(Alliance News) - Partners UK Oil & Gas PLC and Egdon Resources PLC on Friday noted they have pulled out of the PEDL143 licence located around Surrey, England.
The companies said a study found drilling the site would be "neither technically viable or economically feasible".
"Consequently, UKOG and its partners have now relinquished their interests in the licence. It remains a great disappointment to the company that the licence's former operator, Europa Oil & Gas PLC, whilst in possession of planning consent, failed to drill the prospect from the Holmwood site, around 1 kilometre from the target," UK Oil said.
UK Oil had just shy of a 68% stake in the asset, Egdon owned just over 18%.
Egdon Managing Director Mark Abbott said: "The relinquishment is supported by Egdon, as a technically and commercially viable site to drill the A24 Prospect (formerly Holmwood) couldn't be identified. It enables Egdon to focus its resources on the core near-term priorities; namely, moving to production at Wressle during this quarter, progressing drilling options at Biscathorpe and North Kelsey, and acquiring a marine 3D seismic survey over the Resolution and Endeavour gas discoveries during the coming period."
Elsewhere, UK Oil said Surrey County Council will on November 27 determine whether the company will get planning consent at the Loxley gas asset. The meeting will be a rerun of an August 3 consultation.
UK Oil added: "This unprecedented rerun decision was taken by SCC following receipt of external advice regarding the company's and over 100 other formal complaints questioning the lawfulness of SCC's June 29 planning committee meeting. During this PCM the members voted by 6 to 5 against SCC's planning officer's recommendation to consent to UKOG's development."
A report by Xodus estimates that the PEDL234 licence has mean and high case recoverable gas volumes of 34 billion cubic feet and 54 bcf, respectively.
This would place Loxley as "the second largest gas accumulation ever discovered and flow tested in the UK onshore".
UK Oil shares were 4.4% lower at 0.15 pence each in London on Friday morning. Egdon's stock was down 8.6% at 1.60p.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Uk Oil & Gas (UKOG)