(Alliance News) - UK Oil & Gas PLC said Wednesday it acquired a further 35% stake in its flagship Horse Hill oil discovery in the Weald Basin for GBP12 million, taking its interest to 86%.
UKOG agreed to buy Magellan Petroleum UK Investment Holdings Ltd from Tellurian Investments LLC for GBP12 million in a cash-and-shares deal.
Magellan holds a 35% stake in the Horse Hill discovery - including the PEDL137 and PEDL246 licences - which takes the UKOG interest to 86% in total. Most of the remainder is held by Alba Mineral Resources PLC, with a 12% stake.
UKOG will pay an initial GBP8 million, with GBP5 million in cash and GBP3 million shares, on completion of the purchase. The remaining deferred payments will be made using shares.
UKOG will fund the cash element of the deal through a mixture of the GBP3.5 million raised through a placing it conducted in March, as well as a GBP5.5 million loan from Riverfort Global Opportunities PCC Ltd and YA II PN Ltd.
"This transformational acquisition, the largest in UKOG's 6 year history as an oil and gas company, boosts UKOG's net share of its flagship Horse Hill asset by a significant 69%, providing the company with the lion's share of future production revenues and reserves, together with absolute control over the field's future development and progress," UKOG Chief Executive Officer Stephen Sanderson said.
"Importantly, the acquisition forms a key part of UKOG's stated near-term strategy to grow the company via organic appraisal drilling and by targeted acquisitions in key assets with near term cash flow potential," Sanderson added.
Shares in UKOG were 3.0% lower at 0.85 pence in London on Wednesday. Alba Mineral Resources was down 1.4% at 0.17p.
Alba Mineral Resources (ALBA)
Uk Oil & Gas (UKOG)