UK Oil & Gas Investments PLC (LON:UKOG and ISDX:UKOG) has this morning told DirectorsTalk that it has executed a farm-in agreement with Warwick Energy Exploration and Production Limited to acquire a further 10% interest in UK onshore Weald Basin licence PEDL143 (“Licence”) which contains the Holmwood Prospect. This second farm-in increases UKOG’s interest in the Licence to 30%. As previously reported, the Company will participate in the drilling of the planned Holmwood-1 exploration well which will test the Holmwood Prospect’s identified Portland sandstone, Kimmeridge limestone and Corallian sandstone reservoir objectives.
PEDL143 covers 35.5 square miles and is located to the immediate west of Horse Hill licence PEDL137, in which UKOG has a 20.163% interest, and to the immediate south of the Brockham oil field, licence PL235, in which UKOG has an interest via its 6% ownership of Angus Energy Limited.
Further details of PEDL143 prospectivity are available on the Company’s website www.ukogplc.com
Transaction details:
Subject to receipt of the necessary consent from the Oil and Gas Authority (“OGA”), UKOG will pay a consideration of £25,000 and a 20% share of the Holmwood-1 exploration drilling costs in order to acquire a full 10% working interest in PEDL143 from Warwick.
UKOG’s 20% share of well costs will be capped at £0.6 million net to UKOG (i.e. 20% of a gross Holmwood-1 well cost estimate of £3 million). Gross well costs above £3 million, should they arise, will be met by UKOG, Warwick and other partners pro-rata according to their working interests in PEDL143.
Stephen Sanderson, UKOG’s Executive Chairman commented: “We are delighted to follow up our very recent news on the OGA’s consent to the Egdon PEDL143 farm-in with the acquisition of a further interest in the Licence from Warwick. These two transactions now provide the Company with a material 30% overall participating interest in the Holmwood exploration well and Licence.
With this acquisition the Holmwood well now provides an excellent low to moderate risk opportunity for UKOG to access a mean estimated 1.68 million barrels of net conventional prospective resources together with the opportunity to confirm the Kimmeridge tight oil in place within the Licence as calculated by Nutech in their recent study of the Company’s licences and wider Weald.
We look forward to working with the partnership and to drilling the Holmwood-1 well next winter. “
