UK Oil & Gas PLC (UKOG.L) Turkey: General operational update

UK Oil & Gas PLC (London AIM: UKOG) (“the Company”) announces that following its first covid permitted technical and management visit to its partner Aladdin Middle East’s (“AME”) offices in Ankara and to the company’s Basur-Resan licence area in which UKOG holds a 50% non-operated interest, it is pleased to provide the following general update:

Basur-Resan Seismic Acquisition

Further to AME’s August decision to temporarily halt drilling of the proposed Basur-3 (“B-3”) mechanical sidetrack (“B-3S”) until new seismic over the target area was acquired, good progress has now been made by Viking Geophysical Services (“VGS”) in acquiring the 2D seismic programme.

The Company’s geophysicist visited the VGS operation for over a week and continues regular in-person oversight of the acquisition. VGS’ acquisition programme is also being overseen by the Company’s UK-based expert acquisition quality control consultant to ensure the best data possible is acquired.

A first tranche of acquisition and fast track processing (“Phase 1”) is due to be completed within the first quarter of 2022, factoring in anticipated winter-weather down-time in the Siirt region. It should be noted that seismic acquisition in this area of Turkey is challenging due to the remote location, rough and steep topography, significant elevation changes and presence of several significant river gorges and lakes.

The Phase 1 processing contractor has been chosen and priority will be given to fast-track process 3 lines covering the B-3S area and trajectory, plus the proposed new Resan-6 drilling location. Existing legacy data has also been recently reprocessed and a pre-stack depth migration process has commenced aimed at sharpening the seismic imaging and spatial positioning of faults that may be encountered along the B-3S trajectory.

B-3S Drilling

Active planning of B-3S is well underway and initial discussions with prospective drilling rig contractors have taken place, with detailed well planning and contractor selection progressing. It is planned that the well will commence upon receipt and interpretation of the fast-track seismic processing.

In the interests of maximising cost efficiencies, plans are in place for surplus UKOG-owned casing to be transferred to the B-3S site for utilisation during drilling, thus reducing UKOG net costs

The Company is working closely with AME’s operations team and spent a full day involved in joint contractor meetings and well planning during its Ankara visit.

B-3S is located within the north-western structural culmination of the 60 km² Basur-Resan anticlinal structure, with a surface location approximately 1.2 km north of the 1964 Basur-1 oil discovery well. UKOG’s wholly owned subsidiary UKOG Turkey holds a 50% interest in B-3 and the surrounding 305 km² Resan M47-b1, b2 licence with AME, its joint venture partner and the operator of B-3 and B-3S.

As stated in August 2021 the Company’s position in which it preferred to drill B-3S before the conclusion of the seismic programme remains unchanged. However, in the interests of JV harmony we will support the operator’s position and forward plan.

Additional Basur-Resan Licence Prospectivity

Recent detailed surface geological mapping of the licence area has identified a previously unrecognised and undrilled surface anticline, currently referred to as Lead Siirt. This new feature is a four-way dip thrust-related anticline, geologically analogous in nature to AME’s producing East Sadak field and occupies a larger surface extent. Since AME’s discovery of the nearby East Sadak field in late 2013, they have successfully drilled 12 producing wells plus 3 sidetracks in the field.

The joint venture may switch one or two of the less essential Basur-Resan seismic lines to cover Lead Siirt with the object of better understanding its potential hydrocarbon volumes prior to any drilling decision. Should such a switch occur, it will not affect B-3S drilling or the definition of the Basur-Resan structure.

Joint Venture Admin

A Resan Licence Operating Committee meeting was held in Ankara, the first face to face meeting permitted since the pandemic, and which approved the 2022 work programme and budget for seismic acquisition and B-3S drilling.

Sufficient funds are available to deliver the seismic and planned sidetrack as stated above.

New Ventures

AME and the Company’s bid for three new licences in last year’s Turkish mini-licence round, announced on 10 December 2020, was ultimately unsuccessful. The mini licence round attracted several other bidders including the Turkish national oil company TPAO. Although the result was disappointing given the work programme offered by AME and UKOG, the bid was always ancillary to the Company’s main focus of appraising Basur-Resan.

We now understand from various sources in Ankara that whilst GDMPA, the Turkish licence regulator, recommended the award of more than one licence to the AME led group, the Ministry awarded all these licences in favour of TPAO following their recent successes in the Black Sea.

The Company continues to look for additional projects in Turkey and has reviewed a further new opportunity to the southeast of our Resan licence. This contains an interesting and potentially material undrilled anticlinal feature analogous to both East Sadak and Basur-Resan. Further information will be issued in due course if our evaluations prove positive.

Qualified Person’s Statement

Matt Cartwright, UKOG’s Commercial Director, who has 38 years of relevant experience in the global oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.

Stephen Sanderson, UKOG’s Chief Executive commented:

“2022 promises to be an exciting year in our Turkish assets with the conclusion of the Basur-Resan seismic programme and the drilling and testing of Basur-3S. The additional prospectivity from Lead A also gives unexpected further additional resources and drilling scope to the Licence.”

For further information, please contact:

UK Oil & Gas PLC

Stephen Sanderson / Kiran Morzaria

Tel: 01483 941493

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