TIDMUKOG
RNS Number : 6115U
UK Oil & Gas Investments PLC
13 July 2018
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Corporate Update & Notice of GM
UK Oil & Gas Investments PLC (London AIM: UKOG) is pleased
to announce that it has today posted a Circular to shareholders
concerning the proposed change of status, from an AIM investing
company to an operating company. The Circular and Admission
Document will be available on the Company's website at
www.ukogplc.com
Highlights
-- General meeting to be held to approve the admission of the
company's shares to trading on AIM as an operating company;
-- The appointment of Nicholas Mardon Taylor to the Board upon Admission;
-- Extended Well Test Operations at the Horse Hill-1 site have,
to date, included installation of all test-equipment and the
commencement of the necessary well clean-up process in preparation
for the first flow period of the Portland test sequence.
The letter from the Chairman within the Circular has been
extracted and presented below. The full document is available on
the Company's website at www.ukogplc.com
For further information, please contact:
UK Oil & Gas Investments PLC
Stephen Sanderson / Kiran Morzaria Tel: 01483 243450
WH Ireland (Nominated Adviser and Broker)
James Joyce / James Sinclair-Ford Tel: 020 7220 1666
Cenkos Securities PLC (Joint Broker)
Joe Nally / Neil McDonald Tel: 0207 397 8919
Public Relations
Brian Alexander / David Bick Tel: 01483 243450
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
RE-ADMISSION TO AIM OF EXISTING SHARE CAPITAL AS AN OPERATING
COMPANY AND NOTICE OF GENERAL MEETING
1. INTRODUCTION
The Board of UK Oil & Gas Investments PLC ("UKOG") announced
earlier today that, subject to Shareholder approval, the Board has
decided to implement fully a number of changes to the way that UKOG
is managed which will have the effect of changing the status of the
Company from an Investing Company under the AIM Rules to an
Operating Company with a material trading activity.
The change to an Operating Company is classified as a
fundamental change of the business of the Company under the AIM
Rules and therefore is conditional, inter alia, upon the approval
of Shareholders at the General Meeting. Accordingly, set out at the
end of this Document, is a notice convening the General Meeting to
be held at Hill Dickinson LLP, The Broadgate Tower, 8th Floor, 20
Primrose Street, London EC2A 2EW at 10.00 a.m. BST on 31 July 2018,
at which Shareholders will be asked to approve the Proposal for the
purposes of the AIM Rules.
Provided that the Resolution is duly passed at the General
Meeting, trading in the Existing Ordinary Shares will be cancelled
at 4.30 p.m. on 31 July 2018 and it is expected that the Shares
will be readmitted to trading on AIM the following day at 8.00 a.m.
on 1 August 2018.
It is also proposed that the Company will change its name to UK
Oil & Gas Plc with effect from Admission.
The purpose of this Document, which comprises an Admission
Document prepared under the AIM Rules, is to provide you with
information on the Admission and to explain why the Directors
consider the Proposal is in the best interests of the Company and
its Shareholders as a whole, and why they unanimously recommend
that Shareholders vote in favour of the Resolutions.
2. BACKGROUND
UKOG is a British oil and gas investment company, seeking to
support the drive for increased energy security for this country,
while ensuring its assets preserve the natural beauty of the Weald
and Wessex region. The Company specialises in investing in new
geological ideas, concepts and methodologies to find and produce
oil from previously under-explored rock formations within
established oil-producing basins.
The Company is admitted to trading on AIM and currently has a
portfolio of direct and indirect investments in 8 UK onshore
exploration, appraisal, development and production assets. UKOG is
the largest acreage holder in the South of England, and the fourth
largest in the overall UK onshore, with assets covering 791.5 gross
km2. The Company's portfolio includes 4 non-KL oil discoveries and
the Directors believe that this area has the potential for
significant growth in the future. UKOG is focussed on the KL
geological section and its licences cover 591.51 gross km2 of KL
reservoir targets. The Directors advise that the Company's
Kimmeridge 'sweet spot' licences were independently calculated by
Nutech to contain a significant proportion of the play's total OIP
which was 9.831BB. Subsequent to this, PEDL233 has expired and as
such the Company has calculated the remaining oil as 8.651BB.
The Company is generating cash from its interests in the
Horndean oil field, as well as developing the Horse Hill project.
UKOG is also working to advance its Markwells Wood, Holmwood and
the Arreton (onshore Isle of Wight) licences, which are set out in
further detail in this Document.
By making use of some of the world's latest oil and gas
technologies, UKOG is endeavouring to turn its discoveries into
commercially viable producing assets.
UKOG is currently categorised as an Investing Company under the
AIM Rules and is therefore subject to the requirements of the AIM
Note for Investing Companies. The Company substantially implemented
its current investing policy on 19 September 2014. The Company is
seeking to re-admit its shares to trading on AIM as an Operating
Company subject to approval by Shareholders. Following this change
in status, the Company will no longer have an investing policy.
In the course of its investment strategy, UKOG has taken
indirect and direct non-controlling stakes in oil and gas asset in
the Weald Basin. It is now seeking to become more active in the
development of these investments and in other assets it may
identify. Following approval for and the change of status to an
Operating Company, UKOG's investing policy will cease and UKOG will
be able to take direct controlling interests in oil and gas assets
without restriction and under the AIM Rules become the operator of
such assets.
3. OUTLINE OF INTERESTS
An overview of UKOG's wholly-owned assets and assets in which
UKOG owns an interest are outlined in the below table (Figure 1)
and their geographic spread is presented in Figure 3.
UKOG Licence Area
Asset Licence Interest Holder Operator (km2) Status
UKOG (GB) IGas Energy Field currently
Avington1 PEDL070 5% Limited Plc 18.3 shut in
BB-1 & 1z
completed,
preparing
Kimmeridge Kimmeridge two further
Broadford Oil & Gas Oil & Gas planning
Bridge3 PEDL234 100% Limited Limited 300.0 applications
Holmwood-1
exploration
Europa Oil well
& Gas (Holdings) planned in
Holmwood3 PEDL143 40% UKOG plc 91.8 2018
UKOG (GB) IGas Energy Field in stable
Horndean1 PL211 10% Limited Plc 27.3 production
Production
tests and
further
appraisal
Horse Hill Horse Hill well(s)
Horse Developments Developments scheduled
Hill5 PEDL137 32.435% Ltd6 Ltd6 99.3 for 2018
Horse Hill Horse Hill
Horse Developments Developments
Hill PEDL246 32.435% Ltd6 Ltd 43.6 As above
Preparing
Arreton-3
oil discovery
Isle appraisal
of Wight well planning
(Onshore)2,3 PEDL331 65% UKOG UKOG 200.0 submission
Revised planning
Markwells UKOG (GB) UKOG (GB) application
Wood2 PEDL126 100% Limited Limited 11.2 underway
Notes:
1. Oil field currently in production.
2. Oil discovery pending development and/or appraisal drilling.
3. Exploration asset with drillable prospects and leads. PEDL234
contains the Broadford Bridge-1 and 1z discovery well, the
extension of the Godley Bridge Portland gas discovery plus further
exploration prospects.
