Last checked at 14 Feb 2019 07:00
UK Oil & Gas PLC
("UKOG" or the "Company")
Acquisition of Further Interest in Horse Hill Oil Field and Licences
UK Oil & Gas PLC (London AIM: UKOG), the largest onshore licence acreage holder in the Weald Basin, is pleased to announce that it has entered into a binding heads of terms with Doriemus Plc ("Doriemus") to acquire a further 6% shareholding in the Company's subsidiary, Horse Hill Developments Limited ("HHDL"), the operator and 65% direct interest holder in the Horse Hill oil field and the surrounding geologically prospective PEDL137 and PEDL246 licences. Upon completion, the Company will hold a 77.9% direct interest in HHDL and a majority 50.635% interest in the Horse Hill oil field and licences.
As previously reported in UKOG's Strategic Review of 23 January 2019, the Company's prime 2019 target is to move Horse Hill's ongoing test-based oil production into permanent production by the end of the year. Two new horizontal wells, HH-2 Portland and HH-1z Kimmeridge, are planned to start in spring 2019. Once drilled, both wells will be put on long term production test until planning consent for permanent production is granted. Planning consent and environmental permits for HH-2 and HH-1z are in place and UKOG is currently fully funded for both wells.
The Strategic Review also detailed that the HH-2 Portland production target of 720-1,080 barrels of oil per day ("bopd") from the first horizontal well, HH-2, which has been externally verified as a realistic and viable expectation by Xodus Group Ltd ("Xodus"), aims to position Horse Hill as the Weald Basin's leading oil producing field. Subsequent planned horizontal wells in 2020 are designed to boost gross production to over 2,000 bopd, which would place UKOG within the current top three oil producing companies in the UK onshore sector.
Permits to cover up to 20 years of permanent production are expected to be in place by autumn 2019.
Transaction Summary
The total consideration of £2,100,000, with an effective date of 13 February 2019, will be satisfied through the issue of 129,629,630 new ordinary shares in UKOG ("Consideration Shares"). The Consideration Shares are calculated based upon the 5-day volume weighted average price to market close on Friday 8 February 2019 of 1.62 pence. HHDL recorded a loss of approximately £501,551 in its accounts for the year ended December 2017.
Completion of this acquisition will be announced in due course.
Stephen Sanderson, UKOG's Chief Executive, commented:
"We are delighted to acquire this further share of our Horse Hill flagship oil production project. The transaction now firmly establishes UKOG as the majority interest holder in the Horse Hill Portland and Kimmeridge oil field, together with the highly prospective surrounding licence acreage. Horse Hill is UKOG's stated 2019 focus and we are on-track to deliver continuous test-derived oil production until the start of long-term stable oil production by year end. The plan is designed to make Horse Hill the Weald Basin's number one oil producing field in 2019 and to move UKOG upwards into the top tier of UK onshore oil producing companies shortly afterwards.
We wish Doriemus well in their planned new ventures in Western Australia."
Qualified Person's Statement
Rob Wallace, UKOG's principal technical advisor, who has over 40 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Wallace is a Chartered Scientist, Chartered Geologist and Fellow of the Geological Society of London, an active member of the American Association of Petroleum Geologists, a member of the Petroleum Exploration Society of Great Britain and a member of the South African Geophysical Society.
For further information, please contact:
UKOG |
|
Stephen Sanderson / Kiran Morzaria
| Tel: 01483 900582 |
WH Ireland (Nominated Adviser and Broker) |
|
James Joyce / James Sinclair-Ford
| Tel: 020 7220 1666 |
Cenkos Securities PLC (Joint Broker) |
|
Joe Nally / Neil McDonald
| Tel: 0207 397 8919 |
Novum Securities (Joint Broker) |
|
John Bellis
| Tel: 020 7399 9400 |
Public Relations |
|
Brian Alexander / David Bick | Tel: 01483 900582 |
Glossary
extended well test | a well test, as per the permission granted by the Oil and Gas Authority, with an aggregate flow period duration over all zones of greater than 96 hours and up to 90 days per zone |
flow test | a flow test or well test involves testing a well by flowing hydrocarbons to surface, typically through a test separator. Key measured parameters are oil and gas flow rates, downhole pressure and surface pressure. The overall objective is to identify the well's capacity to produce hydrocarbons at a commercial flow rate |
oil field | an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface. An oil field consists of a reservoir in a shape that will trap hydrocarbons and that is covered by an impermeable or sealing rock |
UKOG Licence Interests
The Company has interests in the following UK licences:
Asset | Licence | UKOG's Interest | Licence Holder | Operator | Area (km2) | Status |
Avington 1 | PEDL070 | 5% | UKOG (GB) Limited | IGas Energy Plc | 18.3 | Field currently temporarily shut in |
Broadford Bridge 3 | PEDL234 | 100% | UKOG (234) Ltd 4 | UKOG (234) Ltd 4 | 300.0 | BB-1 & 1z oil discovery, planning application approved |
Holmwood 3 | PEDL143 | 40% | UKOG | Europa Oil & Gas (Holdings) plc | 91.8 | Seeking alternate sites to drill Holmwood and other Kimmeridge prospects |
Horndean 1 | PL211 | 10% | UKOG (GB) Limited | IGas Energy Plc | 27.3 | Field in stable production |
Horse Hill 5 | PEDL137 | 50.635% | Horse Hill Developments Ltd ⁶ | Horse Hill Developments Ltd ⁶ | 99.3 | Production tests ongoing, two further appraisal wells scheduled for 2019 |
Horse Hill 5 | PEDL246 | 50.635% | Horse Hill Developments Ltd⁶ | Horse Hill Developments Ltd ⁶ | 43.6 | As above |
Isle of Wight (Onshore) 2, 3 | PEDL331 | 95% | UKOG | UKOG | 200.0 | Preparing planning submission for Arreton-3 oil appraisal well and Arreton South exploration well |
Markwells Wood | PEDL126 | 100% | UKOG (GB) Limited | UKOG (GB) Limited | 11.2 | Well plugged and abandoned |
Notes:
1. Oil field currently in stable production.
2. Oil discovery pending development and/or appraisal drilling.
3. Exploration asset with drillable prospects and leads.
4. Contains the Broadford Bridge-1 /1z Kimmeridge oil discovery, the eastern extension of the Godley Bridge Portland gas discovery plus further undrilled Kimmeridge exploration prospects.
5. Oil field with three productive and commercially viable zones, EWT ongoing, two further wells HH-1z and HH-2 scheduled in Q2 2019, development underway subject to grant of planning consent, expected in Q3 2019.
6. UKOG has a direct 77.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.