LONDON (Alliance News) - Alba Mineral Resources PLC Friday said it has extended the deadline by which it will acquire a further 5% stake in one of the holding companies that owns the prospective Horse Hill licence in the Weald basin of the UK, but said it has lost an option to acquire an additional 5% as a result.
In September, Alba struck a deal to increase its holding in the project by purchasing the stake held by one of its partners, Angus Energy. Originally, the deadline to complete the deal was due to expire Friday, but this has now been extended until next Friday.
To secure the extension, Alba will pay a further GBP50,000 non-refundable deposit to Angus.
Under the deal, Alba will purchase from Angus Energy a 5% stake in Horse Hill Developments Ltd, which holds a 65% stake in the Horse Hill project with the remaining balance being held by Magellan Petroleum Corp.
In return, Alba will issue Angus Energy with 137.7 million Alba shares.
However, under the original deal Alba also had secured an option to acquire another 5% stake in the company from Angus, which would have increased its stake in Horse Hill Developments to 20%. That option expired Friday and was not included in the extension, meaning Alba has lost the option.
Although it lost that option, it means Alba has saved itself the GBP275,000 in cash it had left to pay, but it has lost the GBP90,000 it paid upfront when the deal was struck.
Its option to acquire a 5% stake from Angus in the Brockham field, also in the UK, remains in place and unaffected, it said. For the stake in the Brockham field, Alba will issue Angus with 45.9 million warrants in the company at a price of 0.5 pence per share, which can be converted within 18 months of the deal being finalised.
UK Oil and Gas Investments holds a 30% stake in Horse Hill Developments, whilst Doriemus PLC, Stellar Resources PLC, Solo Oil PLC each hold 10% stakes in Horse Hill Developments, with Evocutis PLC holding a 2% stake. Once the deal is completed, Alba will hold a 15% stake in the company with the balance of being held by Angus and some private companies.
UK Oil and Gas Investments holds a 6% stake in Angus Energy.
The Horse Hill well is set to be flow tested later this year which will determine how much oil is in the ground following months of confusion over estimations.
The partners originally announced that estimates showed 158.0 million barrels per square mile at Horse Hill, but this figure was taken by media outlets and then expanded to cover the entire Weald basin, leading to reports that the field had over 100.0 billion barrels of oil.
Since then, the companies, especially UK Oil and Gas Investments which spearheads the project's media releases, have denied that figure and also stressed that only 3% to 15% of the oil at Horse Hill will be recoverable.
That was followed by a third estimate in June carried out by Nutech Ltd, which said the new P50 estimate for the total Jurassic shale plus tight conventional reservoir section in the Horse Hill licenses now stands at 9.24 billion barrels of oil in place, of which 5.23 billion barrels is located in the Kimmeridge section. Nutech also had been responsible for the 158.0 million barrels per square mile figure back in April.
Those estimates exclude the upper portland sandstone reservoir estimate, which was conducted in May by Xodus Group and which said there could be up to 21.0 million barrels of oil initially in place.
Importantly, the companies cautioned the new 9.24 billion barrel estimate "should not be construed as contingent resources, prospective resources or reserves" after the first estimate in April caused controversy.
Alba shares were down 7.1% to 0.325 pence per share on Friday. UK Oil and Gas shares were down 5.1% to 1.40p, Stellar shares were down 3.7% to 0.275p, Doriemus shares were down 4.0% to 0.0600p, Solo shares were up 1.2% to 0.430p, and Evocutis shares were down 0.7% to 0.144p.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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