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(Alliance News) - Pennpetro Energy PLC on Tuesday signed an agreement with UK Oil & Gas PLC to farm-in and drill the next infill oil production well at the Horse Hill Oil Field, near Gatwick airport.
Pennpetro Energy is an independent oil and gas company focusing on production and development in Gonzales County, Texas, US, while UK Oil & Gas PLC is an energy company focused upon oil and gas exploration and production in the UK and international onshore sectors.
Alba Mineral Resources PLC which owns and operates mining projects in Greenland, Wales and Ireland has a 12% holding in Horse Hill.
Pennpetro will receive a 49% share of all production derived from Horse Hill-3, the new infill well, and future wells, plus a 49% interest in the licences.
UK Oil & Gas will retain its current interests in all oil production from Horse Hill-1 and remain the named licence operator at Horse Hill.
Stephen Sanderson UK Oil & Gas Chief Executive commented: "This mutually advantageous transaction will inject new activity into Horse Hill, aiming squarely to deliver increased production and revenues from the oil field."
Pennpetro also announced it has spudded its first well under the agreement with Millennium PetroCapital Corp within the petroleum joint venture in Gonzales County, Texas.
Pennpetro's subsidiary Nobel Petroleum is paying 33% of the cost to drill and complete this joint development well connected to the storage tanks for a net 25% working interest as well as a prospect fee which covers sunk costs relating to leasing, land, legal, 3D seismic licensing, geological and geophysical analysis.
To enable the above developments Pennpetro announced plans to raise GBP1.6 million via a placing and open offer at 3 pence per share.
This will fund its initial financial commitments from the Horse Hill agreement as well as fund its share of the first production well at Gonzales County in Texas.
Pennpetro also named David Lenigas as executive chair with immediate effect. Olof Rapp will remain on the board as a non-executive independent director.
Shares in Pennpetro Energy closed down 34% at 3.30 pence in London on Tuesday. Shares in UK Oil & Gas rose 1.7% to 0.06 pence in London and shares in Alba Mineral Resources were flat at 0.11p.
By Jeremy Cutler, Alliance News reporter
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