Key Points:

United Oil & Gas pins survival on securing a farm-out partner for its Jamaican offshore licence

Auditors flagged “material uncertainty” over the explorer’s future, citing urgent funding needs

With only US$800,000 cash and zero revenue, UOG must attract risk capital to cover US$1.3 million Jamaican costs amid a 39 per cent warrant exercise discount and volatile oil markets.

UNITED Oil & Gas (UOG) Plc is betting its future on Jamaica’s unproven waters after exiting loss-making Egyptian assets battered by Middle East currency chaos, with auditors warning the cash-strapped explorer faces collapse unless it secures a partner for its “transformational” 7-billion barrel prospect within 12 months.

The micro-cap firm—valued at £3.5 million — slashed losses by 88 per cent to US$2.4 million in 2024, according to its 2024 annual report published late last week. But its pivot to the Walton Morant licence, where previous operators identified prospects but did not proceed to drilling, leaves perilously thin margins for error.

CEO Brian Larkin insists, “We continue to look for low-cost, high-impact opportunities to add to our portfolio without losing focus on our Jamaican farmout efforts,” even as accounts reveal “a material uncertainty exists that may cast significant doubt on the ability of the group and company to continue as a going concern and the group and company may therefore be unable to realise their assets or discharge their liabilities in the normal course of business”.

Financial Brinkmanship

Auditors flagged acute liquidity risks in UOG’s 2024 results. Cash reserves fell to US$800,000 from US$2 million in 2023, while administrative costs reached US$1.9 million — leaving the explorer burning through US$110,000 monthly with zero revenue in 2024. The company’s financial survival now hangs on three near-term gambles, all vulnerable to market sentiment and timing. Yet, the company bets on the “appetite for high-impact exploration” returning among investors and said it has secured non-disclosure agreements with “several parties” for its farmout strategy.

UOG must secure a Jamaican farmout partner by November 2025 to cover more than US$1.3 million in past-due exploration bills and fund all future work — including critical piston core sampling and well planning. This lifeline depends on convincing risk-capital investors to back a frontier asset that, despite extensive seismic data, has yet to see a well drilled. Simultaneously, the company needs 300 million warrant holders to purchase shares in the warrant at £0.0028 per share by December 2025, despite shares trading at a 39 per cent discount currently. Exercising would lock in immediate losses, making participation uncertain. It also faces a summer 2025 emergency equity raise — undisclosed in size and unbacked by producing assets — which stands as a last resort.

With no revenue and auditors warning of “material uncertainty”, investor appetite remains untested. The company’s own forecasts show that failure to secure a farm-out, warrant exercises, or a successful equity raise could force drastic cost cuts or worse.

As the auditors put it, “in order to fund current and future expenditure commitment, the group and company are dependent on an equity raise in summer 2025; a Jamaican farm-out covering some back costs and all forward current work programme costs by November 2025; and the exercise of 48 million warrants in June 2025 and 300 million in December 2025”.

The directors, meanwhile, maintain that “it is reasonably likely that a Jamaican farm-out will be achieved or, if necessary, that additional equity funding can be secured. However, neither outcome is guaranteed”.

Jamaica: Saviour or Tombstone

UOG’s entire strategy now orbits the Walton Morant licence, extended to January 2028 after intense government engagement.

“The company’s full focus is now on Jamaica,” Larkin said in notes accompanying the financial statements, possibly indicating a “make or break” scenario with its Jamaican asset. And that asset’s promise is staggering: “Over seven billion barrels of mean/mid-case recoverable unrisked potential prospective resources have been identified within the Walton Morant Licence area. This estimation is based on United’s arithmetic sum of the mean/mid-case prospective resources for each prospect and lead identified by United and previous operators”.

The area includes more than 40 prospective areas off Jamaica’s south coast, with the largest potentially containing more than 1.1 billion barrels mid-case prospective resource recoverable.

Jamaica’s proximity to US markets and its “stable jurisdiction” have been put forward as levers to attract investors. The company also recently secured permission from the National Environment and Planning Agency for piston core sampling — a key de-risking step.

“As part of this extension, United committed to additional technical work, including piston core sampling and seismic reprocessing, to further de-risk the petroleum system. We are currently in the planning and permitting phase while actively pursuing a farmout of the opportunity,” the company said.

The planned piston core sampling will see UOG collecting 40-60 mud samples from the ocean floor in Jamaica’s Walton and Morant areas. It will then check if the mud shows signs that oil could form underground and will also use probes to see how heat flows through the seabed, helping to locate trapped oil. A sonar device will scan deep sections of the licence area (especially where 3D images are missing) to find the best sampling spots.

Yet history looms large: previous operators identified prospects but did not proceed to drilling, with the technical and commercial risks remaining formidable. UOG’s hope lies in convincing partners that its 2,250 km² of 3D seismic data reveals what others missed.

“United continues to run a farm-out campaign to attract partners to the licence and its undoubted potential. The farm-out campaign remains a key focus for United as we seek to move this potentially transformational project forward. Envoi Ltd has continued to be engaged as advisor on the farm-out process with a view to attracting potentially interested parties to the opportunity. United are in discussions with a number of companies who have expressed an interest in the opportunity, and United remain confident of attracting a partner to the licence.”

Risk and Reward

The company’s risk disclosures are unusually frank for the sector. “The directors have considered the various matters set out above and have concluded that a material uncertainty exists that may cast significant doubt on the ability of the group and company to continue as a going concern,” it said in its audited financials.

Principal risks include insufficient capital, commodity price volatility, and the inability to secure a partner for the Jamaican asset. The board notes that, “While it is unlikely that all these downside events will occur simultaneously, the group has identified mitigating actions. These include deferring some capital expenditure and some further reduction to the cost base which would reduce costs by 10 per cent, and potentially raising equity, though success would depend on market conditions and cannot be guaranteed.”

Despite the headwinds, management remains optimistic. “The early months of 2025 have been encouraging, marked by the successful equity raise in January and the early two-year licence extension in Jamaica, now valid until 31 January 2028. This was followed by a further £140,000 raise by an existing shareholder in May 2025 and the exercise of 48 million warrants. These developments enable us to focus on the Jamaica farm-out and advance our broader strategic goals. We look ahead to the rest of the year with optimism,” the company added.

The Road Ahead

United Oil & Gas stands at a crossroads. Its Jamaican bet is bold, but the path to value creation is fraught with risk. The company’s own filings make clear that, without a partner or fresh capital, the next year could be existential.

“The directors are of the view that the group and company will have sufficient cash resources available to meet their liabilities and continue in operational existence for at least 12 months from the date of approval of these 2024 financial statements. On that basis, the directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation as not appropriate to use,” it pointed out.

For now, United’s future is tied to the outcome of a high-stakes farm-out campaign and the hope that Jamaica’s offshore frontier finally delivers on decades of promise.

LARKIN… the company’s full focus is now on Jamaica.