
Restated
0.57
0.54
The profit and weighted average number of ordinary shares used in the calculation of basic earnings per
share are as follows:
Profit used in the calculation of total basic and diluted earnings per share
2,348,777
3,604,280
2022
$
2021
$
Number of shares:
Weighted average number of ordinary shares for the purposes of basic
earnings per share
Dilutive shares
Weighted average number of ordinary shares for the purposes of diluted
earnings per share
2022
2021
649,550,544
637,482,325
6,803,425
24,871,644
656,353,969
662,353,969
102
United Oil & Gas PLC 9. SUBSIDIARIES
Details of the Group’s subsidiaries in 2022 are as follows:
Name and address of subsidiary
Principal
activity
Class of
shares
Place of
incorporation
% ownership held
by the Group
UOG Holdings Plc
2nd Floor, 38-43 Lincoln’s Inn Fields,
London, WC2A 3PE
UOG Ireland Limited 1
128 Lower Baggot Street,
Dublin D02 A430, Ireland
UOG PL090 Ltd 1
2nd Floor, 38-43 Lincoln’s Inn Fields,
London, WC2A 3PE
UOG Jamaica Ltd 1
2nd Floor, 38-43 Lincoln’s Inn Fields,
London, WC2A 3PE
UOG Crown Ltd 1
2nd Floor, 38-43 Lincoln’s Inn Fields,
London, WC2A 3PE
UOG Colter Ltd 1
2nd Floor, 38-43 Lincoln’s Inn Fields,
London, WC2A 3PE
UOG Egypt Pty (Branch)
54 Ahmed Badawi Street,
Upper Mearag, Cairo, Egypt
1 Held indirectly by United Oil & Gas Plc
2022
2021
Ordinary
England and
Wales
100
100
Ordinary
Ireland
100
100
Intermediate
holding
company
Intermediate
holding
company
Oil and gas
exploration
Ordinary
England and
Wales
100
100
Oil and gas
exploration
Ordinary
England and
Wales
100
100
Oil and gas
exploration
Ordinary
England and
Wales
100
100
Oil and gas
exploration
Ordinary
England and
Wales
100
100
Oil and gas
exploration
Ordinary
Australia
100
100
103
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
10. INTANGIBLE ASSETS
Cost
At 1 January 2021
Additions
Transfer to producing assets
Transferred to non-current assets held for sale
Exploration
and
evaluation
assets $
Computer
software
$
Total
$
10,131,978
12,444
10,144,422
3,013,536
(2,576,724)
(2,519,240)
-
-
-
3,013,536
(2,576,724)
(2,519,240)
Foreign exchange differences
(236,009)
(970)
(236,979)
At 31 December 2021
Additions
7,813,541
2,972,201
11,474
7,825,015
-
2,972,201
Foreign exchange differences
(44,093)
(657)
(44,750)
At 31 December 2022
10,741,649
10,817
10,752,466
Amortisation and impairment
At 1 January 2021
Charge for the year
Impairment
2,248,531
-
4,148
3,985
2,252,679
3,985
624,546
-
624,546
Foreign exchange differences
(25,803)
(483)
(26,286)
At 31 December 2021
Charge for the year
Impairment
Foreign exchange differences
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
2,847,274
-
483,611
26,530
7,650
2,478
-
(403)
2,854,924
2,478
483,611
26,127
3,357,415
9,725
3,367,140
7,384,234
4,966,267
1,092
3,824
7,385,326
4,970,091
104
United Oil & Gas PLC
At 31 December 2022 the group’s E&E carrying values of $7.4m related to our high impact exploration activity in
Jamaica, exploration drilling in the Abu Sennan concession in Egypt, and the UK North Sea and Waddock Cross
development and exploration campaigns, respectively.
In Egypt United and its partners drilled two of its larger, but higher risk exploration prospects in 2022. ASV-1X
was drilled in Q2, and although it did not flow on test there were encouraging signs indicating the presence of
hydrocarbons, and the well has a workover planned and approved in the 2023 work programme. As a result,
$0.9m spent net to United remains as an Intangible asset at BS date. The second exploration well, ASW-1X well
did not encounter hydrocarbons in any of the multiple pre-drill targets and was plugged and abandoned
at the beginning of 2023. This resulted in a write off of all costs incurred of $0.5m. On 31 December 2022 the
balance of Egypt Intangible assets was $0.9m
In Jamaica United continues with a farm-out campaign with the intention of attracting partners to the licence
ahead of drilling the Colibri prospect. This farm out campaign has recently seen us add Energy Advisors
Group (EAG) to our existing advisors, Envoi Ltd, with the aim of accessing capital from the US companies and
investment funds. At present there are a number of companies evaluating the opportunity with the intention
of seeing final offers by the end of 1H 2023. The current licence phase expires at end of January 2024 and we
have until then to make a well drilling commitment. As such all costs incurred to date remain capitalised as
Intangibles, and at year end the carrying value of our exploration activity in Jamaica amounted to $5.2m.
In the UK North Sea, the Company carries an Intangibles balance of $1.0m at year end, representing amount
capitalised to date on the Maria discovery. In January 2023 United announced the signing of an asset
purchase agreement (APA). The APA was signed post year end and as a result we do not account for these
assets as held for sale at the BS date. As a result, management believe no impairment indicators exist and we
continue to carry the Maria licence at cost of $1.0m at 31 December 2022.
In the UK Waddock Cross licence, following a review of the updated operator development plan and in light
of the increased importance of energy security in the UK coupled with the sustained high commodity prices,
the Directors are of the view that all costs incurred on the licence in 2022 are fully recoverable given the
commercial viability of the development demonstrated by the operator, Egdon Resources Ltd. As a result,
United continue to carry capitalised costs of $0.3m at the 31 December 2022 Balance sheet date, which
includes a decommissioning asset recognised of $0.2m.
Management reviews the intangible exploration assets for indications of impairment at each balance sheet
date based on IFRS 6 criteria such as where commercial reserves have not yet been established and the
evaluation, exploration work is ongoing and a development plan has not been approved. As a result of these
reviews the Directors believe no impairment indicators exist on the company’s exploration portfolio, and as a
result carry intangibles at cost value of $7.4m at 31 December 2022.