4. UKOG has a 100% interest in Kimmeridge Oil & Gas Limited,
which has a 100% interest in PEDL234.
5. Oil discovery with successful flow test in 3 zones, further
long-term testing scheduled in 2018
6. UKOG has a direct 49.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.
Figure 1, KOG, Table of Interest in Assets
UKOG CORPORATE STRUCTURE
The below (Figure 2) outlines the corporate structure of UKOG,
its assets and economic interests in each.
http://www.rns-pdf.londonstockexchange.com/rns/6115U_1-2018-7-13.pdf
4. SUMMARY OF THE ASSETS
Xodus Group have completed a Competent Persons Report as
commissioned by UKOG. The report has covered UKOG's 8 licences in
the south of England, 7 of which are located in the Weald Basin and
1 in the Wessex Basin. One of those licences contains a currently
producing oil field, another contains a shut-in oil field that is
not economically viable and a number of others contain existing
discoveries. The following is a summary of UKOG's assets. Further
details can be found within the CPR section in Part III of this
Document.
OIP projections for the KL, Kimmeridge Clay Formation and other
tight Jurassic reservoirs have been made by Nutech. These reports
have been made public and OIP volumes reported by UKOG in its
regulatory press releases, most recently in December 2016 where
Nutech calculated a P50 estimate of the Company's net interest over
its licence interests in the Weald Basin of 9.831 BB of OIP in the
Kimmeridge clay formation. These estimates have not been updated
since the drilling and testing of the BB-1/BB-1z discovery well.
Subsequent to this PEDL233 expired and as such the OIP reduced
by
1.180 BB to 8.651 BB OIP.
It should be noted that to date insufficient data exists in
regards to the KL and other Jurassic continuous oil deposits to
make an assessment of any resources or reserves under SPE
standards. Accordingly these OIP numbers should not be construed as
either resources or reserves and for the avoidance of doubt the
Competent Person has not audited these OIP estimates of Nutech.
The Company will update the market in the event of any material
change or change in status of the following assets.
Broadford Bridge
UKOG acquired exploration licence PEDL234 (interest 100%) in
2016, significantly increasing its acreage holding within the KL's
prime prospective area. The licence is operated by Kimmeridge Oil
& Gas Limited ("KOGL"), a wholly-owned subsidiary of UKOG. The
onshore licence, PEDL234, covers 300 km(2). The licence acquisition
included the existing Broadford Bridge well pad, along with
planning permission and Environmental Agency ("EA") consent to
drill the exploratory well ("BB-1").
Kimmeridge Potential - Broadford Bridge
UKOG, as disclosed within the analysis in section 10.2.2 of the
CPR, has previously conducted analysis of PEDL234 and suggests that
KL oil potential is also prevalent in a similar way to that at
Horse Hill. BB-1 drilling commenced in May 2017 and was designed to
penetrate the KL units at an inclination and orientation to test
the open natural fractures within the KLs. Mobile light oil was
recovered from open fractures in the KL5 cores within the
Kimmeridge section. BB-1 was sidetracked to Broadford Bridge-1z
("BB-1z") in August 2017 due to difficult hole conditions to seek
to maximise the Kimmeridge flow test potential.
BB-1z was completed as a potential oil producer with a multizone
completion and over 1000ft of perforations The well was tested over
multiple zones within the KL0-KL5 sections with the well free
flowing light oil for short periods during the clean-up operations.
Oil was also recovered to surface via pumping from multiple zones.
The oil flowed to the surface during this testing programme,
although at likely sub commercial rates. This has led the company
to explore new completion methods that might achieve higher
sustainable flow rates.
The BB-1z oil discovery within PEDL234 licence area is reported
in section 10.2.2 of the CPR with no resource associated with it.
The CPR details that Godley Bridge, a discovery, which is combined
with PEDL235 and adjoins PEDL234, may extend into PEDL234, in which
UKOG has a 100% interest. At Godley Bridge, wells GB-2/2Z and
Alfold-1 failed to find hydrocarbons unlike Godley Bridge-1. See
section 10.1 of the CPR, page 106 for further information. The
report also notes that the previous competent persons reports for
IGas, the operator of PEDL235, have calculated estimated of
Contingent Resource of between 5 and 10 bcf.
The CPR states that after workover operations had been
completed, testing continued and recovered 38 degree API oil.
UKOG's analysis suggests that the Upper Jurassic Kimmeridge
potential covers most of PEDL234, north of BB-1. To further prove
the potential of the Kimmeridge reservoirs, UKOG is working to
acquire 2 further drilling sites in PEDL234. If this is successful,
planning applications are expected to be submitted for the first
site (which neighbours Godley Bridge) later this year.
The well results from the UKOG operated wells at Horse Hill and
Broadford Bridge, which have tested the KL, as well as the reported
results of Brockham-X4Z, show a consistent picture of Kimmeridge
prospectivity across these licence areas. The Kimmeridge oil
potential appears to be regionally extensive with thick sections of
high total organic carbon ("TOC") shale with limestone beds; all of
which are naturally fractured. To date, oil has also flowed from
all three exploration wells that has tested the KL. At present,
significant additional work is required to determine the
development potential of these reservoirs.
Horse Hill
UKOG has an indirect 32.435% interest in each of its 2 Horse
Hill area licences operated by Horse Hill Developments Ltd (HHDL):
PEDL137 and PEDL246. UKOG holds a 49.9% interest in HHDL which, in
turn, has a 65% interest in PEDL137 and PEDL246.
