UKOG28 Apr 2020 09:48
Announced that, in response to the Covid-19 induced low oil price environment, it has successfully implemented material cost savings at all levels across its organisation. These savings enable Horse Hill oil production to remain profitable at asset level at current Brent oil prices, and together with the funding, better positions the company to take full advantage of any post-pandemic oil price increase and related growth opportunities. Further to the Oil and Gas Authority's March 2020 grant of long-term production consent at Horse Hill (UKOG 85.635% controlling interest), which has now produced over 100,000 barrels ("bbl") of dry oil, the Company has negotiated a series of longer-term key equipment and services contracts at reduced rates. These cost reductions, together with a general downsizing of all operational elements not essential for continued safe oil production, result in an operating cost ("opex") at field level of $12/barrels, a reduction of around $7/barrels from extended well test costs. Consequently, with daily flow rates from production start at Horse Hill averaging over 300 barrels of dry oil per day ("bopd"), asset-level opex, inclusive of tanker export, sales and marketing, now equates to $17/barrels. To fund the above costs reductions (e.g. payment of contractual notice periods) and part of the stated well intervention, production facility and other costs, UKOG has raised £1,275,000 through a placing ("Placing") of 637,500,000 new ordinary shares ("Placing Shares") in the capital of the Company. The Placing is being made at an issue price of 0.2p per share ("Placing Price"), representing approximately a 20% discount to the closing bid-price of the Company's ordinary shares on 24 April 2020
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