105
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
11. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 January 2021
Transfer from E&E assets
Additions
Disposals
Foreign exchange differences
Production
assets
$
Computer
equipment
$
Fixtures
and
fittings
$
Right of
use asset
$
Total
$
15,976,659
13,706
2,971
204,764
16,198,100
2,576,724
5,900,375
-
-
-
-
-
-
-
-
-
2,576,724
42,951
5,943,326
(43,862)
(43,862)
(1,068)
(231)
(13,820)
(15,119)
At 31 December 2021
24,453,758
12,638
2,740
190,033
24,659,169
Additions
5,600,238
10,686
-
87,012
5,697,936
Foreign exchange differences
-
(724)
(157)
(3,508)
(4,389)
At 31 December 2022
30,053,996
22,600
2,583
273,537
30,352,716
Depreciation
At 1 January 2021
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2021
Charge for the year
2,563,268
4,005,102
-
-
7,316
3,374
-
248
951
20,101
2,590,933
98,258
4,107,685
-
(16,625)
(16,625)
(706)
(57)
(12,870)
(13,633)
6,568,370
3,213,872
9,984
4,359
1,142
849
88,864
6,668,360
88,382
3,307,462
Foreign exchange differences
-
(509)
(54)
9,158
8,595
At 31 December 2022
9,782,242
13,834
1,937
186,404
9,984,417
Net book value
At 31 December 2022
At 31 December 2021
20,271,754
17,885,388
8,766
2,654
646
1,598
87,133
20,368,299
101,169
17,990,809
Depreciation is recognised within cost of sales for Egypt operations, and administrative expenses for office
assets. Included in PP&E additions are internal costs of $0.6m incurred by the Group allocated to Egyptian
producing assets.
At 31 December 2022 an impairment indicator of IAS 36 was triggered following the material reduction in
average production in 2022 compared to the prior year resulting in management testing the Egyptian
Production and Development assets for impairment. The recoverable amount has been determined using a
discounted cashflow model to estimate the value in use. Calculating the net present value of the cashflows
involves key assumptions which include the commodity prices, 2P reserves estimates and discount rates.
Other assumptions include production profiles, future operating and capital expenditure and the relevant
fiscal terms.
106
United Oil & Gas PLC As at 31 December 2022, the fair value of the assets are estimated based on a post-tax nominal discount rate
of 12% (2021:10%) and a flat Oil price of $80/bbl (2021:$75/bbl) for the period.
The Egyptian oil and gas asset has a carrying value of $20.4 million at 31 December 2022. Testing of sensitivity
cases indicated that a $10/bbl reduction in the long term oil price used would not result in an impairment. We
have also run a sensitivity using a 15% discount rate which would also not result in an impairment.
12. NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE (RESTATED)
During the year, on 11 April 2022, United announced the completion of the sale of 100% of the share capital of
UOG Italia Srl to PXOG Marshall Limited, a subsidiary of Prospex Energy PLC (Prospex), for a consideration of
€2,164,701 (c. $2.54m).
Assets and liabilities held for sale
The following major classes of assets and liabilities relating to these operations have been classified as held
for sale in the comparative consolidated balance sheet at 31 December 2021:
Intangible assets
Trade and other receivables
Cash at bank and in hand
Assets held for sale
Trade and other payables
Liabilities held for sale
Total held
for sale
$
2,062,341
28,588
508
2,091,437
(116,048)
(116,048)
Fair value measurement
The fair value of the net assets of $1,975,389 were categorised as level 3 non-recurring fair value measurements.
The fair valuations have been determined by reference to signed disposal agreements, in relation to which
non-refundable deposits have been received.
Loss on disposal
The net loss on disposal recognised in the income statement is comprised of:
Loss on disposal of UOG Italia net of disposal expenses incurred
Loss on aborted North Sea Quattro disposal
2022
$
-
-
-
2021
$
(236,456)
(114,706)
(351,162)
107
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
13. INVENTORY
Oil in tanks
2022
$
268,859
268,859
2021
$
145,570
145,570
In the year ended 31 December 2022, the movement in Oil Inventory of $123,289 was recognised in the Income
Statement.
14. TRADE AND OTHER RECEIVABLES
Trade receivables
Prepayments
Contract assets
Other tax receivables
Crown disposal proceeds due
2022
$
2021
$
3,549,051
2,257,609
6,941
7,361
873,206
2,865,287
40,295
71,764
-
2,500,000
4,469,493
7,702,021
The Directors consider that the carrying values of trade and other receivables are approximate to their fair
values.
No expected credit losses exist in relation to the Group’s receivables as at 31 December 2022 (2021: $nil).
Trade receivables represent amounts invoiced for oil and gas sold in the year, not yet received from EGPC.
Contract assets relate to one month Oil & Gas invoices not received at year-end for the Abu Sennan
producing assets in Egypt under the receivable terms of the agreement with EGPC.
15. CASH AND CASH EQUIVALENTS
Cash at bank (GBP)
Cash at bank (EUR)
Cash at bank (USD)
Cash at bank (EGY)
2022
$
52,251
23,620
799,390
2021
$
50,831
16,286
3,226
470,202
326,965
1,345,463
397,308
At 31 December 2022 and 2021 all significant cash and cash equivalents were deposited in creditworthy
financial institutions in UK, Ireland and Egypt.
108
United Oil & Gas PLC
16. SHARE CAPITAL, SHARE PREMIUM AND MERGER RESERVE
Allotted, issued, and fully paid:
Number
Share capital
$
2022
Share
premium
$
Ordinary shares of £0.01 each
At 1 January 2022
644,803,969
8,416,182
16,215,361
Effect of Parent company functional currency change
-
283,278
523,376
Allotments:
Shares issued for cash (exercise of warrants)
11,550,000
140,219
60,086
At 31 December 2022
656,353,969
8,839,679
16,798,823
Ordinary shares of £0.01 each
At 1 January 2021
Allotments:
Number
Share capital
$
2021
Share
premium
$
625,153,969
8,138,619
16,047,975
Shares issued for cash (exercise of warrants)
19,650,000
277,563
167,386
At 31 December 2021
644,803,969
8,416,182
16,215,361
As regards income and capital distributions, all categories of shares rank pari passu as if the same
constituted one class of share. Deferred shares are disclosed in Note 19.
