Stephen Sanderson, chief executive of UK Oil & Gas plc. Photo: DrillOrDrop
The company behind oil drilling at Horse Hill in Surrey said this morning it had taken a licence stake in south east Turkey in the hope of “rapid monetisation” of reserves.
UK Oil & Gas plc (UKOG) announced it had signed an agreement with an American firm for a 50% working interest in the Resan Licence in the south east Anatolian basin.
UKOG said it would take “an active technical role” in a five-well oil appraisal and step-out exploration drilling programme, due to start this year. The costs of the first well and a seismic survey would be fully paid by UKOG.
The company predicted the licence could be put to permanent production within months of a well test.
It said two target areas were “as good as, if not better” than its proposals at Loxley/Dunsfold in Surrey or Arreton on the Isle of Wight.
The venture offered “the realistic potential of adding significant net recoverable reserves greater than those within its current UK portfolio”, the company said.
If successful, UKOG’s chief executive, Stephen Sanderson, said a “near continuous drilling programme” was planned. These words were previously used by Mr Sanderson in January 2019 about operations at Horse Hill in Surrey.
So far, UKOG has failed to generate significant revenues from English production against which to borrow.
In June 2019, it failed to get planning permission to drill for gas at Dunsfold. An appeal is expected.
Intervention work has been announced on the two wells at Horse Hill and the approval of the site’s long-term oil production is now the subject of a judicial review at the Court of Appeal.
The Arreton application has so far attracted more than 1,000 objections, including from the MP, highways officials, a parish council and the chair of the Isle of Wight Area of Outstanding Natural Beauty.
This month (July 2019), UKOG’s Broadford Bridge site in West Sussex was granted an extension to planning permission of two years. But no further drilling or testing can be carried out at the site without another application.
Mr Sanderson said of today’s announcement:
“Whilst we remain committed to growing our core UK business, this was an irresistible opportunity to expand our horizons and to expose the company to potentially transformational recoverable oil reserves that can be rapidly monetised.”
UKOG shares opened up sharply on the news but have since fallen back. At the time of writing, they were up 6.35% at 0.18p.
Resan licence (in red) in south east Turkey. Map: From UKOG presentation
“Major oil producing area”
The Resan licence is held by Aladdin Middle East Ltd, which describes itself as an independent American oil and gas exploration and production company, founded in 1961.
UKOG said the Resan licence was a “geological continuation” of the Zagros petroleum system. This is in the foothills of the Taurus-Zagros mountains of Iraq, Iran Turkey and described by UKOG as one of the Middle East’s major oil producing areas.
The company said two geological targets, the Basur oil discovery and the Resan oil pay opportunity, had potentially significant moveable oil in naturally-fractured limestones that had been overlooked by previous operators.
A report by Xodus in June 2020 estimated that the targets had 253m barrels unrisked gross mean oil in place or oil in the ground before extraction. The high case was 495m barrels.
The Basur discovery, made in 1964, produced 500 barrels of oil over a six-hour test period, UKOG said. Both Basur and Resan were geological look-alikes for Aladdin’s East Sadak field, 20km away. This had initial well rates of up to 1,300 barrels of oil per day, it said.
UKOG said a successful oil well in Resan could be put to long-term production from a flow test within months, rather than the three-five years it said was often taken in the UK.
The company described the Turkish petroleum fiscal regime as “amongst the most globally competitive”. It said Turkish law guaranteed that any domestically produced oil must be accepted by Turkish refineries and purchased at market price. Drilling costs were also lower than in the UK, it said.
Costs and plans
UKOG said it had committed to paying 100% of the cost of the first of five wells in the licence, as well as a 2D seismic survey. This was expected to be $1-1.5m but capped at US$5 million.
After this, UKOG said it would pay for 50% of the share of future work, estimated at $1.5m per well.
The deal has to be agreed by the Turkish government, expected to take about two months, UKOG said.
At current oil prices, UKOG said a successful initial well could fund further drilling. But it added:
“It may be necessary at some stage for the company to raise future working capital to bring the project to fruition.”
UKOG said the Resan licence exploration phase ends in under two years, in June 2023 but could be extended. The first well, due to be in the Basur oil discovery, must start drilling before 27 June 2021.