The Horse Hill discovery comprises several prospective
intervals; with only the Upper Portland Sandstone being considered
as Contingent Resource. HHDL flow tested the Portland Sandstone and
KL intervals of the Horse Hill-1 (HH-1) oil discovery well in 2016.
The Company notes that the three reservoirs tested in 2016
demonstrated an initial aggregate stabilised natural flow rate of
1,688 barrels of oil per day.
Horse Hill is the first in a series of planned near-continuous
appraisal drilling and testing operations designed to convert the
company's recoverable resources into permanent production and
reserves. The Directors believe that if the current Horse Hill
testing programme is successful then it could deliver stable oil
production in 2019, subject to obtaining the necessary regulatory
consents and capital financing. The anticipation is that, should
the Horse Hill testing programme produce oil in sufficient
quantities and of the right quality it will be sold to offset the
costs of the well test.
The extended well test is specifically designed to determine the
presence of a commercial value of OIP. Consequently, the Company
expects that HHDL will be able to determine the commerciality for
the Kimmeridge and Portland following these test results. This is
further explained in paragraph 5 of this Part I which outlines the
future plans in respect of Horse Hill.
As reported on 27 June 2018, EWT operations at the Horse Hill
site have commenced. As of the date of this Document operations to
date have included equipment set-up and the necessary well clean-up
process in preparation for the first sequence of the planned
Portland flow test programme.
Horse Hill - Kimmeridge Potential
Within section 10.2.1 of the CPR, it is noted that the
Kimmeridge shows good evidence of natural fracturing and that this
is consistent with recent results from Brockham-X4z well where
image log interpretation shows that both the Kimmeridge shale and
the limestone beds are naturally fractured as at Horse Hill.The
HH-1 KL3 and KL4 reservoirs were flow tested in 2016. The upper 2
limestones were tested and flowed an aggregate stable dry oil flow
of 1,365 bopd under natural flow with no water produced.
Interpretation of the tests suggest that there is a dual porosity
system which exhibited no observed depletion.
Figure 4 outlines the report's estimate for Contingent Resources
of PEDL137, Portland Reservoir.
Oil Contingent Contingent Resources Contingent Commercial
Resources Gross Resources Net Risk
to UKOG Factor
(MMbbl) 1C 2C 3C 1C 2C 3C
Upper Portland 0.592 1.498 3.629 0.19 0.49 1.18 75
Figure 4. CPR, Contingent Resources for PEDL137 Portland
Reservoir.
Avington
The Avington oil field (onshore licence PEDL070) in which UKOG
holds a 5% interest is located in Hampshire, close to the
Stockbridge oil field, and is operated by IGas Energy PLC. It was
discovered in 1960 and commenced production in 2007. UKOG acquired
its indirect 5% interest from Northern Petroleum plc in 2014.
As outlined in section 5 of the CPR, Avington is a conventional
field producing from the Jurassic Great Oolite limestone reservoir.
Average Avington production in 2017 was approximately 35 bopd. Due
to high operating costs and issues with one of the production
wells, Avington production was temporarily shut down in early 2018.
Three wells were drilled at Avington between 1987 and 2006 and the
site has been in production since August 2007, with initial
production rates over 500 bopd. The field has produced continuously
from 2009 with low oil rates and high water cut (>90%).
The field is temporarily shut as the low oil production rate and
costs linked to the high water cut have resulted in the field being
uneconomic at the current cost and oil price.
Historically there has been Contingent Resource reported
alongside Reserves. These resources were based on a further phase
of development, However, given the current status of the field,
further development appears unlikely.
Baxters Copse
UKOG held a 50% interest in the Baxters Copse (onshore licence
PEDL233) oil discovery located in Hampshire, close to the Singleton
oil field and which was operated by IGas Energy PLC. The initial
term of the licence expired on 30 June 2018 and, due to the
operator not having carried out the relevant exploration work
commitment, the OGA served notice of determination of the licence
on 5 July 2018.
IGas Energy Plc (as licence operator) must formalise an expiry
of the licence by providing a relinquishment report to the OGA.
This is due within 3 months of notification of the expiry of the
licence. The Company expects to be responsible for 50% of the
operator's costs associated in preparing the relinquishment report,
but does not expect there to be any material costs associated with
the relinquishment of the licence as no substantive works have been
carried out to date.
Holmwood Well
Onshore licence PEDL143 in which UKOG holds a 40% interest and
is operated by Europa Oil & Gas Limited contains the Holmwood
prospect. It is located to the west of the Horse Hill licence, in
the northern part of the Weald Basin. Planning permission is in
place to drill the Holmwood-1 well to test the Portland and the
Kimmeridge in 2018. This is further explained in paragraph 5 of
this Part I which outlines future plans.
Two reservoirs are considered, in section 8.2 of the CPR, at the
Holmwood Prospect - the Portland and Corllian Sandstones. The
Portland reservoir is known to be oil bearing in the Horse Hill
discovery in the adjacent block and the Brockham field to the
north. However, despite the presence or Corrilian Sandstones at
both, neither are considered as oil bearing reservoirs in these
fields. There are no wells on the licence, with the closest well on
the adjacent Brockham field which lies in a "cut-out" in the
northern portion of the PEDL143 licence. The CPR further notes that
given the proximity to Horse Hill, the KLs are also highly
prospective at Holmwood, but they are not included within the
report.
Xodus have calculated the following STOIIP estimates for the
Holmwood Well.
Prospective Prospective Prospective Risk
Resources Resources Resources Factor
Gross Net to UKOG
Low Best High Low Best High COS13(%)
Portland 0.45 0.98 1.71 0.18 0.39 0.68 29
Corallian 0.38 1.19 3.12 0.15 0.48 1.25 17
============ ====================== ========== ============ =============
Homwood
Total14 1.19 2.29 4.26 0.48 0.92 1.70
Figure 5, CPR, Estimate of Holmwood Prospective Resource.
Horndean
Onshore licence PL211, in which UKOG holds a 10% interest is
located in Hampshire, UK and is operated by IGas Energy PLC.
Section 4 of the CPR states that 7 wells including horizontal
sidetracks have been drilled into the Great Oolite Reservoir.
Currently, the Directors believe that production is very stable at
a rate of approximately 150 bbl/d (15 bbl/d net to UKOG).
Historically, Horndean oil production has been above forecast due
to improved well performance and this has been reflected in
increases in Reserves estimates in the past, including from 2014 to
2016.
