Last checked at 1 May 2024 07:00
UK Oil & Gas PLC
("UKOG" or the "Company")
Loxley Gas Project Update
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has appointed UK based oil and gas divestment and project marketing specialists, Envoi Limited to facilitate the farmout of up to a 50% working interest in the Company's material 100% owned Loxley gas and hydrogen feedstock project ("Loxley"). The farmout seeks to fully fund the planned Loxley-1 appraisal drilling and testing programme with the Company's share of costs being carried by the farminee or farminees. The project has incontestable planning consent to proceed ahead (see RNS 10th January 2024).
Separately from Envoi's mandate, active discussions are ongoing with two UK listed energy companies interested in pursuing the farmout opportunity.
Loxley, one of the UK onshore's largest historic gas discoveries, was assessed in its most recent February 2023 Competent Persons Report ("CPR") to contain mid-case recoverable 2C Contingent Resources of 31.0 billion cubic feet net to UKOG, with an associated net to UKOG post-tax present values (discounted at 10%) of £124 million using 31 December 2022 gas prices and £87 million using an RPS Energy forward price forecast (see RNS 21st February 2023). Further development of the asset post appraisal would be required to move the 2C classification to Reserves (see glossary definitions).
The CPR is available on the Company's website www.ukogplc.com .
Stephen Sanderson UKOG's Chief Executive commented;
"The farmout process is designed to fully fund the Loxley appraisal programme and, if successful, remove the requirement for the Company to raise additional funds for its share of costs for this material project. We look forward to working with Envoi and with prospective farminees".
For further information, please contact:
UK Oil & Gas Plc
Stephen Sanderson / Guzyal Mukhametzhanova Tel: 01483 941493
WH Ireland Ltd (Nominated Adviser and Broker)
James Joyce / James Bavister / Andrew de Andrade Tel: 020 7220 1666
Communications
Brian Alexander Tel: 01483 941493
Glossary of terms
2C | the mid-case or average estimate of Contingent Resources, where the estimated quantity is assessed to have a 50% probability that the quantity recovered will equal or exceed the estimate. |
CPR | Competent Person's Report, a Petroleum Resources report prepared by an independent Competent Person(s), providing an estimated range of remaining recoverable resources and their potential monetary valuation in accordance with the relevant reporting standard (in this case the 2018 Society of Petroleum Engineers' PRMS). The RPS CPR was not prepared under the AIM rules for oil & gas companies. |
Contingent Resources | those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status. |
discovery | a petroleum accumulation (gas in Loxley's case) 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. |
farmout | An oil sector term characterising a transaction where a party (the farminee) bears the full or part costs of a commitment work programme to earn an equity or commercial interest in an oil and gas property. Most commonly, farmouts involve the farminee paying the costs of a well and or a seismic programme. |
PRMS | Petroleum Resources Management System created by the Society of Petroleum Engineers. A global standard of petroleum reserve and resource classification together with guidelines and accepted methodologies for the definition and estimation of petroleum resources and their monetary valuation. |
Reserves | those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria: discovered, recoverable, commercial and remaining (as of the evaluation's effective date) based on the development project(s) applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by development and production status. |
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon publication of this announcement, this information is now considered to be in the public domain.