UK Oil & Gas to buy additional stake in Horse Hill project

UK Oil & Gas (UKOG) has signed agreements to acquire an additional stake in the Horse Hill project in the Weald Basin, Surrey, UK.

The company will acquire an aggregate 7% shareholding in Horse Hill Developments (HHDL) from Gunsynd and Primorus Investments.

HHDL is the operator of the project, holding a 65% interest in the Horse Hill-1 (HH-1) Portland and Kimmeridge Limestone oil discovery, in addition to 55 square-mile PEDL137 and PEDL246 licences.

Once the transaction completes, the company’s shareholding in HHDL will increase to 56.9%, which translates to a 36.985% beneficial licence interest.

A 150-day extended well test programme to confirm the HH-1 well’s commerciality is currently in progress.

The Portland oil pool was subjected to short-term high rate tests and achieved daily pumped rates of 401 and 414 barrels of oil of dry 36 API oil over two respective periods of six and two hours.

Upon completion of the Portland test, the operator will test the two Kimmeridge Limestone oil pools.

UKOG chief executive Stephen Sanderson said: “Although modest in overall size, these acquisitions, the first under the company’s new AIM operating company status, are highly strategic in that they deliver to UKOG, the driving force behind the HH-1 Portland and Kimmeridge oil discovery, a majority 56.9% shareholding in HHDL.

“In cooperation with the remaining co-venturers, the company can now effectively steer the project directly towards planned permanent production and potentially significant cash flow in 2019.

“These acquisitions are also fully in line with UKOG’s strategy of increasing its working interests in key assets to gain effective control and operatorship.”

Under the terms of the agreement with Gunsynd, UKOG will receive a 2% interest in HHDL for a total consideration of £1.925m.

The second agreement will see the company receiving Primorus’ 5% shareholding in HHDL, which represents a further 4.55% beneficial interest in the licences.

The total consideration involves £425,000 in cash and £1.5m through the issue of 85,714,286 new ordinary shares in UKOG.