Mr Sanderson said:
“The Basur and Resan appraisal opportunities compare well with our Loxley and Arreton projects.
“However, they offer significantly larger upside potential, are much cheaper to drill and can be monetised far more quickly than any of our UK projects. The overall post-tax share of gross revenues is also marginally better than in the UK.
“The low cost of drilling compared to the UK also means that, in the success case, we plan to have a near continuous drilling programme, hopefully commencing this year, Covid and weather permitting.”
DRILL OR DROP? 
Hmm. Good job they don’t have Biosphere status in Turkey.
What is that you are saying? They do?
And in Norway?
OMG!
Billions of barrels of oil I tell you , maybe need to change the company name now as UK isn’t part of Turkey. Bring out your camels 🐪 🐫 the investors are getting the hump .
Oh you are funny… do you think Apache and Chesapeake should rename them selves, because they are named after native tribes? Or rename the Indian motorcycle, because it wasn’t made in India??
How about we rename the Eurovision Song Contest as the last time we looked, Turkey wasn’t in the UK or Europe jono.
Has Chesapeake changed names Eli ? The only one I can find has gone bust , surely you can’t mean this one ?
https://www.google.co.uk/amp/s/www.forbes.com/sites/danielmarkind/2020/06/30/chesapeake-energy-goes-bankrupt-will-it-spur-the-industry-to-police-its-own/amp/
Perhaps BP should do the same, Jono? Or, ABF?
Hahaha, you must all be getting very frustrated now that Sanderson can’t get oil out of the Flagship (s) he was warned by Angus Energy that it doesn’t work , the failures keep adding up no matter what name they use , even Lenigas has given it a wide birth . Snake oil is getting Turkey, investors getting stuffing yet there seems to be one born every day to keep throwing good money after bad just so Uncle can keep his luxury lifestyle. I guess I would be having a dig at me too if I was that sad.
Why are you so concerned about what others do Jono??
If you do not wish to spend your money on UKOG shares, that is your choice. If others do, that is their choice.
Maybe you make correct decisions 100% of the time, but I very much doubt it. Your silly comment about the name of UKOG points in another direction, especially with BP being the largest UK oil company.
Maybe some UKOG investors have made the right decisions at the right times. I KNOW that is true. Those who haven’t may whinge. Those who are not investors also do both.
Don’t stress yourself about what others do. You have repeatedly stated that investors will leave the UKOG sinking ship. Well, so far, so wrong. No one is stressed about that. Laughing, maybe, but not stressed.
You must be reading different comments to me then Martin, I do understand your difficulty to accept an empirically verifiable reality where shareholders would rather sack Sanderson than keep paying money for old rope . It’s a good job that shares are digital rather than paper , we would lose all remaining trees to print 11 billion of them and that’s without the next batch to cover Turkish exploits . I remember getting 4 Black jacks for a penny when I was a kid , much better value than UKOG or is it TURKOG now ?
Btw I’m not stressing, I’m doing very nicely but thank you for caring.
I am not sure why anyone would find it ‘irresistible’ to invest in UKOG ventures. Take a look at the expected strategic, operational, and financial risk levels.
Company house. UKOG (GB) Limited. Filing history. Submission dated 12 July 2019 starting ‘consolidated accounts for parent company’
page 8.
Similar risks in earlier entries.
what I find very interesting is the anti’s need to try and educate us on the, ‘investors side’, why invest! If this is not you bag, then don’t invest!
Your not going to make people NOT invest! Investment in something is a drive to make it a success, and obviously a ROI. If you don’t want to invest then that is fine. you be as well spending it, burning it or giving it to a well deserved charity…
E-G
Simply, they don’t have a clue and think their clueless views are taken seriously by anyone who invests. This board is full of them, so is the UKOG board, which Jono also likes to hang around, but still seems to learn nothing. They drivel on about executive pay, and display their left wing viewpoint, but keep very quiet when it is exposed what some in the alternative sector earn-like Mr. Musk. There was even one who wanted to “expose” the corporate compliance of the owners of Third Energy, by referencing the Barclay Brothers! Then, there were comments about those who knew something about INEOS were shareholders!
