The gasfield near the Surrey village of Dunsfold could generate up to £124m for the operator, UK Oil & Gas plc, according to a report released today.
The study, by RPS Energy Consultants said the Loxley field could hold 31 billion cubic feet of 2C contingent resources. [2C is the best estimate or mid case of contingent recoverable resources]
UKOG has planning permission to drill and test vertical and horizontal exploratory wells, though local people have been seeking to challenge the consent. The project was granted an environmental permit in 2020.
In a statement to investors today, UKOG gave estimates of recoverable gas, pre-tax revenues and post-tax present values.
The revenues in the study, known as a CPR (competent person’s report), are based on a mid-case 2C post tax net present value, at a 10% discount rate.
UKOG has a 100% stake in the Loxley licence area, PEDL234.
Earlier this month, the industry regulator gave the company more time to drill the Loxley wells.
UKOG also reported that the gas network could accept potential supplies from the site.
The company’s chief executive, Stephen Sanderson, said:
“The CPR confirms that Loxley, one of the UK’s largest onshore gas discoveries, possesses material present value in today’s prevailing higher gas price world.
“Its potential future revenue streams have the capacity to deliver material shareholder value in the foreseeable future and its recoverable resources to contribute towards the UK’s future energy security.
“Loxley’s illustrated potential commercial robustness also means that UKOG can now plan to fund a future development via normal conventional oil and gas debt funding.
“The option of a farmout, where UKOG’s costs are carried by a new partner, remains a further viable funding option. Our focus will, therefore, now be on implementing the necessary steps to deliver the planned Loxley-1 appraisal programme during 2024 and, if successful, gas production and sales targeted from 2026.”
Mr Sanderson said the company still planned to sell future gas from the Loxley field to make blue hydrogen, using carbon capture and storage.
He said UKOG would investigate using the field to store 1 billion cubic metres of hydrogen when it had been depleted, estimated to be in 2036.
The UKOG share price rose on the news from 0.06p to 0.082p. But this was below half the value of 0.17p when planning permission was granted in June 2022.
DRILL OR DROP? 
This value of £124M for “31 billion cubic feet of 2C contingent resources” could be eventually be double or half or nothing. This is a PR exercise.
This is a company obliged to provide information to their shareholders. As with all oil/gas exploration it is an estimate based upon the best that can be determined before drilling. Hence the need for exploratory drilling.
Wind turbine outputs are based upon similar estimates, so are solar panels. No guarantee how much the wind will blow or the sun will shine.
High risk, no guarantee. Maybe that is one of the reasons gas is so expensive?
Gas is an international market, as you know.
https://www.theice.com/insights/market-pulse/how-natural-gas-became-a-global-market More global than it was, but not as global as coal and oil.
Gas is what? When it was priced at $7 per MMBtu on the Henry Hub, it was $47 per MMBtu on the Dutch TTF! There’s “international” for you. One nation producing at a relatively low price and trading that product, in the form it can be transported “inter” another nation that pays what is required.
Any gas delivered to a country as LNG must be more expensive than the country it has come from, as the process of producing LNG and transportation is expensive. The exporting country is quite happy to do so, as long as the costs can be covered and a profit made within the process and transportation, as the importing country pays for that. UK has been importing huge quantities of LNG from USA- 11 bcm in first 11 months of 2022, up from 4 bcm in 2021. Not only from USA either.
Loxley would hardly change the overall equation, even if best estimates were achieved, but every little bit helps-as is referenced when one or two unreliable wind turbines are planned.