Last checked at 23 Sep 2015 15:56
23 September 2015
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Planning Approval - PEDL143 Farmin, Holmwood, Weald Basin, UK
UK Oil & Gas Investments PLC (LSE AIM: UKOG) is pleased to announce that Europa Oil and Gas (Holdings) plc ("Europa") has today announced that Surrey County Council's Planning & Regulatory Committee has granted permission for the underground drilling corridor for the Holmwood-1 exploration well ("Holmwood-1") in the PEDL143 licence, which lies immediately to the West of the Company's PEDL137 Horse Hill licence in the Weald Basin, Surrey.
UKOG will now proceed to complete its farm-in with Egdon Resources U.K. Limited ("Egdon") to the PEDL143 licence, announced on 29 June 2015. On completion of this farm-in, the Company will hold a 20% licence interest in PEDL143.
PEDL143 is operated by Europa. Europa anticipates that Holmwood-1 drilling will take place in late 2016 or 2017.
Europa's RNS contained the following information:
"Europa Oil & Gas (Holdings) plc … is pleased to confirm that Surrey County Council's Planning & Regulatory Committee has granted permission for the underground drilling corridor of an exploratory borehole at the Holmwood prospect ('Holmwood') in the PEDL143 licence in the Weald Basin. Europa holds a 40% interest in PEDL 143, which contains the conventional Holmwood prospect, alongside Egdon Resources (18.4%), Altwood Petroleum (1.6%), Warwick Energy (20%) and UK Oil & Gas Investments (20% subject to completion of farm-in).
The Holmwood prospect is to be drilled as a deviated exploration well. Europa and its partners now have planning permission for both the surface site and the underground drilling corridor. Next steps will include fulfilment of planning conditions and commencement of detailed drilling planning and environmental permitting. It is anticipated that drilling will take place in late 2016 or in 2017. Europa and its partner Warwick Energy intend to farm out some of their combined 60% equity in licence PEDL 143. The farm out process has already commenced and further updates will be provided as when it is appropriate to do so.
An application for planning permission to drill the Holmwood prospect on PEDL143 was submitted in 2008 and was dismissed by Surrey County Council in 2011. A planning appeal in 2012 was dismissed by the Planning Inspectorate. Europa successfully challenged this decision in the High Court in 2013. In 2014 the Court of Appeal upheld the 2013 High Court judgment in the Company's favour and a second planning appeal was heard at an eight day public inquiry in April and June 2015. The Planning Inspectorate issued a decision to allow the remitted appeal on 7 August 2015 and Surrey County Council allowed planning permission for the underground drilling corridor on 23 September 2015.
Europa provided the following information in its Geological Proof of Evidence submitted at the Planning Inquiry in April 2015: "In the event of a successful oil discovery at Holmwood and based on the most likely resource in place then the field is projected [by Europa] to have a Present Value of around £137 million at 60 $/bbl oil price in 2015 rising to 92 $/bbl by 2018 and inflated at 2% thereafter. After taking costs and discounting into account the Net Present Value to the Government based on current taxation rates will be around £86 million with around £51 million accruing to the Licensee group. As such the Holmwood prospect is considered of material value to both the Government and the Licensee."
CEO Hugh Mackay said "Following Surrey County Council's favourable decision, we are meeting with our joint venture partners and reviewing plans to take the Holmwood prospect forward to drilling. With gross mean un-risked prospective resources of 5.6 million barrels of oil, as estimated in a CPR published in June 2012, Holmwood would be the UK's fifth largest onshore field were the mean resources case to be proved by drilling success. Combined with a one in three chance of success, we therefore regard Holmwood as one of the best undrilled conventional prospects in onshore UK."
Stephen Sanderson, UKOG's CEO commented:
"We are delighted that this planning consent has now, finally, been granted after a protracted process. Although UKOG's involvement has only been since June 2015, subject to the required Oil & Gas Authority ("OGA") consent, the project can now move swiftly forward to the important milestone of drilling and testing the Holmwood prospect towards the end of 2016 or early 2017.
I would like to reiterate that the Holmwood well provides the Company with a valuable opportunity to leverage our proprietary knowledge and experience of the adjacent analogous Horse Hill discovery and the Kimmeridge tight oil play to the benefit and future success of the PEDL143 partnership."
UKOG's interest in Holmwood:
Subject to receipt of the necessary approval from the OGA, UKOG will pay a 40% share of the Holmwood-1 exploration drilling costs in order to acquire a full 20% working interest in PEDL143 from Egdon.
UKOG's share of well costs will be capped at £1.2 million net to UKOG (i.e. 40% of a gross Holmwood-1 well cost estimate of £3 million). Gross well costs above £3 million, should they arise, will be met by UKOG, Egdon and other partners, pro-rata according to their working interests in PEDL143.
Qualified Person's Statement:
Stephen Sanderson, UKOG's Chairman, who has over 30 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Sanderson is a Fellow of the Geological Society of London and is an active member of the American Association of Petroleum Geologists.
For further information please contact:
UK Oil & Gas Investments PLC
Stephen Sanderson / Jason Berry Tel: 020 7440 0640
WH Ireland (Nominated Adviser and Broker)
James Joyce / Mark Leonard Tel: 020 7220 1666
Square 1 Consulting (Public Relations)
David Bick / Mark Longson Tel: 020 7929 5599
GLOSSARY
discovery | a discovery is a petroleum accumulation for which one or several exploratory wells have established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons |
Net Present Value | the difference between discounted cash inflows and discounted cash outflows, commonly used to analyse the economics of a project or asset investment |
prospect | a project associated with a potential accumulation that is sufficiently well defined to represent a viable drilling target |
prospective resources | Prospective resources are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This class represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development projects prepared. |
reservoir | a subsurface rock formation containing an individual natural accumulation of moveable petroleum |
tight oil play, or resource play | a play where oil is found or expected to be present within a reservoir with low permeability, i.e. a tight reservoir. The term, in the case of HH-1, is applied to a play where trapped petroleum accumulations are expected to be pervasive throughout a large area and that are not significantly affected by hydrodynamic influences (also called "continuous-type deposits"). |