For a total consideration of £1,925,000, the Company will receive Gunsynd’s 2% and Primorus’ 5% shareholding in HHDL, equating to a further 4.55% beneficial interest in the Licences.
The total consideration, with an effective date of 17 August 2018, comprises £425,000 payable in cash and £1,500,000 through the issue of 85,714,286 new ordinary shares in UKOG (“Consideration Shares”).
The Consideration Shares are calculated based on the closing UKOG share price on 16 August 2018 of 1.75 pence. Completion of both 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.
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has entered into sale and purchase agreements with Gunsynd PLC (“Gunsynd”) and Primorus Investments PLC (“Primorus”) to acquire their combined 7% shareholding in Horse Hill Developments Ltd (“HHDL”), the operator and 65% interest holder in the Horse Hill-1 (“HH-1”) Portland and Kimmeridge Limestone oil discovery and 55 square mile (143 km2) PEDL137 and PEDL246 licences (“the Licences”). Upon completion, the Company will hold a majority 56.9% HHDL shareholding, equating to a 36.985% beneficial Licence interest, 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, with short-term high rate tests achieving stable implied daily pumped rates of 401 and 414 barrels of oil per day of dry 36 API oil over two periods of 6 and 2 hours, respectively. Testing of the two Kimmeridge Limestone oil pools will commence following completion of the Portland test.
Stephen Sanderson, UKOG’s Chief Executive, commented:
“Although modest in overall size, these acquisitions, the first under the Company’s new AIM operating company status, are highly strategic in that they deliver to UKOG, the driving force behind the HH-1 Portland and Kimmeridge oil discovery, a majority 56.9% shareholding in HHDL. Importantly, the resultant 36.985% beneficial Licence interest also makes UKOG the largest single party in the HH-1 discovery and Licences. In cooperation with the remaining co-venturers, the Company can now effectively steer the project directly towards planned permanent production and potentially significant cash flow in 2019.
These acquisitions are also fully in line with UKOG’s strategy of increasing its working interests in key assets to gain effective control and operatorship.”
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