UK Oil & Gas plc is investigating international oil and gas projects and renewable schemes at home, the company’s annual accounts said today.
The company, which said it has now produced more than 162,000 barrels of oil from Horse Hill in Surrey, is looking at the feasibility of turning part of the site into a geothermal and solar hub.
The scheme aimed to generate and supply more than 200,000 Mwh per year of continuous baseload, mainly as heat energy, UKOG said. It predicted:
“This hub could potentially supply heat energy to a defined significant industrial end-user in the area.”
UKOG also said it was reviewing overseas hydrocarbon projects. Chief executive, Stephen Sanderson, said:
“we have completed the evaluation of potentially lucrative proven oil and gas field opportunities elsewhere in the world, including in the United States, where access to such opportunities has arisen from within the Directors’ extensive business network.
“Should negotiations be successful, there is the realistic prospect of adding significantly to both our reserves and cash flow base in the coming year.”
UKOG is already working in Turkey in the Basur oilfield. It said it was looking for additional projects in the country and had reviewed a further new opportunity to the southeast of the Resan licence.
Stephen Sanderson said the company was “actively evaluating” two sites, in southern England and the north east, for hydrogen generation and storage. This would, he said, “take advantage of the national transition from natural gas to hydrogen for industrial and domestic power and heating demands”.
“The Company hopes to bring at least one new oil and gas opportunity and one or more geothermal-hub and hydrogen-hub projects to fruition in the coming year.”
Hybrid energy sites would focus on subsurface gas and/or hydrogen storage, the company said.
The sites would test UKOG’s hydrogen battery concept to provide peak-shaver power generation and green hydrogen generation from geothermal and other renewable sources, he said.
(Peak shaving is about levelling out peaks in electricity use for all consumers. During high demand, energy produces will reduce the amount of power consumption at small increments to avoid peak loads).
UKOG said it had raised £7.7m between October 2020 and July 2021 to fund drilling and seismic survey costs in Turkey. Raising funds from equity remained a necessary part of UKOG’s strategy, the company said.
- UKOG also announced it had decided not to appeal against refusal of planning permission for oil exploration at Arreton on the Isle of Wight. DrillOrDrop report
UKOG’s revenue from oil sales were up in the year to September 2021 and losses were down sharply.
Revenue from oil sales: £1.56m (2020: £0.91m)
Oil sale volume: 36,664 barrels from Horse Hill and Horndean at average price of £43 per barrel
Depletion, depreciation and amortisation costs: £0.69m (2020 £1.37m)
Costs of sales: £1.07m (2020 £1.17m)
Gross loss for year: £0.19m (2020 £1.63m)
Admin expenses: £2.10m (2020 £1.76m)
Operating loss: £3.81m (2020 £14.1m)
Finance costs: £0.89mm (2020 £0.29m) – unwinding of discounts of decommissioning provisions
Retained loss for the year: £4.89m (2020 £20.94m)
Non-current assets: £37.68m (2020 £37.78m)
Cash and cash equivalents: £4.73m (2020 £1.63m)
Current assets: £5.36m (2020 £2.38mm)
Net assets: £37.50m (2020 34.01m)
Production: 140 barrels of oil per day (2020 128 bopd)
Operating costs: £29/barrel (2020 £28/barrel
Payments to Stephen Sanderson: £287,000 (2020 £301,000)
Total directors’ salary: £468,000 (2020 £515,000)
Loss before tax: £4.84m (2020 £20.93m)