Oil Reserves W.I. Gross Volumes Net to Operator
UKOG
(MMbbl) 1P2 2P 3P 1P 2P 3P
============== ======= ========================== ==== ===== ============ ===== ========
Horndean 10% 0.39 0.85 1.29 0.039 0.085 0.129 IGas
============== ======= ========================== ==== ===== ============ ===== ========
Total (MMboe) 0.39 0.85 1.29 0.039 0.085 0.129
Figure 6, CPR, Reserves Estimates for Horndean.
Isle of Wight
The onshore licence PEDL331, in which UKOG holds a 65% interest,
contains the Arreton oil discovery and two geologically similar
prospects. The Directors see this as an important element of the
Company's portfolio with a focus upon the Portland
fracture-enhanced conventional reservoirs in Arreton and look-alike
exploration prospects which other operators have missed.
Recoverable gross 2C Contingent Resources were calculated as 15.7
MMbbl, with 10.2 MMbbl net to UKOG according to the CPR. Arreton
site selection and regulatory permitting activities are now
underway to permit a planned appraisal drilling campaign targeted
for 2019.
The PEDL331 licence was formally granted to UKOG by the OGA in
September 2016. Angus Energy Holdings UK Limited assigned its 5%
licence interest to Doriemus Plc and UKOG was formally appointed by
the OGA as the licence operator. The PEDL331 JOA was entered into
by the Company with Doriemus plc and 30% partner Solo Oil Plc. UKOG
is finalising the selection of the well site and preparing a
planning application to drill the Arreton-3 appraisal well, with a
view to achieving oil production in the event of success, as
detailed in section 5 of the CPR.
Two wells have previously been drilled on the Arreton structure.
The discovery was made by the Arreton-2 well which was a twin of
the 1952 Arreton-1 drilled by BP as noted within section 7 of the
CPR. This further outlines that as the Arreton North Portland
Limestone reservoir is separated from the Arreton Main reservoir by
a fault, the recoverable volumes in the prospect are classified as
Prospective Resources. The estimated STOIIP volumes from the Xodus
report are shown in Figures 7, 8 and 9, below.
Arreton North STOIIP (MMbbl) Low Best High Mean
Portland Limestone 3.7 22.0 59.9 27.6
Figure 7, CPR, STOIIP Estimates
for Arreton North Portland
Arreton South STOIIP (MMbbl) Low Best High Mean
Portland Limestone 14.2 55.2 138.0 67.4
Figure 8, CPR, STOIIP Estimates
for Arreton South
Arreton South STOIIP (MMbbl) Low Best High Mean
Portland Limestone 6.8 21.3 61.6 29.3
Purbeck 4.7 9.2 19.6 11.2
Inferior Oolite 52.0 87.5 137.0 91.7
================================ =========== ====== ====== ======
Total STOIIP10 82.0 127.0 189.0 132.0
Figure 9, STOIIP Estimates
for Arreton Main
Markwells Wood
The onshore licence PEDL126, in which UKOG holds a 100% interest
through its subsidiary UKOG (GB) Limited, contains the Markwells
Wood-1 oil discovery. In September 2016, UKOG submitted a planning
application to the South Downs National Park Authority ("SDNPA") to
further appraise and develop the Markwells Wood-1 oil discovery.
The planned 2-phase programme would see 4 horizontal wells drilled
within the conventional Great Oolite limestone reservoir.
Section 9 of the CPR states that currently, a single well has
been drilled on the field, Markwells Wood-1. The surface location
of the well lies approximately 75m away from the nearest seismic
control (line CV85-369). As the well deviates to the south, the
well track and seismic line navigation cross, with the effect that
at reservoir level they are just 5m apart. The reservoir of the
Markwells Wood discovery is of Great Oolite Limestone formation
which is a common reservoir unit in the Weald Basin. This well
encountered 318 ft of the Great Oolite reservoirs from the top of
the Cornbrash to the base of the Lower Massive Oolite/top of the
Fullers Earth which was logged and cored. There are
5 zones in this reservoir named as follows and more detail on
each can be found in the CPR contained within Part III of this
Document:
-- The Cornbrash
-- Interbedded Oolite
-- Upper Massive Oolite
-- Oncolites
-- Lower Massive Oolite
A geological summary of the Great Oolite was available to Xodus
and demonstrates the lateral continuity and thickness variations in
the different zones along strike in the analogue fields of Horndean
to the west and Chilgrove to the east. Markwells Wood-1 well tests
were conducted from December 2011 to May 2012 and produced 3931 bbl
in total during that period. The CPR further notes, in section 9,
that UKOG plans for a horizontal well in the crest of the structure
a production forecast has been generated for a side track to
Markswell Wood-1 1,200m length horizontal well with an east-west
azimuth. The well is positioned high in the structure and targets
the layers with the highest permeability.
Figure 10 below shows the STOIIP estimates calculated by Xodus
in their report broken down into each of the reservoir's 5 zones,
extracted from section 9 of the CPR. Likewise, Figure 12 outlines
the CPR estimation of Markwells Wood Gross and Net Contingent
Resources in '000 bbl, below.
STOIIP (MMbbl) Low Best High Mean
Cornbrash 0.15 0.37 0.89 0.46
Interbedded Oolite 6.74 13.4 22.9 14.3
Upper Massive Oolite 13.8 22.4 35.0 23.6
Oncolite 0.36 0.98 2.09 1.13
Lower Massive Oolite 2.66 6.3 12.4 7.07
======================================== ====================== ======================== =======
Markwells Wood Total 32.7 45.6 61.8 46.6
Figure 10, CPR, STOIIP
Estimates for Markwells
Wood.
Oil Contingent Contingent Contingent
Resources Resources
Resources Gross Net to UKOG Risk
Factor
(MMbbl) 1C 2C 3C 1C 2C 3C (%)
Markwells
Wood 0.63 1.25 2.71 0.63 1.25 2.71 60
Figure 11, CPR, Xodus estimation of Markwells Wood Contingent
Resources.
Summary of Resources
The Competent person has estimated gross and net recoverable
volumes for undeveloped discoveries and are classified as
Contingent Resources. A commercial risk factor has been estimated
for each discovery and shown in the following Figure 12.