Really quite odd. They might find that many who invest in oil and gas also invest in other sectors, such as Tesla! And, both at the same time. And both, high risk.
jPs comments are normally pretty classical, and he does not disappoint this time! So, investors don’t invest in high risk?? LOL. What is AIM all about? Add oil/gas exploration to that and about the highest risk you might find. But, investors would not know that, would they?
As for Jono, with his comments about sacking SS! Well, my little capitalist (we were so poor we couldn’t afford sweets and chewed our nails), share holders, if so inclined, can take action to adjust directors pay. Seems with UKOG they are not that inclined to do so. ANYONE can post on a chat site, Jono.
And he still has not sussed out that bits of paper are rarely seen by investors these days! Plastic has sorted that.
It just feeds their misconception that if they cost companies money they will go out of business. Strange, though, most survive by attracting more money (just like Tesla)-which the antis hate if it is oil and gas but ignore if it is Tesla-and those that do not are usually replaced by another player.
Turkey is an interesting punt. They are doing quite a lot to control oil and gas supplies in the area, so obviously some benefits there. But, not an easy place to do business so can understand UKOG linking with a company already there. Usual practice for those who enter a difficult market.
Yes , Turkey is a really great place to get into business
https://www.worldecr.com/news/macron-calls-for-turkey-sanctions-as-cyprus-issue-escalates/
Hmm. So Greece is better?! What are your qualifications, Jono, to post that? From my personal experience, there is not a lot between them.
Actually, my sweet eating friend, if you are so concerned about places to do business, then-here it comes- HOW ABOUT UK!!??
So much better for the environment, for adherence to regulation and for our NHS.
This is fun.
Some will keep on encouraging those who can’t be bothered to research that this is a safe zone, and there will be those who continue to post the reality.
MC: it beggars believe in this snowflake era that the UK ever had anything to do with heavy industry of was a pioneer of the industrial revolution…
Here it is Anti’s you cannot make energy, employment or raise tax from a biosphere! Tourists, Colonials and Animals co-exist, eliminating energy exploration from one region requires it to be produced in another region… or we may as well revert to rubbing sticks for coming and warm and living in mud huts!! Stopping future development is pure and simple Nimbyism at its finest.
If you want tourists on the IOW, E-G, you need HGVs.
They are called buses!
Arguing for one, but not the other, just another case of a lack of joined up thinking.
Talking of Biospheres, anyone notice that the coach park at the Eden project is HUGE??!!
EG [edited by moderator] Experts and evidence disagree with your view as many animal and plant species continue to decline at an alarming rate, due to human development and activity. And being opposed to fracking and oil and gas exploration, when we already have greater reserves than we could ever burn, if we are to prevent catastrophic climate change, isn’t NIMBYISM, it’s a global movement to prevent the destruction of the planet. Or are the majority of scientists and experts snowflakes too?
[edited by moderator]
UK not producing oil but importing it from far away from countries with lower environmental standards is simply ADDING to the destruction of the planet.
All we hear from the anti’s are complaints and lack of progress in reducing our footprint and targets to carbon net zero…
Greta ‘greeting’ 😭 “how dare you”!! Would you dare help us with providing SOLUTIONS!! Come on, We’re waiting…
E-G:
As there are all these scientists working on the subject, being supplied with funding worth £ BILLIONS, it is interesting that whilst certain advances are being made, they fall far short of making a great deal of difference overall, and many of the “advances” do create their own issues. (How is it that issues with fossil fuel mean, to some, it should be stopped, but issues with materials such as cobalt just mean that progress towards something is okay?)
Maybe, some scientists like the late Professor Sir David McKay (government chief scientific adviser) should be believed rather than rubbished by the antis, when he stated:
“There is this appalling delusion that people have that we can take this thing (renewables) and we can just scale it up, then we can just do energy efficiency. Humanity really does need to pay attention to arithmetic and the laws of physics.”
But, I suppose, if you avoid schooling, you can avoid the arithmetic and laws of physics. And, if you are a scientist, you can get funding for just about anything as long as you can link it however tenuously to climate change. (Yes, you can.) A lot of “employment” but not a lot of solutions.
More uneducated narrative jono! Rolls Eyes…
p.s. how’s your energy privilege?