2022 PERFORMANCE

UEG achieved outstanding Health, Safety, Security & Environmental (“HSSE”) performance throughout 2022, with zero fatalities and major incidents.

In 2022, UEG achieved an average daily gross oil and gas production of 165,883 barrels of oil equivalent with working interest daily production of 100,245 barrels. In terms of exploration, UEG made 12 commercial discoveries, of which 9 were in Pakistan and 3 in Egypt. Net working interest share of 2P (Proved and Probable) reserves reached approximately 867.1 mmboe, and the reserve-production ratio was approximately 23.7. Performance metrics were excellent, mainly due to improved operating efficiency with continued focus on safety.

Pakistan faced unprecedented floods with widespread devastation. UEG played its role in supporting its local communities by providing emergency relief supplies and medical aid. I am proud to report that our employees participated actively in these relief efforts. Despite the flood related challenges, our resilient employees ensured safe operations and maintained impressive stable production to secure energy supplies; a contribution well recognised by the Government of Pakistan. UEG expanded its foot print in Pakistan with three new exploration blocks.

Block-9 in Iraq is a key asset of our Group. Development work is on track with daily gross production reaching over 60,000 barrels in 2022. Construction of a major central processing facility is progressing swiftly and will enable Block 9 to achieve daily gross production target of 100,000 barrels in the coming year. Block-9 has achieved good financial returns with improved operating efficiency and continuous financial discipline including consistent cost-savings strategy. It is worth mentioning that our team in Block-9 is very diverse. Employees from more than 40 nationalities work together, demonstrating our values and the “united” culture of our Group.

In Egypt, our team continued to take effective measures to tap potential and increase operating efficiency through drilling good-producing new wells. Both potential performance and reserves witnessed a favorable increase. Production remained stable while we achieved desirable cost saving results. Additionally, the award of new block 11, is another expanding footprint for the Group in Egypt.

In 2022, we continued our focus on energy mix transition and investing in clean energy. In addition to investing in those projects in the countries where we operate oil and gas assets, such as Pakistan and Iraq, we are also actively exploring a 200 MW wind power project in Eastern Europe. Once completed, it will pave the path to set up our clean energy business in Eastern Europe.

The Group will continuously explore new opportunities in clean energy projects in MENA and other regions in the coming years. The Group also continued growing its Corporate Social Responsibility (“CSR”) portfolio. We supported the flood relief efforts in Pakistan and invested in schools, colleges and hospitals, among other initiatives, to contribute to the welfare of our local communities in Pakistan, Iraq and Egypt.

We continued to focus on enhancing shareholder value by building a quality portfolio, improving operating efficiency, ensuring capital discipline and maintaining a flexible dividend payout policy without impacting its development agenda.

The Group maintains a prudent financial policy. Cost saving and investment controls underpin our competitiveness. Leverage remains at a healthy level, with strengthened cash balance. New SAP system implementation during the year further strengthen our integrated management systems to better support our business.

OUTLOOK

In 2023, we expect the global economy to continue to grow, though at a lower rate, mainly due to higher inflation and the continuing war in Ukraine. On the commodity front, since China has opened up after COVID-19, world oil demand growth is expected to increase, and oil price is projected to be at a relatively high level.

As an upstream oil and gas company, the Group will continue to focus on increased production and reserves growth to support energy demand whilst gaining momentum on its energy mix transition. It will continue to implement a low-cost strategy to ensure its competitiveness. It will further strengthen its operating strategies, which mainly include promoting high-quality development, maintaining prudent financial policy and investment decision-making and pursuing a sustainable development model.

In 2023, Group will target an average daily gross production range of 165,000 to 179,000 barrels with average daily working interest production range of 94,700 to 102,400 barrels. Capital expenditure is anticipated to reach US$990 million to US$1,050 million, which is essential to support the exploration, production and development plans of the Group.

As part of its long-term plans, from the perspective of decarbonization and sustainability, UEG aims to expand its clean energy portfolio and invest over GWs clean energy projects in Europe, MENA and Central Asia. The Group will continue exploring integrating environmental friendly solutions into its existing operations, to reduce carbon emission. UEG will also proactively develop its carbon credit trading segment and advance on the roadmap to make its business carbon neutral.

HSSE will remain our top priority. As the business grows, we will continue to maintain high HSSE standards in line with our commitment to safe operations. Improved integrated systems and technology application will help run efficient and safe operations. Undoubtedly, good HSSE performance is the prerequisite to achieving operational excellence and financial targets.

With regard to financial management, the Group is committed to a more optimized and comprehensive capital structure. We remain prudent with our finances, and our strong balance sheet gives us the financial flexibility needed to support business growth and continuously create value for our shareholders in the future.

For the year 2022, all assets teams delivered good performance, despite the challenges and uncertainties we faced. This is a strong reflection of the quality & professionalism of our employees and management. For the year 2023, targets and directions have been set. I am confident that we will work together to make our goals come true.

Zhang Hong Wei
Chairman
31 March 2023