109
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
17. SHARE-BASED PAYMENTS
Share Options
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during
the year are as follows:
2022
Outstanding at the beginning of the year
Issued
Expired
Outstanding at the year end
Number vested and exercisable at 31 December 2022
2021
Outstanding at the beginning of the year
Issued
Expired
Outstanding at the year end
Number vested and exercisable at 31 December 2021
Number of
Options
49,604,414
13,662,005
(1,617,435)
61,648,984
14,431,374
Number of
Options
46,767,690
3,939,665
(1,102,941)
49,604,414
10,764,707
WAEP
£
0.04
0.02
0.02
0.04
0.04
WAEP
£
0.04
0.04
0.04
0.04
0.04
Directors or employees are required to be employed by the company at the time of the vesting of the option to
exercise their option awards. At the discretion of the Board, this condition can be waived by up to 1 year from the
date of cessation of employment. No additional performance conditions are attached to option awards.
The fair values of share options issued in the current financial year were calculated using the Black Scholes
model as follows:
Date of grant
Number granted
Share price at date of grant
Exercise price
Expected volatility
Expected life from date of grant (years)
Share options
Share options
Share options
Share options
30 Sep 2022
30 Sep 2022
1 Aug 2021
4 Jan 2021
6,862,005
6,800,000
2,597,403
1,342,282
£0.016
£0.025
68.15%
6.34
£0.016
£0.016
68.15%
6.41
£0.04
£0.04
£0.03
£0.03
59.25%
83.28%
6.5
6.5
Risk free rate
4.3172%
4.3172%
0.2867%
-0.0678%
Expected dividend yield
Fair value at date of grant
0%
£0.009
0%
£0.011
0%
£0.021
0%
£0.021
Earliest vesting date
31 May 2025
25 Jul 2025
1 Aug 2024
4 Jan 2024
Expiry date
29 May 2032
23 Jul 2032
1 Aug 2031
4 Jan 2031
110
United Oil & Gas PLC Expected volatility was determined based on the historic volatility of the Company’s shares for a period
averaging 1 year. The expected life used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The Group recognised total expenses of $246,707 (2021: $325,375) in the income statement in relation to share
options accounted for as equity-settled share-based payment transactions during the year. The balance of
the share based payment reserve at 31 December 2022 was $2,547,688 (2021: $2,247,465)
Warrants
Details of the number of share warrants and the weighted average exercise price (WAEP) outstanding during
the year are as follows:
2022
Outstanding at the beginning of the year
Exercised
Expired
Outstanding at the year end
Number vested and exercisable at 31 December 2022
2021
Outstanding at the beginning of the year
Exercised
Outstanding at the year end
Number vested and exercisable at 31 December 2021
Number of
Options
64,093,040
(11,550,000)
(45,012,206)
7,530,834
7,530,834
Number of
Options
83,743,040
(19,650,000)
64,093,040
-
WAEP
£
0.05
0.01
0.08
0.03
0.03
WAEP
£
0.04
0.02
0.05
-
Expected volatility was determined based on the historic volatility of a comparable company’s shares for a
period averaging 1 year. Management believes a 1 year volatility period is sufficient for a company of United’s
short history and long enough for option holders to gauge performance over this period, and is sufficient when
compared with peer companies of United’s size in the industry. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
The Group recognised total expenses of $nil (2021: $nil) in relation to share warrants accounted for as equity-
settled share-based payment transactions during the year.
111
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
18. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Deferred shares (note 19)
Accruals
2022
$
2021
$
499,217
1,180,088
1,295,680
1,599,414
40,476
40,476
1,874,294
2,602,756
3,709,667
5,422,734
19. DEFERRED SHARES
On 12 October 2015, the Company issued 30,000 Deferred Shares of £1 for £30,000 to the founder, which have
an entitlement to a non-cumulative annual dividend at a fixed rate of 0.1 per cent of their nominal value.
The Deferred Shares have no voting rights attached to them and may be redeemed in their entirety by the
Company for an aggregate redemption payment of £1. They were initially recognised at their proceeds and
carried at amortised amounts.
20. LEASES
Right of Use Assets
The Group used leasing arrangements relating to property, plant and equipment. As the Group has the right of
use of the asset for the duration of the lease arrangement, a “right of use” asset is recognised within property,
plant and equipment.
When a lease begins, a liability and right of use asset are recognised based on the present value of future
lease payments.
Interest expense on lease liabilities
Total cash outflow for leases
Additions to right-of-use assets
Disposals from right-of-use assets
Depreciation charge – right of use assets
Foreign exchange movement on right of use assets
Right of use assets - carrying amount at the beginning of the year
Carrying amount at the end of the year
Lease liabilities
Current
Non-current
112
2022
$
86,669
2021
$
14,421
(176,765)
(83,335)
87,012
42,951
-
(27,237)
(88,382)
(98,258)
(12,666)
(950)
101,169
87,133
184,663
101,169
2022
$
83,985
7,356
91,341
2021
$
83,368
24,494
107,862
United Oil & Gas PLC 21. BORROWINGS AND DERIVATIVES
Amounts payable on borrowings held by the Group falling due within one year and in more than one year are:
Secured – at amortised cost
Other loans
Current
Non-current
The assets of the Group are held as security against the loan.
Separated embedded derivative
Loan derivative (asset) / liability
2022
$
2021
$
2,964,225
2,422,212
2,964,225
2,422,212
-
-
2,964,225
2,422,212
2022
$
2021
$
(120,168)
1,346,044
(120,168)
1,346,044
Summary of Borrowing Arrangements
In February 2020, the Group entered into a prepaid commodity swap arrangement for $8 million to part-
finance the acquisition of Rockhopper Egypt Pty Ltd. The repayment schedule provided for 30 monthly
repayments which were structured as a fixed notional amount with variations based on movements in oil
prices with a cap.
Due to the price structure, the arrangement includes an embedded derivative (a forward contract). For
financial reporting purposes, this must be separately accounted for at fair value at each balance sheet date.
The balance of proceeds that did not relate to the derivative were treated as the opening carrying amount of
the loan which will then be measured at amortised cost over its life, with finance charges recognised to give
an even return over the loan life and repayments of capital allocated appropriately.
As at 31 December 2022, a fair value loss has been recognised (as finance expense) as a result of oil price
movements in the period and on forward price rates (2021: loss).
In January 2022 the Group extended the final maturity date on the facility from 30 September 2022 to
31 December 2023 with revised terms. As a result, a modification occurred and the loan and embedded
derivative were remeasured. The new terms provide downside protection at $70/bbl for a volume of bbls
through to the end of 2023.
