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LONDON (Alliance News) - UK Oil & Gas Investments PLC said on Tuesday the UK's Oil & Gas Authority has granted a licence conversion to new model terms for the Horse Hill project, meaning the work plan at the site can continue on schedule and the area can be developed without the threat of obligatory reductions.
The Horse Hill project near Gatwick Airport attracted a lot of attention when a string of AIM-listed firms, including UK Oil & Gas, began work on the asset, and the partners' efforts came to fruition when they managed to flow almost 1,700 barrels of oil per day from the Kimmeridge limestones and Portland sandstone earlier this year.
The results were a positive shock for the companies involved and for other firms operating in the onshore sector of the UK, as the expectation was for a production rate of only 400 barrels per day.
On Tuesday, the UK Oil & Gas said the Oil & Gas Authority has granted a licence conversion to new model terms at the Horse Hill project, and at the election of the operator Horse Hill Developments Ltd, the licences will adopt the 2016 14th round licence terms, which will permit the Horse Hill licences to continue without further relinquishment.
The Oil & Gas Authority has also agreed an outline work programme for the entire site, which has been designated as a "retention area", to stay in place throughout the agreed work programme period, currently due for expiration on June 30, 2018 at one of the sites and June 30, 2017 for the other.
The Horse Hill licences forward work plan includes ling-term production testing of three Kimmeridge Limestone zones plus the overlying Portland, two contingent appraisal and development wells and 3D seismic, the companies said.
Of those involved, Regency Mines PLC currently holds a 5.0% interest in Horse Hill Development Ltd, the investment company developing the Horse Hill exploration project near Gatwick Airport in the UK which has a 65% participating interest in the two projects. Stellar Resources PLC holds a 10% interest in the HHDL, Alba Mineral Resources PLC holds a 15% interest in HHDL and Evocutis PLC holds a 2.0% interest in HHDL.
Meanwhile, Solo Oil PLC holds a 6.5% direct interest in the project and UK Oil & Gas Investments holds a 27.3% stake.
"The successful conversion of these licenses ensures that the Horse Hill work plan can continue on schedule with the Portland and Kimmeridge Limestone appraisal effort being the current focus. Retaining the entirety of the current licenses means the consortium can maximise the value of its findings and ultimately develop the area to its full potential without threat of obligatory reductions," said Regency Chairman Andrew Bell.
Elsewhere, UK Oil & Gas Investments said it has received a two-year extension of its initial term licence at the Broadford Bridge site to June 30, 2018, whilst its Markwells Wood site licence will also now adopt the new 2016 14th round licence terms, permitting the licence to continue without further relinquishment.
The Baxter Corpse licence, which UK Oil & Gas Investments holds a 50% interest in, has also received a two-year extension from the Oil and Gas Authority, the company said.
Shares in UK Oil & Gas Investments were down 0.1% at 1.45 pence on Tuesday morning, whilst shares in Solo Oil were up 10% at 0.270p.
Regency Mines was untraded on Tuesday, having last traded at 0.350p, and Stellar Resources was up 1.3% at 0.147p. Alba Mineral Resources was trading up 0.6% at 0.181p on Tuesday and Evocutis was untraded, having last traded at 0.051p.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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