Industry

UKOG to increase share of Horse Hill oil licences

1810 Horse Hill UKOG1

Horse Hill oil site near Gatwick Airport, October 2018. Photo: Used with the owner’s consent

UK Oil & Gas plc reported today that it intended to increase its stake in the Horse Hill exploration licences in Surrey.

In a statement to investors, the company said it had a signed a deal to acquire the entire share capital of Magellan Petroleum, a major shareholder in the licences.

Magellan, a subsidiary of of the Houston-based Tellurian Investments LLC, held 35% of the licences, PEDL137 and PEDL246.

The deal will cost UKOG £12m in cash and shares, the statement said, and increase the company’s share from just over 50% to almost 86%.

It gives UKOG full control over a drilling programme at Horse Hill and sole ownership of the Horse Hill site lease, the statement said.

UKOG tweeted that the deal would be concluded “in the next few weeks”. It said a permitted second well at the site would be spudded “in late summer”.

This well, a horizontal into the Portland limestone, had previously been expected in the first half of 2019 and today’s news was treated with some scepticism on social media.

The UKOG share price closed down 5.71% at 0.825p.

Stephen Sanderson, UKOG’s executive chairman, described the acquisition as “transformational” and the largest in the company’s six year history. He said it would provide the company with:

“the lion’s share of future production revenues and reserves, together with absolute control over the field’s future development and progress.”

UKOG said the deal would be financed by cash from a £3.5m placing raised in March 2019 and funds from a £5.5m loan from Riverfort Global Opportunities PCC Limited and YA II PN Ltd. The statement said the full £5.5m from the loan would be paid in cash to UKOG on the completion of the acquisition.

Loan money not used for the acquisition would fund construction of production facilities and other regulatory activities needed to bring the Horse Hill site into long-term production.

The company’s application for production and extra wells at the site is still going through the planning system.

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5 replies »

  1. Maybe because they received a good offer, PaulaC.

    Why would UKOG be purchasing? Seems strange considering this was a “puddle” according to some “experts”.

    Maybe UKOG are more aware of the value of what they are exploring and developing than a few random individuals.

    Time will tell, once the rig arrives and gets to work. Seems there is such a demand for such bits of kit in the UK at the moment that companies are having to wait their turn!

    • Tellurian owned quite a chunk, 35%.

      This is a very big deal of course, especially following the exit of Doriemus.

      Maybe UKOG will pay to buy them out by selling more shares, diluting the value for the individual shareholder.

      But what is it that these corporations know, that the individual shareholders don’t?
      Lenigas hyped this well as the “Gatwick Gusher”, but left before it goes into production, interesting timing, draw your own conclusions.

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