Oil Contingent W.I. Gross Volumes Net to UKOG Risk Factor(1)
Operator Resources
(MMbbl) 1C2 2C 3C 1C 2C 3C %
Avington 5% 0.31 0.37 0.41 0.016 0.019 0.021 40% IGas
Horse Hill
Portland 32% 0.59 1.50 3.63 0.19 0.49 1.18 75% HHDL
Isle of Wight
Onshore 65% 9.9 15.7 24.1 6.44 10.21 15.67 75% UKOG
Markwells
Wood 100% 0.63 1.25 2.71 0.63 1.25 2.71 60% UKOG
(GB)
============== ==== ====== ==== ====== ===== ===== ======== ====== ====
Total 11.5 18.8 30.9 7.3 12.0 19.6
Figure 12, Gross and Net Contingent Resources (in MMbl).
1 "Risk Factor" for Contingent Resources means the estimated
chance, or probability, that the volumes will be commercially
extracted.
2 1C, 2C and 3C denote the low, best and high estimate scenario
of Contingent Resources respectively as defined under the PRMS.
The Onshore Isle of Wight and Holmwood licences both include
Prospective Resources. The Prospective Resources for UKOG's assets
are shown in the following figure 13. "Risk Factor" for Prospective
Resources means the estimated chance, or probability, of geological
success.
Oil Prospective W.I. Gross Volumes Net to UKOG RF Operator
Resources Low Best High Low Best High
(MMbbl) Estimate Estimate Estimate Estimate
Estimate Estimate
Onshore Isle
of Wight 65% 4.0 10.5 21.6 2.6 6.8 14.0 50% UKOG
Europa
Holmwood 40% 1.2 2.3 4.3 0.5 0.9 1.7 17% O&G
================ ===== ========== ========== ========= =============== ======== ========= ====== ========
Total 5.2 12.8 25.9 1.9 7.1 18.0
Figure 13, Gross and Net Prospective Resources (in MMbl).
5. PROPOSED UKOG WORK PROGRAMME
In relation to Horse Hill, the OGA has granted its consent for
the HH-1 Extended Well Test ("EWT") programme. All other necessary
regulatory consents from Surrey County Council ("SCC"), the
Environment Agency ("EA") and the Health and Safety Executive are
in place. The Company has previously announced that it has funded
its full share of operational EWT costs. The EWT will comprise a
series of three separate test sequences commencing in the Portland
followed by the KL4 and finally, the deeper KL3. If time permits a
test combining the KL4 and KL3 (a commingled test) may be
undertaken. Each test will utilise existing perforated zones as per
the 2016 test programme. The expected duration of the full flow
programme is around 150 days. The 2018 long-term testing
programme's goal is to determine commerciality by confirming that
HH-1's reservoirs are each connected to a commercially viable oil
volume. It is expected that, should the minimum commercial volume
threshold be met or exceeded, a declaration of commerciality for
each horizon could be made in a timely manner after the completion
of each testing sequence.
The Directors are targeting an assessment of Portland
commerciality in Q3 2018 subject to a successful outcome of tests.
In a similar manner to the 2016 test, which flowed oil from the
Portland at a stable metered rate of 323 bopd over an 8.5 hour
period, a linear rod-pump will be utilised to flow Portland oil
from around 35 metres of existing perforations located at around
615 metres below surface. As the 2016 test rates were constrained
by the pump's capacity, the new test will use a larger pump with a
capacity of around 475 bopd.
Subject to a successful testing outcome in the Kimmeridge and
Portland, the HH-2 appraisal well is planned to immediately follow
the EWT in late 2018 / early 2019. The well will be drilled as a
future Portland production well. Drilling plans include optionality
to deepen HH-2 into the Kimmeridge to gather core and image log
data, together with a possible northwards deviation to access the
adjacent oil bearing Collendean Farm fault block's significant
Portland oil resources.
Similarly, contingent upon EWT success, an HH-1z Kimmeridge
sidetrack spud is planned in 2019 following integration of HH-1
Kimmeridge production data into a reservoir model and data from any
future HH-2 Kimmeridge core. Necessary Planning and EA permits for
HH-2 and HH-1z are in place. To achieve its goal of stable,
long-term Horse Hill oil production during 2019, HHDL now plans to
submit a further production planning application to SCC in Q3 2018.
This application will seek consent to produce oil initially from
HH-1 & 1z, and HH-2, together with further production wells in
a second contingent drilling phase.
UKOG was awarded an extension of the licence term at its 100%
owned PEDL234 from 30 June 2018 until 31 December 2023. The Licence
has been converted into the 14th Licence Round Master Clauses
Agreement which permits a Retention Area ("RA") covering the
entirety of the 300km2 licence area to be created.
UKOG intends to progress leases and regulatory approvals for two
further well sites and exploration wells in the north of PEDL234
and potentially for a BB-1y sidetrack. An application was made
recently to the West Sussex County Council to extend the existing
planning consent on the BB-1 site for a further 18 months to the
end of 2019.
On PEDL331: UKOG intends to secure a site lease and regulatory
steps necessary to drill an appraisal well on the Arreton Main oil
discovery and look-alike Arreton South prospect in PEDL331. PEDL331
currently has an estimate of 10.2 million barrels UKOG Net P50
Contingent (recoverable) Resources.
UKOG intends to participate in the share of the planned Portland
and Kimmeridge Holmwood exploration well which currently has an
estimated 0.92 million barrels UKOG Net P50 Prospective Resources.
Europa plans to drill the Holmwood-1 exploration well.
On Markwells Wood: UKOG intends to submit a revised planning
application for further flow testing to include the Kimmeridge
section of the well. UKOG will seek necessary consents from EA to
test this area.
UKOG plans to continue to consolidate and expand its licence
position in the UK onshore, particularly in its core Weald Basin
Kimmeridge oil play, with additional exploration, development and
production.
6. OIL & GAS REGULATORY BACKGROUND
This paragraph is intended as background information in relation
to the oil and gas regulatory framework in place in the UK. As
such, it is only a summary of the more pertinent provisions of the
Petroleum Act 1998 ("Petroleum Act"). The Petroleum Act is the
principal legislation regulating the grant of rights to bore for
and obtain petroleum in the United Kingdom. The Petroleum Act was
enacted on 11 June 1998 and repealed the Petroleum Production Act
1934.
