Drilling for gas near a Surrey village will be funded by another company, the operator has announced.
In a statement today, UK Oil & Gas plc (UKOG) said it would farmout the site at Loxley, near Dunsfold. At least part of the costs would be paid, it said.
The housing minister, Stuart Andrew, granted planning permission for the Loxley site last month.
But earlier this week, Waverley Borough Council and the community group, Protect Dunsfold, said they would apply to bring a legal challenge against the permission.
UKOG did not refer to the legal action in its statement to investors.
It said under the farmout arrangements, “the Company’s costs would be either fully or part carried by any farminee”.
“The Company believes that this is the most prudent course of action to both manage uncertainty and to help ensure the best use of the Company’s working capital.”
UKOG said the farmout programme had been “pre-planned” and would now be implemented.
More money needed in Turkey
The announcement coincided with news that UKOG needed to raise more money for its oil operations in Turkey.
The company said its focus in the coming six-nine months would be on seismic surveys and a new appraisal well in the Basur region.
These operations “required additional previously unbudgeted working capital”, UKOG said.
This, and the delay in anticipated cash flow from a successful Basur well, meant the company would need to seek more finance before November 2022, it said.
Portland gas storage plan tops £1bn
UKOG’s plans for gas storage at Portland in Dorset could cost more than £1bn, the company also revealed today.
Construction of 14 salt caverns, surface facilities and a pipeline to the national gas grid were expected to cost £895m, it said. Capital expenditure on an LNG terminal and green hydrogen generator would be more than £105m.
UKOG said it was now looking at whether the Portland project could link to a hydrogen hub planned by an energy consortium in and around Southampton.
- At the time of writing (12.45pm), the UKOG share price had fallen 4.89% to 0.11p.
UKOG would be better off collecting the gas that comes out of the RNS office , same old dilution for those happy investors while holidaying in Barbados for Steve
UKOG are not subcontracting the exploration, they are farming it out.
With respect to the June 7th 2022 grant of planning consent for the Company’s 100% owned Loxley gas appraisal project the Company will now implement a pre-planned farmout programme, whereby the Company’s costs would be either fully or part carried by any farminee. The Company believes that this is the most prudent course of action to both manage uncertainty and to help ensure the best use of the Company’s working capital.
So they will recieve money from the other company – that company is not going to do any drilling or work on site or do any exploring in their own right it sees.
Hence it is not quie right to say –
Plans to drill for gas near a Surrey village will be contracted out to another company.
It might be better to say, a company is providing finanacial support to UKOG in return for a percentage of the income (or whatever).
Headline and text corrected to be clear.
I think they needed to be clear on financial situation for the appeal, which clearly they weren’t. Financial insecurity is too risky, especially as I believe they were forced to restore Markwells Wood and haven’t restored Broadford Bridge yet.
What is financial insecurity, Paula C? As long as a farminee (my new word!) provides the funding there is none in respect of this project. Indeed, it would improve the financial security of UKOG.
100 billion barrels of oil.
7 trillion cubic ft of gas.
500 million barrels of oil in Turkey.
1 billion pound project for gas holdings.
2 geothermal plants at 250,000MW of energy each per year.
Projects in the USA.
Shouldn’t ukog be earning trillions of GBP.