UK Oil & Gas has revealed that it has given up its licence to explore for hydrocarbons on the Isle of Wight.
The company was awarded PEDL331 in 2016, giving it the exclusive right to explore and produce oil and gas in the southern part of the island, subject to permissions.
UKOG secured a two-year extension to the exploration term in 2019, until 2023.
But last year (2021), the company was refused planning permission for its first proposal for exploration, at Arreton. It announced in March 2022 that it would not appeal against the unanimous decision of Isle of Wight Council.
Today, in interim accounts, UKOG said publicly for the first time:
“The Company has subsequently relinquished the associated PEDL331 licence.”
The licence is no longer listed on the North Sea Transition Authority (NSTA) website.
This decision now blocks UKOG plans for a second site on the Isle of Wight, at Godshill. This site was unveiled at a public meeting in December 2019 but no planning application was ever submitted.
The interim accounts said UKOG would “further expedite” plans to convert the Horse Hill-2Z well into a saline water reinjector during 2022.
Technical planning would also progress for drilling a proposed Portland HH-3 and Kimmeridge HH-4 wells, UKOG said.
The company also said modifications at Horse Hill were continuing “in order to comply with the Control of Major Accident Hazards regulations” and other regulations.
By the end of May 2022, 171,000 barrels of Brent quality crude had been produced from the Kimmeridge and Portland formations, UKOG said.
UIOG said seismic mapping in its Turkish licences showed there was a major backthrust fault to south of Basur-3 well. This explained why the well had not encountered the reservoir, the company said.
A sidetrack to B-3 remained “a solid option”, UKOG said, but the plans had been put on hold.
It said new seismic data showed the sidetrack would need to be “a longer and higher angle trajectory” than previously thought. This involved drilling through a major backthrust fault at a high angle within potentially heavily fractured limestone rocks. This potentially increases drilling risks, complexity and cost, the company said.
In a separate statement to investors today, UKOG said a light oil seep had been discovered in an unused seismic drill hole about 4km north of the Basur-3 well. “This has positive implications for future exploration in the licence”, UKOG said.
Updates already reported by DrillOrDrop
- Hydrogen storage and generation facility at Portland Port in Dorset
- Loxley/Dunsfold gas exploration planning permission
- Geothermal plans at Horse Hill
Figures for six months to 31 March 2022
Operating loss: £1.29m (six months to 31 March 2021 £1.01m)
Retained loss: £1.36m (six months to 31 March 2021: £1.02m)
Revenue: £0.91m (six months to 31 March 2021: £0.72m) – because of increased Brent crude prices
Net cash flow: £1.39m (six months to 31 March 2021: £0.96m) – because of working capital movements and lower admin costs
Admin expenses: £1.402m (six months to 31 March 2021: 0.915m)
Exploration and evaluation assets: £31.31m (six months to 31 March 2021: £25.6m)
Total assets: £41.5m (six months to 31 March 2021: 43m)
Total liabilities: £5.3m (six months to 31 March 2021: 7.4m)