Stephen Sanderson, UKOG’s Chief Executive, commented: The completion of this transformational acquisition of a further 35% in our flagship asset means UKOG is now firmly in the driving seat at Horse Hill, holding a controlling 85.635% interest.
Our operations team is now poised to commence simultaneous Horse Hill-2/2z Portland drilling and HH-1 Kimmeridge test operations before month’s end. The remainder of the year at Horse Hill looks set to be highly eventful and, hopefully, financially transformative, as we drive to seek to establish permanent oil production by year-end.
Acquisition of Tellurian’s 35% interest in Horse Hill oil field completed
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has completed the acquisition of Magellan Petroleum (UK) Investment Holdings Limited (“Magellan”) from Tellurian Investments LLC, for a total consideration of £12 million in cash and UKOG shares. The addition of Magellan’s 35% direct interest in the Horse Hill oil field, held through the PEDL137 and PEDL246 licences, significantly increases the Company’s holding in its flagship asset, from 50.635% to a controlling 85.635%, a 69% increase in UKOG’s associated Horse Hill net asset value and net reserves/resources.
Following the acquisition, ongoing civil works at Horse Hill, necessary to enable simultaneous Horse Hill-2/2z (“HH-2/2z”) drilling and HH-1 Kimmeridge test production, are expected to be completed this week, with drilling expected to start before the end of September. Further HH-2/2z operational updates will be made in due course.
The £12 million consideration is payable in three tranches:
· An £8 million initial consideration on SPA completion
· A £3 million deferred payment, on or before 31 December 2019, in UKOG shares or cash.
· A £1 million second deferred payment, on or before 31 March 2020, in UKOG shares or cash.
The £8 million initial consideration was satisfied through the payment of £5 million in cash and the issue of an aggregate total of 275,988,960 new ordinary shares in UKOG (“Consideration Shares”). The number of consideration shares issued was calculated by the payment amount divided by the 10-day average mid-price of UKOG ordinary shares prior to the completion date.
An application has been made for the Consideration Shares to be admitted to trading on AIM, which are anticipated to be available for trading on or around 12th September 2019 (“Admission”).
Following Admission, the Company’s enlarged issued share capital will comprise 6,359,278,867 ordinary shares. The Company holds no shares in treasury. The enlarged ordinary share capital figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.
Further to our announcement of 7th August, whilst the completion of this transaction does not require formal Oil and Gas Authority (‘OGA’) approval, the Company has sought a comfort letter from the OGA to the effect that it has no objection to the change of control of Magellan as a licensee; we await their formal response.
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