The Petroleum Act provides that petroleum deposits (which
includes shale gas) below land in Great Britain are the property of
the Crown but permits the OGA to grant licences to search and bore
for and get petroleum to such persons as he thinks fit. The
Petroleum Act is supplemented by various environmental and health
and safety legislative provisions. All regulatory powers for the
oil and gas industry, apart from those concerned with the
environment, have been transferred from the Secretary of State to
the OGA.
A PEDL (Production Exploration and Development Licence) is an
onshore production licence which allows a company to pursue a range
of oil and gas exploration activities, subject to necessary
drilling/development consents and planning permission. All PEDLs
run for the following 3 successive terms:
l The initial term is associated with an exploration work
programme that the licensee will have agreed with the OGA during
the competitive application process. The licence will expire at the
end of its initial term unless the licensee has completed the work
programme and surrendered a fixed amount of acreage (usually 50%).
While the initial term is associated with a work programme of
exploration work that must be completed if the licence is to
continue into a second term, the licensee has the right to start
production during the initial term, if the licensee can move
quickly enough, subject to normal regulatory controls.
l The second term is associated with appraisal and development.
There is no agreed work programme; instead the licence will expire
at the end of its second term unless the OGA has approved a
development plan.
l The third term is intended for production (production period).
The OGA has the discretion to extend the term if production is
continuing, but reserves the right to reconsider the provisions of
the licence before doing so, especially the acreage and rentals.
While the initial term is associated with a work programme of
exploration work that must be completed if the licence is to
continue into a second term, the licensee has the right to start
production during the initial term, if the licensee can move
quickly enough, subject to normal regulatory controls.
The length of each of the terms of a PEDL is agreed between the
OGA and the licensees prior to the licence being issued, but may be
subject to any subsequent amendments being agreed in the manner set
out in this paragraph 6.
A PL (Production Licence) is an older form of onshore production
licence issued by the UK government which grants exclusive rights
to explore, drill and produce petroleum within a specified area for
a specified time. An operator is approved for each petroleum
licence and is responsible for managing all activities that take
place in relation to that licence.
As from 1 October 2016, the Energy Act 2016, and Regulations
made under it, transferred certain functions from the Secretary of
State for Energy and Climate Change (now the Secretary of State for
Business, Energy and Industrial Strategy) to the OGA. These include
the licensing function conferred by the Petroleum Act 1998 insofar
as it affects existing licences. Consequently, any legal agreement
that would previously have named the Secretary of State for Energy
and Climate Change as a party must correspondingly name the OGA
instead (and all
pre-existing agreements are deemed to refer to the OGA as necessary).
All petroleum exploration and production licences that are
granted incorporate the model clauses (the "Model Clauses") which
are contained in statutory instruments at the time of grant of each
respective licence. Alternatively the OGA may agree bespoke clauses
that may apply to the exclusion of the Model Clauses.
Part 1 Article 5 of the Petroleum Act determines that all
licences granted prior to the enactment of the Petroleum Act will
incorporate the current Model Clauses in substitution of any
previous model clauses. The current Model Clauses applicable to
onshore licenses are contained in the Petroleum Licensing
(Exploration and Production) (Landward Areas) Regulations 2014 (SI
2014/1686).
Clause 5 of the Model Clauses contains an option in favour of a
licensee to continue a licence beyond the initial term of that
licence. Notice to exercise this option must be given to the OGA no
later than 1 month prior to the expiry of the initial term of the
licence and will be subject to and conditional on: (i) all sums
outstanding under the licence having been paid; and (ii)
performance by the licensee of the work programme specified in the
licence having been performed.
Clause 7 of the Model Clauses determines that a licensee may
give notice to the OGA that it wishes for a licence to continue
beyond a second term into the production period, provided that such
notice may be given at any time not later than 3 months before the
expiry of the second term of a licence, subject to all due payments
having been made and the terms and conditions contained in the
Model Clauses having been performed. In order for a licence to
continue beyond a second term, the OGA must have either: (i)
approved a programme submitted to him it and such programme must be
in force upon expiry of the second term; (ii) served a programme on
the licensee and such programme must be in force upon expiry of the
second term; or (iii) the OGA has with a view to securing the
maximum economic recovery of petroleum so directed in writing
(subject to any conditions specified by the OGA).
The Model Clauses provide that each of the 3 terms of a PEDL may
be amended as follows:
l The initial term and or the second term of a licence may be
extended by the OGA, on application being made to him it in writing
not later than 1 month prior to the expiry of the relevant period,
subject to all due payments having been made and the terms and
conditions contained in the Model Clauses having been performed.
Any extension of the initial term or second term shall be given by
the OGA and which shall be for such period, and subject to such
conditions, as the OGA may determine. There is no limitation on the
number of extensions that may be made to the initial term or second
term contained in the Model Clauses.
l The production period of a licence may be extended for such
further period as may be agreed by the OGA and a licensee in order
to secure the maximum economic recovery of petroleum from the
licensed area. Any such extension shall be subject to such
modification of the terms and conditions of the licence as may be
agreed by the OGA and a licensee. Any application to extend the
production period must be made to the OGA no later than 1 month
prior to the expiry of the production period. There is no
limitation on the number of extensions that may be made to the
production period contained in the Model Clauses.
The consideration payable in terms of respect of each licence
shall be determined by the provisions contained in each such
licence or shall be determined by the Model Clauses, as the case
may be. In the past, a royalty regime applied whereby the UK
government would receive a royalty (usually linked to petroleum
produced, or profits made pursuant to licences), but this was
abolished from 1 January 2003.
The Model Clauses contain restrictions prohibiting the (i)
assignment of licences (or any interest therein) or (ii) the entry
into agreements to share in the proceeds of sale from petroleum
extracted from an area subject to a licence already granted by the
OGA which has not, but may be, won and saved, unless the prior
consent of the OGA has been obtained.
Fiscal and regulatory regime
There are currently two main elements of government tax to which
oil and gas companies are subject. These are Ring Fence Corporation
tax ("RFCT") and Supplementary Charge ("SC"). A third, Petroleum
Revenue Tax (PRT), still exists but has been set at zero per cent
with effect from 1 January 2016.
RFCT
Corporate profits generated in the upstream oil and gas industry
are liable for RFCT which is assessed against the upstream profits
of the company. The RFCT tax rate is currently 30% and is assessed
on an annual basis. First year allowances are given as a relief at
a rate of 100% for virtually all capital expenditure.
