energy B plc has announced that it has successfully completed a placing of £1.2m (gross), signed an agreement with London listed UK Oil & Gas Plc ('UKOG') to conditionally acquire their entire interest in the Horse Hill Oil Field near Gatwick Airport and the appointment of David Lenigas as Chairman, effective immediately.
The Horse Hill discovery well (HH-1) was drilled in 2014 and recorded one of the highest flow rates of oil to surface of any onshore well drilled in the UK from multiple oil-bearing zones in the Kimmeridge limestones and Portland sandstones at depths of less than 1,500 metres below surface.
During the initial 2016 extended flow tests at the Horse Hill-1 (HH-1) discovery well, UKOG recorded a combined peak aggregate dry-oil flow rate of 1,688 barrels of oil per day (bopd). At the time this was a record high aggregate stable rate for any onshore UK new-field wildcat discovery well.
The Horse Hill field has produced approximately 211,651 barrels of high-quality oil to date.
This acquisition will form part of a wider strategy for the Company to build a portfolio of oil and gas projects in the UK in support of UK energy security. The Company will also continue to maintain its interests in the HFI wind turbine technology.
Conditional Acquisition
The Company has entered into a share purchase agreement ('SPA') with London listed UKOG to acquire, for the total cash consideration of £1 million, (i) their 100% subsidiary UKOG (137/246) and (ii) their 77.9% shareholding in Horse Hill Developments Ltd ('HHDL').
UKOG (137/246) holds a 35% working interest in HH and the 99.3 sq km Petroleum Exploration and Development Licence (PEDL)137 licence (the primary site of the Horse Hill-1 discovery well) which is located within the Weald Basin and approximately 2 km north of Gatwick International Airport ('PEDL137'). HHDL, in turn, holds a 65% operated interest in HH and PEDL137. The Company's HHDL shareholding will equate to a 50.635% working interest in HH and PEDL137. Combining these interests, the Company will hold a 85.635% interest in HH and PEDL127.
Following the execution of the SPA, energy B will pay a deposit of £100,000, out of the proceeds of the Placing. The balance will be paid upon certain conditions being satisfied. Such conditions include, inter alia, approval of the Acquisition by energy B's shareholders at a General Meeting and consent by the UK petroleum regulator. Such consent has a statutory timetable of 90 days, and the SPA contains a longstop date which may be extended at the discretion of the parties should statutory approvals take longer than expected. The Company will publish a General Meeting circular in the coming days, and the General Meeting is expected to be held in July.
The SPA also provides customary warranties and covenants with respect to UKOG's various interests in Horse Hill and the matters pertaining to those interests (including compliance with various legacy investment agreements between the Horse Hill syndicate).
Board Changes
David Lenigas has agreed to join the Board as Executive Chairman with immediate effect. Neil Ritson will remain as an Executive Director and will assume the role of CEO. Jonathan Colville will remain as a non-executive director of the Company.
Both Neil Ritson and David Lenigas have extensive experience in the Oil & Gas sector and in the Horse Hill project.
Neil Ritson, CEO of the Company, commented:
'I am delighted to present shareholders of energy B with an opportunity to develop the Company as an onshore oil and gas participant, alongside the green energy technology being developed around the HFI patented wind turbine.
The UK is on a path to net zero, however, we need to recognise that oil and gas will remain part of the energy mix for decades to come. Importing foreign gas and oil; often with a much higher carbon footprint than indigenous supplies, is environmentally and economically unsound. We hope to bring Horse Hill back on to production as soon as possible and to develop its greater potential as a springboard for further development of the Weald Basin as a source of indigenous energy.'
David Lenigas, Chairman of the Company, commented:
'This is an incredibly exciting project and important for future of UK energy sovereignty. Not only is there a great deal of oil at Horse Hill, but there is also a lot of gas in this very live, shallow and extensive hydrocarbon system. That gas has historically been flared over the last decade, gas that could have been used to power or heat UK homes.
The initial flow rates at Horse Hill were incredible but obstacles existed to fully assessing the true potential of the 500m thick oil-laden Kimmeridge limestones identified by some of the biggest independent oil consultancies in the world at the time. Only a few of the oil sequences in the Kimmeridge were tested in 2016 testing program. Time constraints limited the ability to test the Kimmeridge's ultimate flow potential and less than 20% of the Kimmeridge interval was tested back in 2016.
With the oil and gas window at Horse Hill being relatively shallow compared to the hydrocarbons in the North Sea, this project and many other onshore projects in the UK offer a highly credible solution to assist with the domestic energy crisis.
Whilst many right now are vacating the oil and gas sector in the UK, we aim to go against the tide with energy B.'
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Source: energy B plc
