UKOG has announced that it has consent for long-term production from its Horse Hill site in Surrey from the Oil & Gas Authority (OGA).
In a statement this morning, the company said the OGA had also approved the Horse Hill field development plan.
The decision is significant because it means net recoverable reserves can be allocated to the company, allowing it to borrow money for future operations.
UKOG shares rose on the news. At the time of writing (13.10), they were up 33% at £0.5 pence.
UKOG’s chief executive, Stephen Sanderson, described the news as “an important regulatory milestone”. He said:
“The company can now focus firmly upon maximising stable production, reducing operating costs and generating positive cash flow.
“The ability to book reserves also opens the way to potential debt funding, a positive step towards both creation and preservation of shareholder value.”
UKOG also said the consent would allow it to enter into long-term field operations contracts. This could help reduce operating costs below $19 per barrel, it said. UKOG said this, in turn, would make the field more profitable even at current low oil prices.
The statement added that production from the Portland would begin from the Horse Hill-1 well, followed by Kimmeridge production in late spring. Production from the HH-2z well was planned to follow the extended well test, it said.
UKOG has planning permission for long-term oil production. It has also applied for an environmental permit for five new wells at the site and oil processing and storage facilities. A public consultation closed in November 2019.