RE: CHARTS -T LINE TIPS24 Apr 2016 00:07
UKOG CHART UPDATE
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Business Description:
UK Oil & Gas Investments (UKOG) is a holding company with interests in the exploration, development and production of oil and gas assets in the UK. Since its launch in 2013, UKOG has built up a portfolio which includes five licences in the South of England; four onshore and one offshore. Of these, the Horndean and Avington onshore oil fields in Hampshire are currently in production. UKOG also holds a 42% stake in Horse Hill Developments Limited, which is a consortium developing the Horse Hill oil field near Gatwick Airport.
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Alex Joyner, Senior Equity Analyst 18 April 2016
Share Chart - Six Months: Key Details:
Ticker: UKOG
Sector: Oil and Gas
Mkt. Cap: £42.93m
52 Wk. High: 4.09p
52 Wk. Low: 0.85p
Divi. Yield: 0%
Sources: ADVFN, Factset, Bloomberg PE Ratio: N/A
Why It’s Interesting:
Oil was first discovered at Horse Hill in 2014, but a drilling survey last April revealed the true magnitude of the find. Early analysis suggested there could be upwards of 158 million barrels of oil per square mile.
There was more good news in February this year when testing revealed that oil from the ‘Gatwick Gusher’ flowed faster than expected, potentially increasing production rates. This sent UKOG shares over 75% higher in one day.
This week a report by Ernst & Young has further highlighted the economic potential of Horse Hill.
It indicated the discovery could generate as much as £52 billion for the UK economy over a 40 year period and provide up to 27% of the country’s oil demand at its ‘peak production’.
Strengths
Major oil discovery
Land based reserves are significantly cheaper to
develop
Dwindling North Sea reserves will strengthen
political support
Could attract a takeover
Weaknesses
Further fundraising could temporarily dilute the
share price
Close to an airport and residential area
Extraction methods and timescale are still
uncertain
Oil prices remain near multi-year lows
Summary:
UK Oil & Gas is an exciting prospect. Big onshore fields are pretty rare these days and are substantially cheaper to develop than offshore finds.
Prior to Horse Hill, the UK’s last major onshore discovery was in 1973 at Wytch Farm, a couple of miles away from Sandbanks. It remains Western Europe’s largest onshore field and has been pumping out oil since 1979, peaking at 110,000 barrels a day. It proves that big money can be made from land-based oil fields in the UK, not just those in Texas and the Middle East.
Securing more funding will be an important next step. While all oil developments take time, money and political will to progress, the Horse Hill field could be a valuable resource for the UK. There is still plenty to be done, such as determining the scale of recoverable oil and the best method of extraction. It’s early days, so the shares are highly speculative but could offer significant upside for the adventurous investor
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