The valuations of the host debt and derivative on initial recognition and valuation of the remaining embedded
derivative as at 31 December 2022 were undertaken using data provided by independent third parties.
The fair value of the contracts has been estimated using a valuation technique that maximises the use of
observable market inputs. These are classified as Level 2 in the fair value hierarchy (see note 23).
113
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Reconciliation of liabilities arising from financing activities
2022
Loan
Embedded
derivative
2021
Loan
Embedded
derivative
Derivative
At 1
January
2022
$
2,868,796
1,346,044
Interest
accrued
$
Repaid in
cash
$
Modifications
& Fair Value
Movements$
At 31
December
2022
$
41,760
(1,452,118)
1,505,787
2,964,225
-
(1,522,892)
56,680
(120,168)
3,768,256
41,760
(2,975,010)
1,562,467
2,844,057
At 1
January
2021
$
4,555,801
1,552,078
87,979
6,195,858
Cash
received
$
Interest
accrued
$
Repaid in
cash
$
Fair value
movements
$
FX
movements
$
At 31
December
2021
$
-
-
-
-
1,381,083
(3,518,359)
-
3,687
2,422,212
-
-
(1,666,975)
1,477,118
(16,177)
1,346,044
(138,111)
50,132
-
-
1,381,083
(5,323,445)
1,527,250
(12,490)
3,768,256
Fair value movements are recognised in finance costs (see note 6).
22. PROVISIONS
Opening balance
Additions in the year
Uses of provision in the year
Closing balance
2022
$
-
233,630
-
233,630
2021
$
-
-
-
-
The decommissioning provision is made up of 1 well, planned to be drilled on the Waddock Cross licence,
onshore UK. The decommissioning provision has been calculated assuming industry established oilfield
decommissioning techniques and technology at current prices and is discounted at 4% per annum reflecting
the associated risk profile.
23. FINANCIAL INSTRUMENTS
Classification of Financial Instruments
The fair value hierarchy groups financial assets and liabilities into three levels based on the significance of
inputs used in measuring the fair value of the financial assets and liabilities.
The fair value hierarchy has the following levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
114
United Oil & Gas PLC
The level within which the financial asset or liability is classified is determined based on the lowest level of
significant input to the fair value measurement.
The only financial instruments measured at fair value in the balance sheet are the embedded derivatives
and standalone derivatives which are classified as Level 2 according to the above definitions. There were no
transfers in or out of Level 2 in the year.
There are no financial instruments classified at Level 1 or Level 3 in the years presented.
The tables below set out the Group’s accounting classification of each class of its financial assets and liabilities.
Financial assets measured at amortised cost
Trade receivables (note 14)
Contract assets (note 14)
Crown disposal proceeds due (note 14)
Cash and cash equivalents (note 15)
2022
$
2021
$
3,549,051
2,257,609
873,206
2,865,287
-
2,500,000
1,345,463
397,308
5,767,720
8,020,204
All of the above financial assets’ carrying values are approximate to their fair values, as at 31 December 2022
and 2021.
Financial liabilities
Trade payables (note 18)
Other payables (note 18)
Lease liabilities (note 20)
Borrowings (note 21)
Accruals (note 18)
2022
$
2021
$
499,217
1,180,088
1,295,680
1,599,414
91,341
107,862
2,964,225
2,422,212
1,874,294
2,602,756
6,724,757
7,912,332
In the view of management, all of the above financial liabilities’ are due within one year and the borrowings
were fair valued during the year upon modification and were subsequently carried at amortised cost. Carrying
values approximate to their fair values as at 31 December 2022 and 2021.
Derivative financial (assets) / liabilities (note 21)
Measured at fair value through
profit or loss
2022
$
2021
$
(120,168)
1,346,044
(120,168)
1,346,044
115
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Fair Value Measurements
This note provides information about how the Group determines fair values of various financial assets and
financial liabilities.
Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis
The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in the
consolidated financial statements approximate their fair values (due to their nature and short times to maturity).
Fair value of financial liabilities that are measured at fair value on a recurring basis
The fair value of derivative financial instruments has been estimated using a valuation technique that
maximises the use of observable market inputs.
24. FINANCIAL INSTRUMENT RISK EXPOSURE AND MANAGEMENT
The Group’s operations expose it to degrees of financial risk that include liquidity risk, credit risk, interest rate risk.
This note describes the Group’s objectives, policies and process for managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented in notes 14, 15, 18,
20, 21, 23 and 25.
Liquidity Risk
Liquidity risk is dealt with in note 25 of these financial statements.
Credit Risk
The Group’s credit risk is primarily attributable to its cash balances.
The credit risk on liquid funds is limited because the third parties are large international banks with a minimum
investment grade credit rating.
The Group’s total credit risk amounts to the total of trade receivables, other receivables and cash and cash
equivalents. Credit assessments are routinely reviewed on all of the Group’s joint venture partners and other
counterparties.
As described in note 14, there are no expected credit losses on trade receivables. This conclusion was
reached by applying the matrix approach described in IFRS 9, grouping trade receivables based on their
characteristics and applying known default rates to each group. Since there is no history of default for trade
receivables in any of the groupings, there are no lifetime expected credit losses to recognise.
Market risk - interest rate risk
The Group’s only exposure to interest rate risk is the interest received on the cash held on deposit, which is
immaterial. The Group’s borrowings outstanding at 31 December 2022 and 31 December 2021 are structured in
such a way, through the use of a pre-paid commodity swap, so that the notional interest charge is fixed and
therefore there is no net interest rate risk. IBOR reform has had no effect on interest rate risk as the group does
not have borrowings or investments based on such an index.
Market risk - commodity Price risk
The company manages its exposure to commodity price risk on an ongoing basis. The loan for the acquisition
of Rockhopper Egypt also involved a derivative arrangement to manage the exposure arising from having
the loan payments based on oil quantities rather than a fixed cash price. The combined put and call
arrangements provide the group with protection against price movements on either side of a protected collar.
116
United Oil & Gas PLC Market risk - foreign exchange risk
The Group is exposed to foreign exchange movements on monetary assets and liabilities denominated
in currencies other than USD. The Group's operational and administrative transactions are carried out
predominantly in USD but also in GBP, EUR and EGP.
