UK Oil & Gas (UKOG) has signed an agreement with Solo Oil to acquire the latter’s 15% stake in Horse Hill Developments (HHDL), the operator and 65% interest holder in the Horse Hill-1 (HH-1) Portland and Kimmeridge Limestone oil discovery and the PEDL137 and PEDL246 licenses in the UK.
Image: Onshore drilling. Photo: courtesy of Stuart Miles/Freedigitalphotos.net.
Upon completion the Company will hold a majority 71.9% HHDL shareholding, equating to 46.735% beneficial interests in the Licences, the largest single beneficial interest-holding in both Licences.
As previously reported in July and August, a comprehensive 150-day extended well test programme, designed to confirm the HH-1 well’s commerciality, is in progress.
Results to date from the Portland oil pool have been very positive. Testing of the two Kimmeridge Limestone oil pools will commence following completion of the Portland test.
Transaction Summary
For a total consideration of £4,500,000, the Company will purchase Solo’s 15% shareholding in HHDL, equating to a further 9.75% beneficial interest in the Licences.
The total consideration of £4,500,000 with an effective date of 28 August 2018, will be satisfied through the issue of 234,042,221 new ordinary shares in UKOG (“Consideration Shares”).
The Consideration Shares are calculated based on the 10-day volume weighted average price from 24 August 2018 of 1.92 pence.
In addition, and to ensure parity with the acquisition of 7% of HHDL announced on 20 August 2018 we have agreed with Gunsynd PLC (“Gunsynd”) and Primorus Investments PLC (“Primorus”) to issue a further 2,600,469 and 6,501,173 new ordinary shares respectively in UKOG so that both the Solo transaction and the Gunsynd and Primorus transactions will be completed at £300,000 per 1% of HHDL.
Completion of these acquisitions, which will be announced in due course, is conditional on HHDL consent. In the year ended December 2016, HHDL made a loss of £146,208.
UKOG CEO Stephen Sanderson said: “This further strategic acquisition firmly cements UKOG as the dominant player in the Horse Hill Portland and Kimmeridge oil discoveries and Licences.
“UKOG’s three recent HHDL acquisitions provide a valuable controlling interest and exemplify the rationale behind our recent change of AIM status to an operating company.
“With the positive Portland test results to date, UKOG, supported by its remaining three coventurers, can now steer the way towards permanent HH oil production in 2019.”
Source: Company Press Release