AIM-listed UK Oil & Gas has announced its full year results for the full year ended 30 September 2023. A copy of the full annual report has been posted to shareholders. A copy of the full annual report will also be made available on the Company's website: www.ukogplc.com
STRATEGIC REPORT FOR THE YEAR ENDED 30 September 2023
OUR BUSINESS
UK Oil & Gas aims to build a sustainable oil and gas production base that can help deliver its new UK hydrogen storage business as part of the UK's transition to Net Zero and which will act as a springboard to further worldwide growth opportunities in the hydrogen space.
In May 2022, the Company's wholly-owned subsidiary, UK Energy Storage Ltd ('UKEn'), signed an Agreement to Lease with Portland Port Limited covering two sites at the former Royal Navy port in Dorset, with the intent to develop, subject to new planning consent and securing necessary development finance, a planned integrated Energy-Hub, centred around hydrogen-ready gas storage and a future green hydrogen generation capability.
The government's newly announced one year acceleration of the first hydrogen storage allocation round to Q3 2024 against the prior Q3/Q4 2025 timeline, also necessitates the Company to accelerate its Portland project schedule. In order to prepare and submit a bid for an allocation award, the round's timetable necessitates an acceleration of specific conceptual design, pre-FEED and environmental/ecology works during 2024. The Company is also in discussion with several significant potential international investors with regard to their participation in the Company's hydrogen storage project.
Our current oil and gas operational focus is on the UK and Turkey onshore sectors. UKOG has operated safely and environmentally responsibly in the UK since 2013.
Our current UK onshore portfolio consists of direct and indirect interests in five oil & gas exploration, appraisal, development and production assets, all situated within the Weald and Purbeck-Wight Basins of southern England. We are the largest acreage holder in the south of England, with assets covering 489 gross km².
We hold majority interests in the Horse Hill oil field and Loxley gas discovery in Surrey, together with a significant position in the Kimmeridge Limestone (KL) oil deposit or "play".
Our UK oil & gas portfolio contains a good balance of low-risk production, appraisal and development assets as well as upside exploration assets within both the Kimmeridge Limestone and Portland conventional plays.
Our portfolio in Turkey consists of a 50% non-operated working interest in the 305 km² Resan licence in southeast Turkey, containing the potentially significant undeveloped Basur-Resan oil discovery plus further exploration prospects. This project is assessed to contain significantly greater discovered oil volumes than any of our UK projects and, if successful, offers potentially transformational growth for the Company.
In order to move our business forwards, we maintain a high level of operational activity, conducting near-continuous drilling, flow testing and production operations since May 2017.
Our portfolio, notably Loxley and our hydrogen storage portfolio in the UK, has the potential to generate significant returns for the Company and its shareholders.
OUR STRATEGY
UKOG aims to build a diverse, sustainable and self-funding energy business which has the following strategic objectives:
Oil and Gas:
1. Find and Develop Low-Cost and Long-life Assets
- Continuing to invest in new and existing near-term production assets both domestically and internationally is a key priority.
- New assets added to the Company's portfolio must demonstrate potential self-funding capacity in the near term. Once in production, revenues from these assets will provide free cash flow to re-invest and deliver shareholder returns.
2. Resource and Reserve Growth
- Building our recoverable resources, reserves and future production through targeted and disciplined high-impact exploration, appraisal projects and acquisitions, both in UK and increasingly abroad.
3. Balance Risk and Reward
- Maximising value by ground floor or early entry where possible. Judicious use of farmouts to provide operational funding. Maximising return on investment by actively considering divestment after an asset has been de-risked, where appropriate.
Hydrogen and Renewables:
1. Hydrogen
- Investigate potential sites for hydrogen generation, storage and hydrogen battery concept.
- Focus initially on the UK, with international expansion if successful or if commercially viable opportunities arise.
- Ground floor operated entry through planning permission stages, with possible subsequent strategic partnerships/JV arrangements with large infrastructure players.
- Strategic partnerships with sector technology specialists.
2. UK Energy Diversification - Reduce Carbon Footprint of Company's Existing Petroleum Producing Sites
- Where viable, implement geothermal and/or solar energy cogeneration plus battery storage from existing wells/sites.
- Where viable, add new standalone geothermal and battery storage for grid/heat export.
- Investigate replacement of diesel powered off grid mobile generation.
3. Find and Develop New Stand-alone Energy-Hub Projects
- Ground floor entry, either operated or as joint venture partner.
- UK initial focus, international expansion if successful or commercially viable opportunities arise.
Targeted Portfolio Management:
Continuously review and upgrade our portfolio to either acquire or divest further stakes in existing assets. We also look to acquire assets at any stage in the life cycle and are not limited by geography, where we can create significant value for shareholders.
UKOG shares this vision and strategy through internal dialogue with employees and externally with shareholders and stakeholders via public announcements and dissemination of information through our website and the Annual Report and Accounts.
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Source: UKOG