The monetary assets and liabilities denominated in currencies other than USD are relatively immaterial
(see notes 14 and 15), with EGP cash balances posing the primary transactional risk at this time due to the
Central Bank of Egypt imposing restrictions on the remittance of USD outside the country. This is considered
manageable as the majority of payments in Egypt can be made in local currency meaning large EGP
balances are not exposed to currency devaluation, and as an Oil company preferential treatment is available
to the company when more USD is available in-country. All receivables remain denominated in USD reducing
any currency exposure.
The Group does not hold material non-domestic balances and currently does not consider it necessary to
take any action to mitigate foreign exchange risk due to the immateriality of that risk.
25. LIQUIDITY RISK
United closely monitors and manages its liquidity risk using both short and long term cashflow projections,
supplemented by debt and equity financing plans and active portfolio management. Cash forecasts are
regularly produced and sensitivities run for different scenarios including, but not limited to, changes in asset
production profiles and cost schedules. Prudent liquidity risk management includes maintaining sufficient
cash balances to ensure the Group can meet liabilities as they fall due.
In managing liquidity risk, the main objective of the Group is therefore to ensure that it has the ability to pay all
of its liabilities as they fall due. The Group monitors its levels of working capital to ensure that it can meet its debt
repayments as they fall due. The table below shows the undiscounted cash flows on the Company’s / Group’s
financial liabilities as at 31 December 2022 and 2021, on the basis of their earliest possible contractual maturity.
Total
$
Payable on
demand
$
Within 2
months
$
Within
2 -6
months
$
Within
6 – 12
months
$
Within
1-2
years
$
At 31 December 2022
Trade payables
499,217
-
499,217
Other payables
1,295,680
1,295,680
-
-
-
-
-
-
-
Lease liabilities
Borrowings
Derivative financial
instruments
182,302
2,968,200
(120,168)
Accruals
1,874,294
-
-
-
-
19,373
35,336
39,428
88,165
236,941
473,882
2,257,377
(20,028)
(40,056)
(60,084)
-
1,874,294
-
-
-
-
6,699,525
1,295,680
735,503
2,343,456
2,236,721
88,165
Details of the Groups Borrowings and Derivatives can be found in Note 21.
117
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended 31 December 2022
The Group deposits cash with a number of international and UK financial institutions, ensuring sufficient
liquidity to enable the Group to meet its short and medium-term expenditure requirements.
Payable
on
demand
$
Within 2
months
$
Within
2 -6
months
$
Within
6 – 12
months
$
Within
1-2
years
$
Within
2-5
years
$
Total
$
At 31 December 2021
Trade payables
1,180,088
-
1,180,088
Other payables
1,599,414
1,599,414
-
-
-
-
-
-
-
-
-
Lease liabilities
Borrowings
Derivative financial
instruments
116,359
2,769,947
1,346,044
Accruals
2,602,756
-
-
-
-
18,526
33,250
37,813
17,568
9,202
692,487
1,384,973
692,487
-
-
-
1,346,044
2,602,756
-
-
-
-
-
-
-
9,614,608
1,599,414
1,891,101
4,020,979
2,076,344
17,568
9,202
26. CAPITAL MANAGEMENT
The Group’s capital management objectives are:
• To provide long-term returns to shareholders; and
• To ensure the Group’s ability to continue as a going concern.
The Group defines and monitors capital on the basis of the carrying amount of equity plus borrowings less
cash and cash equivalents as presented on the face of the balance sheet and as follows:
Equity
Borrowings
Lease liabilities
Derivatives
Cash and cash equivalents
2022
$
2021
$
26,958,745
23,825,090
2,964,225
2,422,212
91,341
107,862
(120,168)
1,346,044
(1,345,463)
(397,308)
28,548,680
27,303,900
The Board of Directors monitors the level of capital as compared to the Group’s commitments and adjusts
the level of capital as is determined to be necessary by issuing new shares. The Group is not subject to any
externally imposed capital requirements.
These policies have not changed in the year. The Directors believe that they have been able to meet their
objectives in managing the capital of the Group.
118
United Oil & Gas PLC 27. RELATED PARTY TRANSACTIONS
Key management personnel are identified as the Directors of the Company, and their remuneration is
disclosed in note 5.
28. FINANCIAL COMMITMENTS
As at 31 December 2022, the Group’s commitments comprise their producing assets and exploration
expenditure in Egypt, exploration expenditure interests in Waddock Cross, and the Walton Morant licence.
These commitments have been summarised below:
Exploration/Production Licence
Abu Sennan
Walton Morant
Waddock Cross
31 December
2022
$m
31 December
2021
$m
5.6
0.4
-
6.0
4.1
0.3
0.1
4.5
29. ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be an ultimate controlling party.
30. EVENTS AFTER THE BALANCE SHEET DATE
On the 17th of January 2023 United announced the signing of an Asset Purchase Agreement (APA) with Quattro
Energy Limited (Quattro) to sell the Maria licence, P2519 for a maximum consideration of up to $7m (£5.7m)
inclusive of contingent bonus payments.
Consideration comprises:
•
Initial cash payment of £2.45 million to United (c.US$3 million) at completion.
• An additional £1.0 million to be paid to United upon approval of an FDP (expected late 2023) for Block 15/18e.
• Contingent bonus payments of up to £2.25 million upon reaching gross production thresholds from the field
of three, four and five million barrels.
The completion of the APA is subject to a number of pre-conditions including the North Sea Transition
Authority (NSTA) approval to the Licence acquisition, which was approved in March 2023, and Quattro
having available an amount equal to the completion payment of £2.45 million in cash. It is anticipated that
completion of the APA will be in May 2023.
31. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were approved by the Board of Directors and authorised for their issue on 27 April
2023 and were signed on its behalf by:
Brian Larkin
Chief Executive Officer
119
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION COMPANY BALANCE SHEET
For the year-ended 31 December 2022
Assets:
Non-current assets
Investments
Current assets
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total Assets
Equity and liabilities:
Capital and reserves
Share capital
Share premium
Share-based payment reserve
Retained losses:
Opening retained losses
Loss for the year
Total retained losses
Shareholders’ funds
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax payable
Deferred shares
Total liabilities
Total equity and liabilities
31 December
2022
$
Note
Restated
31 December
2021
$
2
3
7
4
8
8
5
7
7
6
21,758,070
21,758,070
8,161,944
11,192,640
120,168
399,954
-
48,726
8,682,066
11,241,366
30,440,136
32,999,436
8,839,679
8,699,461
16,798,823
16,738,736
2,547,688
2,300,982
(10,708,297)
(5,525,183)
(3,283,852)
(5,183,114)
(13,992,149)
(10,708,297)
14,194,041
17,030,882
13,241,394
12,102,681
2,694,225
2,422,146
-
-
40,475
1,346,007
57,245
40,475
16,246,094
15,968,554
16,246,094
15,968,554
30,440,136
32,999,436
The notes to these financial statements form an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for their issue on 27 April 2023
and were signed on its behalf by:
Brian Larkin
Chief Executive Officer
Registered number: 09624969
120
United Oil & Gas PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year-ended 31 December 2022
Share
capital
$
Share
premium
$
Share-
based
payments
reserve
$
Retained
earnings
$
Total
$
For the year ended 31 December 2022
Balance at 1 January 2022
8,699,461
16,738,736
2,300,982
(10,708,297)
17,030,882
Loss for the financial year
Total comprehensive income
Transactions with owners:
Share based payments
-
-
-
-
-
-
246,706
Shares issued
140,218
60,087
-
Total transactions with owners
140,218
60,086
246,707
-
-
(3,283,852)
(3,283,852)
(3,283,852)
(3,283,852)
-
-
-
246,706
200,305
447,011
Balance at 31 December 2022
8,839,679
16,798,823
2,547,688
(13,992,149)
14,194,041
Restated for functional currency change
For the year ended 31 December 2021 (restated)
Balance at 1 January 2021
8,434,350
16,578,862
1,981,504
(5,525,183)
21,469,533
Loss for the financial year
Total comprehensive income
Transactions with owners:
Share based payments
-
-
-
-
-
-
Shares issued
265,111
159,874
-
Total transactions with owners
265,111
159,874
319,478
-
-
(5,183,114)
(5,183,114)
(5,183,114)
(5,183,114)
319,478
-
-
-
319,478
424,985
744,463
Balance at 31 December 2021
8,699,461
16,738,736
2,300,982
(10,708,297)
17,030,882
The notes to these financial statements form an integral part of these financial statements.
121
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
For the year-ended 31 December 2022
1. ACCOUNTING POLICIES
Basis of Preparation
The annual financial statements of United Oil & Gas (the Parent Company financial statements) have
been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting
Requirements (FRS 100) and Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions
conferred by FRS 101. Therefore, these financial statements do not include:
• certain disclosures regarding the company's capital;
• a statement of cash flows;
• the effect of future accounting standards not yet adopted;
• the disclosure of the remuneration of key management personnel; and
• disclosure of related party transactions with the Company’s wholly owned subsidiaries.
In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because
equivalent disclosures are included in the Company’s Consolidated Financial Statements. These financial
statements do not include certain disclosures in respect of:
• Financial instruments (other than certain disclosures required as a result of recording financial instruments
at fair value)
• Fair value measurement (other than certain disclosures required as a result of recording financial
instruments at fair value)
• Related party transactions
• Share-based payments
As permitted by section 408 of Companies Act 2006, a separate Income Statement for the Company has not
been included in these financial statements. The Company’s loss for the year ended 31 December 2022 was
$3,283,852 (2021 restated: $5,183,114).
Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance
and position are set out in the Chair’s statement and the Strategic Report.
United regularly monitors its business activities, financial position, cash flows and liquidity through the
preparation and review of detailed forecasts. Scenarios and sensitivities are also regularly presented to the
Board, including changes in commodity prices and in production levels from the existing assets, plus other
factors which could affect the Group’s future performance and position. A base case forecast has been
considered which uses budgeted commitments and prevailing forward curve assumptions for oil prices.
The key assumptions and related sensitivities include a “Reasonable Worst Case” (RWC) sensitivity where the
Board has considered a scenario with significant aggregated downside, including a delay in the payment of
receivables in Egypt, a reduction in forecasted revenue of 12% and an increase in forecast capital expenditure
in Egypt by 15%. The RWC incorporates a scenario whereby the sale of Maria P2519 l to Quattro does not
complete in the period. Under the combined RWC, the Group forecasts there will be sufficient resources to
continue in operational existence for the foreseeable future.
122
United Oil & Gas PLC The likelihood of all these downside sensitivities taking place simultaneously and lasting for the entire forecast
period is considered to be remote. Under such a RWC scenario, we have identified appropriate mitigating
actions, including the deferral of additional uncommitted capital expenditure, seeking a restructuring of
debt arrangements and adjustment of the Group cost base, which would be available to us and have been
demonstrated as effective strategies in previous periods of low oil prices. Our business in Egypt remains robust
given cash operating costs of less than $11/boe, flexible drilling contracts and downside price protection on our
hedged volumes and gas contracts that are fixed price in nature. There are limited capital commitments in
the other assets in our portfolio. The forecasts outlined above show that the Group will have sufficient financial
headroom for the 12 months from the date of approval of the 2022 Accounts. Based on this analysis, the
Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Therefore, they continue to use the going concern basis of accounting in
preparing the annual Financial Statements.
Investments
Fixed asset investments in subsidiaries are stated at cost. Investments are tested for impairment when
circumstances indicate that the carrying value may be impaired.
Impairment of Non-financial Assets
At each balance sheet date, the Directors review the carrying amounts of the Company’s tangible and
intangible assets, other than goodwill, to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash
flows that are independent from other assets, the Company estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. If
the recoverable amount of a cash-generating unit is less than its carrying amount, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
of the unit pro rata based on the carrying amount of each asset in the unit.
An impairment loss is recognised as an expense immediately.
An impairment loss recognised for goodwill is not reversed in subsequent periods.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset or cash-generating unit in prior periods. A reversal of an impairment loss is recognised in the
Income Statement immediately.
Intercompany Balances
Amounts due to and from subsidiaries via intercompany loans are reviewed by the Directors for recoverability
at each balance sheet date, and where any impairment exists the recoverability is estimated and loans are
written down accordingly in the books of plc and the subsidiary, respectively.
123
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Financial assets are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the Company does not have any financial assets categorised as FVOCI or FVTPL.
The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions:
• they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting
is omitted where the effect of discounting is immaterial. The Company’s cash and cash equivalents, trade and
other receivables fall into this category of financial instruments.
