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.
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.