The RFCT rules are designed to prevent companies reducing their
upstream ring fence profits with reliefs and allowances from other
activities. The main restrictions are that losses and expenses from
other activities, either within the company or accruing to an
affiliate, cannot be deducted against ring fence profits. The
deductibility of financing costs is also limited such that,
broadly, interest deductions are only available in respect of
monies borrowed which have been used in the ring fence business,
and where the terms do not exceed those applicable at arm's length.
Ring Fence Expenditure Supplement allow companies to claim a 10%
supplement on their ring fence trading losses carried forward for
10 (previously six), not necessarily consecutive, periods.
SC
SC was introduced in 2002 and applies to all profits obtained
from oil and gas production, and transportation and processing from
17 April 2002 onwards. SC is charged at a rate of 10% (with no
deduction for finance costs) and is calculated in a very similar
way to RFCT. SC can be reduced by the investment allowance, cluster
area allowance or onshore allowance once the relevant allowance has
been activated.
Investment Allowance
Investment Allowance is calculated as a percentage of the amount
of qualifying ring fence expenditure, which was only capital
expenditure when the Investment Allowance was originally
introduced, with effect from 1 April 2015. However, the scope of
the qualifying expenditure has been extended to include certain
operating and leasing expenditure incurred on or after 8 October
2015. Once activated by production income from the relevant field
the allowance reduces the company's profits subject to
supplementary charge
Cluster Allowance
Cluster Allowance is similar to Investment Allowance in the way
it is calculated; however qualifying costs for the purposes of
Cluster Allowance are those in respect of qualifying expenditure
incurred in relation to a cluster area on or after 3 December 2014.
The definition of qualifying expenditure is the same as for
Investment Allowance. Once an area has been determined as a cluster
area all subsequent qualifying capital expenditure will qualify for
the allowance. The benefit of cluster allowance over investment
allowance is that income from any of the interests included in the
cluster will activate the allowance, not just income from the
licence in question.
Onshore Allowance
Onshore Allowance is designed to support the early development
of onshore oil and gas projects including shale gas developments.
The allowance is available in respect of capital expenditure
incurred on and after 5 December 2013 in relation to an onshore oil
and gas related activity, and is calculated as a percentage of a
qualifying capital expenditure spend, reducing adjusted ring fence
profits subject to supplementary charge once activated. The
extension of qualifying costs to include certain operating and
leasing costs does not apply to the onshore allowance. If the
allowance cannot be activated (due to a lack of production income
from the site) it can be transferred to another site three years
after the expenditure was incurred.
Environmental Regime
The regulatory framework for the hydrocarbon extraction industry
is administered by a number of regulatory authorities. The
framework involves a number of review processes and
permissions/consents to be obtained before any operation can
commence. These requirements are in addition to the consenting
process under the Town and Country Planning Act 1990. A brief
summary of the key regulatory requirements is set out below.
The Oil and Gas Authority
The Petroleum Act 1998 vests all rights to petroleum in the
Crown, including the rights to search for, bore for and get
petroleum. It empowers the OGA to grant licences to search for and
bore for and get petroleum to such persons as they see fit.
The OGA has regulatory control for petroleum licencing under the
Petroleum Act 1998 (as amended by the Infrastructure Act 2015).
Under the Petroleum Act, the Secretary of State (SoS) issues
landward production licences (Petroleum Exploration and Development
Licences (PEDL)).
Under the terms of a PEDL, a licensee is obligated to seek
consent from the OGA to undertake well operations including but not
limited to the drilling of a well, extended well test and
production as well as consent to flaring or venting.
Standard provisions in PEDLs include obligations on the licensee
to avoid harmful methods of working, powers for the SoS to execute
works in the event of breach of the PEDL by the licensee and powers
to revoke the PEDL.
The Environment Agency
Onshore oil and gas production is regulated by the Environment
Agency (EA) by an environmental permitting regime granted by the EA
pursuant to the Environmental Permitting (England and Wales)
Regulations 2016 (EPR 2016).
One of the principal aims of the permitting regime is to protect
the environment. Under the EPR 2016, the EA controls the treatment
and disposal of mining waste and naturally occurring radioactive
material (NORM) should this be encountered, any emissions to air
and water as a result of the permitted operations through to
restoration and aftercare. Other permits/licences may also be
required from the EA depending on the site location and geological
and hydrogeological characteristics of the site.
In addition to the EPR 2016, the EA controls water resources,
water quality and water pollution under the Water Resources Act
1991. Part of its requirements relate specifically to drilling, by
ensuring the protection of any groundwater sources.
Health and Safety Executive
The Health and Safety Executive (HSE) regulates the safety
aspects of all phases of extraction. It ensures that safe working
practices are adopted by onshore operators as required under the
Health and Safety at Work etc Act 1974, and regulations made under
the Act.
HSE works closely with the EA and the Department for Business,
Energy and Industrial Strategy to share relevant information on
such activities and to ensure that there are no material gaps
between the safety, environmental protection and planning
authorisation considerations, and that all material concerns are
addressed.
Minerals Planning Authority
Minerals Planning Authorities (as part of local councils) grant
planning permission for the location of any wells and well pads,
and impose conditions to ensure that the impact on the use of the
land is acceptable. Where planning permission is granted for
petroleum exploration and development, the development will be
subject to restoration and aftercare provisions, which will be
enforced by way of planning condition.
The planning system controls the development and use of land in
the public interest. The focus of the planning system is on whether
the application is an acceptable use of the land, and the impacts
of those uses. This includes ensuring that any new development is
appropriate for its location. This takes into account the effects
(including cumulative effects) of potential pollution on health,
the natural environment or general amenity. Certain types of
planning application are required to undertake an environmental
impact assessment before they are determined.
The planning regime and other regulatory regimes are separate
but do complement each other. Any control processes, health and
safety issues or emissions themselves are then subject to the
approval of the other regulators mentioned above.
Abandonment Framework
The Model Clauses prohibit operators from abandoning any well
without the consent of the OGA. The operator must submit an
application for consent to abandon a well and provide detailed
information regarding the results of the well. The OGA's consent to
well abandonment must be given before this operational activity is
undertaken and the operator must adhere to any conditions imposed
by the OGA. After well abandonment consent is given, the operator
must notify the OGA upon completion of the work and a well
engineering diagram must be submitted at this time.