Impairment of Financial Assets
In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model to be applied.
The expected credit loss model requires the Company to account for expected credit losses and changes in
those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of
the financial assets.
IFRS 9 requires the Company to recognise a loss allowance for expected credit losses on trade receivables.
IFRS 9 requires the Company to measure the loss allowance for a financial instrument at an amount equal
to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased
significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired
financial asset. However, if the credit risk on a financial instrument has not increased significantly since initial
recognition, the Company is required to measure the loss allowance for that financial instrument at an
amount equal to 12 months ECL.
124
United Oil & Gas PLC Classification and measurement of financial liabilities
The Company’s financial liabilities include trade and other payables, borrowings and derivatives.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Company designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit
or loss are included within finance costs or finance income.
Embedded derivative financial instruments
A borrowing arrangement structured as a prepaid commodity swap with monthly repayments over 30
months has embedded in it a derivative that is indexed to the price of the commodity. This is considered to be
a separable embedded derivative of a loan instrument.
At the date of issue, the fair value of the embedded derivative is estimated by considering the derivative as a
series of forward contracts with modelling of the fixed and floating legs to determine a repayment schedule
and derive a net present value for the forward contract embedded derivative.
This amount is recognised separately as a financial liability or financial asset and measured at fair value
through the income statement. The residual amount of the loan is then recorded as a liability on an amortised
cost basis using the effective interest method until extinguished upon conversion or at the instrument’s
maturity date.
Current Taxation
Current taxation is based on the local taxable income at the local statutory tax rate enacted or substantively
enacted at the balance sheet date and includes adjustments to tax payable or recoverable in respect of
previous periods.
Deferred Taxation
Deferred taxation is calculated using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred
tax arises from the initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.
Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred tax asset is realised, or the deferred
tax liability is settled.
Deferred tax liabilities are provided for in full.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit or loss,
except where they relate to items that are charged or credited directly to equity in which case the related
deferred tax is also charged or credited directly to equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
125
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
For the year-ended 31 December 2022
Foreign Currency
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the
year-end date. All differences are taken to the Income Statement.
On 1 January 2022 the Company’s functional and presentation currency changed from GBP to USD. The change
in functional currency was accounted for prospectively from the date of the change. All items at the date of
change are translated into the new functional currency at the date of change, and the resulting translated
amounts for non-monetary items are treated as their historical cost.
Share-based Payments
Where share-based payments (warrants and options) have been issued, IFRS 2 has been applied whereby
the fair value of the share-based payment is measured at the grant date and spread over the vesting period.
A valuation model is used to assess the fair value, taking into account the terms and conditions attached to
the share-based payments. The fair value at grant date is determined including the effect of market based
vesting conditions, to the extent such vesting conditions have a material impact.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over
the period in which the performance and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (the vesting date).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has expired and the Company’s best estimate of the
number of equity instruments that will ultimately vest.
The charge or credit for a period to the income statement represents the movement in cumulative expense
recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition, which are treated as vesting irrespective of whether or not the market
condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the
terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the
terms had not been modified. An additional expense is recognised for any modification, which increases
the total fair value of the share-based payment arrangement or is otherwise beneficial to the recipient as
measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is granted,
the cancelled and new awards are treated as if they were a modification of the original award, as described
in the previous paragraph.
Where an equity-settled award is forfeited, the cumulative charge expensed up to the date of forfeiture is
credited to the income statement.
Equity
Equity comprises the following:
• “Share capital” represents amounts subscribed for shares at nominal value.
• “Share premium” represents amounts subscribed for share capital, net of issue costs, in excess of nominal
value.
• “Share-based payment reserve” represents amounts credited to equity as part of the accounting for
share-based payments.
• “Retained losses” represents the accumulated profits and losses attributable to equity shareholders.
126
United Oil & Gas PLC 2. INVESTMENTS
Cost
As at 1 January 2021
Additions
As at 31 December 2021
Additions
As at 31 December 2022
Investments in
Subsidiaries
$
21,758,070
-
21,758,070
-
21,758,070
The Company’s subsidiaries are detailed in note 9 to the consolidated financial statements. UOG Italia srl
ceased to be a subsidiary as completion of the sale of the company took place in 2022, as detailed in Note 12
of the group financial statements.
3. TRADE AND OTHER RECEIVABLES
Amounts due from group undertakings
Crown disposal proceeds due
Other tax receivables
4. CASH AND CASH EQUIVALENTS
Cash at bank
2022
$
2021
$
8,140,470
8,632,077
-
2,500,000
21,474
60,563
8,161,944
11,192,640
2022
$
2021
$
399,954
48,726
127
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
For the year-ended 31 December 2022
5. TRADE AND OTHER PAYABLES
Trade payables
Amounts due to group undertakings
Other payables
Accruals
2022
$
2021
$
86,970
773,686
12,692,235
10,601,447
369,987
660,090
92,202
67,458
13,241,394
12,102,681
Amounts due to subsidiary companies relates to day-to-day intercompany balances accumulated with other
group entities, are interest free, and repayable on demand.
6. DEFERRED SHARES
On 12 October 2015, the Company issued 30,000 Deferred Shares of £1 for £30,000 to the founder, which have
an entitlement to a non-cumulative annual dividend at a fixed rate of 0.1 per cent of their nominal value.
The Deferred Shares have no voting rights attached to them and may be redeemed in their entirety by the
Company for an aggregate redemption payment of £1. They were initially recognised at their proceeds and
carried at amortised amounts.
7. BORROWINGS AND DERIVATIVES
Secured – at amortised cost
Other loans
Current
Non-current
Separated embedded derivative
Loan derivative (asset) / liability (current)
2022
$
2021
$
2,964,225
2,422,146
2,964,225
2,422,146
-
-
2,964,225
2,422,146
2022
$
2021
$
(120,168)
1,346,007
(120,168)
1,346,007
In February 2020, the Company entered into a prepaid commodity swap arrangement for $8 million to
part-finance the acquisition of Rockhopper Egypt Pty Ltd. The repayment schedule provided for 30 monthly
repayments which were structured as a fixed notional amount with variations based on movements in oil
prices with a cap.
128
United Oil & Gas PLC
Due to the price structure, the arrangement includes an embedded derivative (a forward contract). For
financial reporting purposes, this must be separately accounted for at fair value at each balance sheet date.
