UK Oil & Gas has announced the acquisition of 30% shareholding in the Arreton Oil Discovery and PEDL331 onshore Isle of Wight license from Solo Oil.
Image: UK Oil & Gas has announced the acquisition of 30% shareholding in the PEDL331License. Photo: Courtesy of rawpixel on Unsplash.
Upon completion the Company will hold an operated 95% direct interest in the Licence. As reported in the Company’s July 2018 AIM admission document, the Arreton conventional oil discovery, a geological analogue of the Company’s Horse Hill Portland oil field (UKOG net 46.735%), contains three stacked Jurassic oil pools with an aggregate gross P50 oil in place (“OIP”) of 127 million barrels (“mmbbl”), over four times larger than Horse Hill’s 30 mmbbl P50 OIP Portland oil pool.
The acquisition will also correspondingly increase UKOG’s share of the Arreton discovery’s recoverable Contingent Resource volumes by 46%, from 10.2 mmbbl to a material 14.9 mmbbl UKOG net. As detailed in Xodus’s June 2018 Competent Person’s Report, a further significant increase in oil recovery factor above the current estimated 12% is likely via adoption of an early stage reservoir pressure support scheme (i.e. water reinjection).
The total consideration of £350,000, with an effective date of 11 December 2018, will be satisfied through the payment of £90,450 in cash and the issue of 17,989,326 new ordinary shares in UKOG (“Consideration Shares”). The Consideration Shares are calculated based upon the 5-day volume weighted average price to market close on 10 December 2018 of 1.4428 pence.
Completion of this acquisition, which will be announced in due course, is conditional upon the usual Oil and Gas Authority consent.
UKOG Chief Executive Stephen Sanderson said: “We are delighted to acquire this further substantial share of the Arreton oil discovery, giving the Company a material 14.9 million barrels of net attributable discovered PEDL331 recoverable resources.
“The first Arreton appraisal well, Arreton-3, is now scheduled to be drilled, cored and tested in the first quarter of 2020, with the drilling of the larger look-alike Arreton South exploration prospect planned to follow after completion of Arreton-3 flow testing. We look forward to starting the journey towards realising the Isle of Wight Licence’s considerable conventional oil resource potential.”
UKOG principal technical advisor Rob Wallace, who has over 40 years of relevant experience in the oil industry, has approved the information contained in this announcement. Wallace is a Chartered Scientist, Chartered Geologist and Fellow of the Geological Society of London, an active member of the American Association of Petroleum Geologists, a member of the Petroleum Exploration Society of Great Britain and a member of the South African Geophysical Society.
Source: Company Press Release