UK Oil & Gas PLC (AIM: UKOG) stock soared around 35% higher in Tuesday's early deals after it unveiled a new review of the Loxley gas discovery near Guildford, which details the potential economic value of the project. Loxley could be worth up to £124 M net to UKOG in the 'mid-case' scenario, the company highlighted in a statement.
The new competent person's report (CPR) was penned by consultant RPS Energy, which based the study on an estimated 31bn cubic feet contingent gas resource.
In London, UKOG shares rose 35.54% to trade at 0.082p, giving the small-cap energy stock a market value of £17.73mln.
UKOG said they will now advance its program, which already has planning and environmental consents for an appraisal well, Loxley-1.
At present, the well is slated for the 2024 season, and it is anticipated that it could be funded through a partnership.
"The CPR confirms that Loxley, one of the UK's largest onshore gas discoveries, possesses present material value in today's prevailing higher gas price world," said chief executive Stephen Sanderson.
"Its potential future revenue streams have the capacity to deliver material shareholder value in the foreseeable future and its recoverable resources to contribute towards the UK's future energy security."
"Loxley's illustrated potential commercial robustness also means that UKOG can now plan to fund a future development via regular conventional oil and gas debt funding.
"A farm out, where a new partner carries UKOG's costs, remains a viable funding option.
"Our focus will, therefore, now be on implementing the necessary steps to deliver the planned Loxley-1 appraisal program during 2024 and, if successful, gas production and sales targeted from 2026."
Sanderson, meanwhile, noted that the plan for monetizing the Loxley gas envisages its reforming into low-carbon blue hydrogen. In the long term, after it is depleted by 2036, it is intended for hydrogen storage.
UKOG focuses primarily on oil and gas assets in the Weald Basin in southern England, where oil and gas drilling has been taking place for over 100 years. Modern technologies have dramatically altered the business methodology and drastically reduced the environmental impact on local communities and residents.
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UKOG, thanks to its policy of investing in expert advice from the world’s major analysts, is leading the way in ensuring that any oil and gas developments are conducted with full respect to the countryside and a determination to preserve the well-being and way of life of residents.
UKOG’s shares are listed and traded on London’s Alternative Investment Market (AIM). The current portfolio includes eight oil and gas assets held under Petroleum Exploration and Development Licences (PEDL). All purchases are onshore.
The Company is well-funded and plans to grow its core UK Weald business with a program of development and acquisition. Our technical team is driving the “proof of concept” for the new and potentially significant Weald Kimmeridge limestone naturally-fractured oil play, demonstrated by the successful Horse Hill-1 exploration well.
Source- www.proactiveinvestors.co.uk