The balance of proceeds that did not relate to the derivative were treated as the opening carrying amount of
the loan which will then be measured at amortised cost over its life, with finance charges recognised to give
an even return over the loan life and repayments of capital allocated appropriately.
As at 31 December 2022, a fair value loss has been recognised (as finance expense) as a result of oil price
movements in the period and on forward price rates (2021: loss).
In January 2022 the Company extended the final maturity date on the facility from 30 September 2022 to 31
December 2023 with revised terms. As a result, the loan and embedded derivative were remeasured.
The valuations of the host debt and derivative on initial recognition and valuation of the remaining embedded
derivative as at 31 December 2022 were undertaken using data provided by independent third parties.
8. SHARE CAPITAL
Allotted, issued, and fully paid:
Ordinary shares of £0.01 each
At 1 January 2022
Allotments:
Number
Share
capital
$
Share
premium
$
644,803,969
8,699,461
16,738,736
Shares issued for cash (exercise of options)
11,550,000
140,218
60,087
At 31 December 2022
656,353,969
8,839,679
16,798,823
At 1 January 2021
Allotments:
625,153,969
8,434,350
16,578,862
Shares issued for cash (exercise of options)
19,650,000
265,111
159,874
At 31 December 2021
644,803,969
8,699,461
16,738,736
The Company has one class of ordinary shares which carry no fixed right to income.
129
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
For the year-ended 31 December 2022
9. CHANGE IN PRESENTATION CURRENCY
As described in note 1, for the current reporting period the company’s functional currency was changed to USD
and the presentation currency has also been updated.
The restated and previously reported amounts in the comparative statement of financial position are as follows:
Restated
31 December
2021
$
Previously
reported
31 December
2021
£
Note
2
3
4
8
8
5
7
7
6
21,758,070
16,127,081
11,192,640
8,644,211
-
48,726
-
36,115
11,241,366
8,680,326
32,999,436
24,807,407
8,699,461
6,448,040
16,738,736
12,406,752
2,300,982
1,705,488
(5,525,183)
(4,095,266)
(5,183,114)
(3,493,499)
(10,708,297)
(7,588,765)
17,030,882
12,971,515
12,102,681
8,970,507
2,422,146
1,795,295
1,346,007
57,245
40,475
997,661
42,429
30,000
15,968,554
11,835,892
15,968,554
11,835,892
32,999,436
24,807,407
Assets:
Non-current assets
Investments
Current assets
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total Assets
Equity and liabilities:
Capital and reserves
Share capital
Share premium
Share-based payment reserve
Retained losses:
Opening retained losses
Loss for the year
Total retained losses
Shareholders’ funds
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax payable
Deferred shares
Total liabilities
Total equity and liabilities
130
United Oil & Gas PLC 10. EVENTS AFTER THE BALANCE SHEET DATE
See note 30 of the Notes to the Consolidated Financial Statements.
11. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were approved by the Board of Directors and authorised for their issue on 27 April
2023 and were signed on its behalf by:
Brian Larkin
Chief Executive Officer
131
2022 Annual Report and Financial Statements STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION GLOSSARY – ALTERNATIVE PERFORMANCE MEASURES
Non-IFRS measures
The Group uses certain measures of performance that are not specifically defined under IFRS or other
generally accepted accounting principles, but are additional and useful performance indicators both of the
operational and financial performance of the group, and important metrics both from a management and
reader perspective of the financial statements.
Cash-operating costs per barrel
Cash operating costs are defined as cost of sales less depreciation, depletion and amortisation, production
based taxes, movements in inventories and certain other immaterial cost of sales.
Cash operating costs are then divided by barrels of oil equivalent produced to demonstrate the cash cost
incurred to producing oil and gas from the Group’s producing assets.
Cost of Sales
Less:
Depreciation, depletion, and amortisation
Inventories
Cash operating costs
Production (boepd)
Cash Operating Cost /boe ($)
Year ended
31 December
2022
$
Year ended
31 December
2021
$
8,143,910
8,911,815
(3,213,872)
(4,005,102)
-
109,841
4,930,038
5,016,554
1,312
10.29
2,327
5.90
EBITDAX
EBITDAX is earnings from continuing activities before interest, tax, depreciation, amortisation, reversal of
impairment, and exploration expenditure and exceptional items in the current year.
Operating Income
Depreciation, Depletion & Amortisation
Exploration Expense
Year ended
31 December
2022
$
Year ended
31 December
2021
$
9,221,131
8,858,730
3,307,462
4,107,685
767,886
624,546
13,296,479
13,590,961
132
United Oil & Gas PLC
GLOSSARY
Bbl
/Bbl
Bn
Barrels
Per barrel
Billion
boepd
Barrels of oil equivalent per day
bopd
Barrels of oil per day
Capex
Capital Expenditure
EGPC
ESG
ESP
Egyptian General Petroleum
Corporation
Environment, Social, Governance
Electrical Submersible Pumps
HCIIP
Hydrocarbon initially in place
HSE
JOC
JV
km
km2
Health, safety and environment
Joint Operating Company
Joint Venture
Kilometres
Square kilometres
KPI(s)
Key performance indicator(s)
m
M
Metres
Thousand
MBbl
Thousand barrels
Mbopd
Thousands of barrels of oil per day
MM
Million
MMBbl
Million barrels
MMboe
Million barrels of oil equivalent
MSET
NPV
OGA
Ministry for Science, Energy and
Technology
Net present value
Oil and Gas Authority
OPEX
Operating expenditure
Q1
Q2
Q3
Q4
scf
SPA
TD
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Standard cubic feet
Sales and Purchase Agreement
Total Depth
UK CNS
UK Central North Sea
WI
%
2C
2D
3D
2P
Working interest
Percentage
Best estimate of contingent resources
Two-dimensional
Three-dimensional
Proved plus probable reserves
2022 Annual Report and Financial Statements
133
STRATEGIC REPORTGOVERNANCE REPORTFINANCIAL REPORTADDITIONAL INFORMATION COMPANY INFORMATION
Directors
Company Secretary
Registered Number
Registered Office
Nominated Advisor
Independent Auditors
Joint Broker
Legal Advisers
Principal Bankers
Registrars
134 United Oil & Gas PLC
Graham Martin (Chair)
Brian Larkin
Peter Dunne
Jonathan Leather
Iman Hill
Peter Dunne
09624969
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