UK Oil
& Gas PLC
("UKOG"
or the "Company")
Loxley
Gas Project Update
UK Oil & Gas PLC (London AIM:
UKOG) is pleased to announce that it
has appointed UK based oil and gas divestment and project marketing
specialists, Envoi Limited to facilitate the farmout of up to a 50%
working interest in the Company's material 100% owned Loxley gas
and hydrogen feedstock project ("Loxley"). The farmout seeks to
fully fund the planned Loxley-1 appraisal drilling and testing
programme with the Company's share of costs being carried by the
farminee or farminees. The project has incontestable planning
consent to proceed ahead (see RNS 10th January
2024).
Separately from Envoi's mandate,
active discussions are ongoing with two UK listed energy companies
interested in pursuing the farmout opportunity.
Loxley, one of the UK onshore's
largest historic gas discoveries, was assessed in its most recent
February 2023 Competent Persons Report ("CPR") to contain mid-case
recoverable 2C Contingent Resources of 31.0 billion cubic feet net
to UKOG, with an associated net to UKOG post-tax present values
(discounted at 10%) of £124 million using 31 December 2022 gas
prices and £87 million using an RPS Energy forward price forecast
(see RNS 21st February 2023). Further development of the asset post
appraisal would be required to move the 2C classification to
Reserves (see glossary definitions).
The CPR is available on the
Company's website www.ukogplc.com
.
Stephen Sanderson UKOG's Chief
Executive commented;
"The farmout process is designed to
fully fund the Loxley appraisal programme and, if successful,
remove the requirement for the Company to raise additional funds
for its share of costs for this material project. We look forward
to working with Envoi and with prospective farminees".
For further information, please
contact:
UK
Oil & Gas Plc
Stephen Sanderson / Guzyal
Mukhametzhanova
Tel: 01483 941493
WH
Ireland Ltd (Nominated Adviser and
Broker)
James Joyce / James Bavister /
Andrew de Andrade
Tel: 020 7220 1666
Communications
Brian Alexander
Tel: 01483 941493
Glossary of terms
|
2C
|
the mid-case or average estimate of
Contingent Resources, where the estimated quantity is assessed to
have a 50% probability that the quantity recovered will equal or
exceed the estimate.
|
|
CPR
|
Competent Person's Report, a
Petroleum Resources report prepared by an independent Competent
Person(s), providing an estimated range of remaining recoverable
resources and their potential monetary valuation in accordance with
the relevant reporting standard (in this case the 2018 Society of
Petroleum Engineers' PRMS). The RPS CPR was not prepared under the
AIM rules for oil & gas companies.
|
|
Contingent
Resources
|
those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations, but the applied project(s) are not yet
considered mature enough for commercial development due to one or
more contingencies. Contingent Resources are further categorised in
accordance with the level of certainty associated with the
estimates and may be sub-classified based on project maturity
and/or characterised by their economic status.
|
|
discovery
|
a petroleum accumulation (gas in
Loxley's case) for which one or several exploratory wells have
established through testing, sampling and/or logging the existence
of a significant quantity of potentially moveable
hydrocarbons.
|
|
farmout
|
An oil sector term characterising a
transaction where a party (the farminee) bears the full or part
costs of a commitment work programme to earn an equity or
commercial interest in an oil and gas property. Most commonly,
farmouts involve the farminee paying the costs of a well and or a
seismic programme.
|
|
PRMS
|
Petroleum Resources Management
System created by the Society of Petroleum Engineers. A global
standard of petroleum reserve and resource classification together
with guidelines and accepted methodologies for the definition and
estimation of petroleum resources and their monetary
valuation.
|
|
Reserves
|
those quantities of petroleum
anticipated to be commercially recoverable by application of
development projects to known accumulations from a given date
forward under defined conditions. Reserves must satisfy four
criteria: discovered, recoverable, commercial and remaining (as of
the evaluation's effective date) based on the development
project(s) applied. Reserves are further categorised in accordance
with the level of certainty associated with the estimates and may
be sub-classified based on project maturity and/or characterised by
development and production status.
|
The
information contained within this announcement is deemed by the
Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014, as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018. Upon
publication of this announcement, this information is now
considered to be in the public domain.