7. REASONS FOR ADMISSION
The Company is seeking readmission to trading on AIM as an
Operating Company (instead of its current status as an Investing
Company) under the AIM Rules. Following approval for and the change
of status to an Operating Company, UKOG's investing policy will
cease and the Company will be able to take direct controlling
interests in oil and gas assets without restriction and under the
AIM Rules become the operator of such assets.
8. DIRECTORS, EMPLOYEES AND KEY PERSONNEL Directors
At Admission, the Board will comprise Stephen Sanderson, Kiran
Morzaria, Allen Howard and Nicholas Mardon-Taylor.
Brief biographical details of the Directors are set out
below:
Allen Dee Howard, Non-Executive Chairman - aged 40
Mr Howard has extensive experience in the oil sector. He was
previously a Senior Vice President of Houston-based Premier
Oilfield Laboratories, and Chief Commercial Officer of well
analysis experts Nutech. Mr Howard also held senior positions with
Schlumberger. He holds a degree in Chemical Engineering from Texas
Tech University and an MBA from Mays Business School in Texas.
Stephen Paul Sanderson, CEO - aged 61
Stephen Sanderson joined UKOG in September 2014 and was
appointed Executive Chairman and Chief Executive in July 2015. A
highly-experienced petroleum geologist, oil industry veteran and
upstream energy business leader, with over 30 years operating
experience, Stephen is a proven oil finder and has been
instrumental in the discovery of more than 10 commercial
conventional fields, including the giant Norwegian Smorbuk-Midgaard
field complex. Stephen held a variety of senior management roles
for ARCO (which was acquired by BP in 2000), Wintershall AG (a
subsidiary of German chemical giant BASF) and 3 junior start-ups.
He created and ran successful new exploration businesses in Africa,
Europe and South America. He has significant technical and
commercial expertise in the petroleum systems of Africa, the North
Sea, Norway, onshore UK and Europe, South America, the South
Atlantic, Middle East, Asia, India, Australia and the USA. He is a
graduate and Associate of the Royal School of Mines, Imperial
College, London, a Fellow of the Geological Society of London and a
member of the American Association of Petroleum Geologists. He
served for 4 years in the British Army and TAVR as a platoon
commander, serving in the UK and Berlin.
Kiran Caldas Morzaria, Finance Director - aged 44
Mr Morzaria holds a Bachelor of Engineering (Industrial Geology)
from the Camborne School of Mines and an MBA (Finance) from CASS
Business School. He has extensive experience in the mineral
resource industry working in both operational and management roles.
Mr Morzaria spent the first 4 years of his career in exploration,
mining and civil engineering. He then obtained his MBA and became
the Finance Director of Vatukoula Gold Mines Plc. He has served as
a director of a number of public companies in both an executive and
non-executive capacity and is currently the Chief Executive Officer
for Cadence Minerals plc, and a non-executive director of European
Metals Holdings Ltd.
Nicholas John Mardon-Taylor, Proposed Non-Executive Director -
aged 73
Mr. Mardon-Taylor served as the Chief Financial Officer of
Hurricane Energy PLC from May 2012 until January 2016. He has
worked in the oil industry for over 35 years, his first involvement
in the North Sea being in the early licensing rounds. He was with
Hurricane from 2005 to January 2016 when he was the Group's first
CFO and was subsequently responsible for the Group's Environmental
Management System.
Key personnel
Matt Cartwright, Chief Operating Officer - aged 56
Mr Cartwright is a part of key management of UKOG and joined the
Company as a Business Adviser in July 2014 to help close and manage
the Company's successful Northern Petroleum acquisition. He has
provided services as Chief Operating Officer since September 2015.
Matt has worked for 35 years in the international oil & gas
industry for super-majors and start-ups. He started his career with
BP and ARCO in the UK before spending 13 years with Total where he
made a significant contribution to Total's growth in the Canadian
heavy oil sands, the UK Elgin/Franklin development and in several
ultra-deep-water West Africa projects. Matt is highly experienced
in the areas of executive management, business development,
development planning, strategic planning, economic evaluation,
asset acquisitions and deployment of new engineering technology.
His international experience encompasses Canada, Norway, France,
Africa and the Middle East. Matt has a first class engineering
degree from the University of Cambridge.
Employees
As at the date of this Document, the Group has 6 full time
employees.
9. CORPORATE GOVERNANCE
From Admission, the Company is required under the AIM Rules to
comply with a recognised corporate governance code to be chosen by
the Board. The Board recognises the importance of sound corporate
governance and intends that the Company will comply with the
provisions of the QCA Code. The Company shall disclose on its
website how it complies with the QCA Code and, where it departs
from the QCA Code, will explain the reasons for doing so.
Following Admission, the Board will comprise 2 executive
directors and 2 non-executive directors (one of whom is considered
by the Board to be independent) in line with QCA guidelines.
The Board is responsible for formulating, reviewing and
approving the Group's strategy, budgets and corporate actions.
The Group has established properly constituted audit and
remuneration committees of the Board with formally delegated duties
and responsibilities.
Audit Committee
The Audit Committee has primary responsibility for monitoring
the quality of internal controls, ensuring that the financial
performance of the Group is properly measured and reported on. It
will receive and review reports from the Group's management and
auditors relating to the interim and annual accounts and the
accounting and internal control systems in use throughout the
Group. The Audit Committee will meet no less than 3 times each year
and will have unrestricted access to the Group's auditors. The
Audit Committee comprises a minimum of 2 directors including, at
least, 1 independent Non-Executive Director and 1 member with
recent and relevant financial experience. At Admission, the members
of the Audit Committee shall be Allen Howard and Nicholas
Mardon-Taylor.
Remuneration Committee
The Remuneration Committee reviews the performance of executive
directors and makes recommendations to the Board on matters
relating to their remuneration and terms of employment. The
committee also makes recommendations to the Board on proposals for
the granting of share options and other equity incentives pursuant
to any share option scheme or equity incentive scheme in operation
from time to time. The Remuneration will meet at least twice each
year. The Remuneration Committee comprises a minimum of 2 directors
all of whom shall be independent Non-Executive Directors. At
Admission, the members of the Remuneration Committee shall be Allen
Howard and Nicholas Mardon-Taylor.
AIM Rules Compliance Code
The Company has also adopted an AIM rules compliance code to
ensure that they have in place sufficient procedures for ensuring
compliance with the AIM Rules.
10. SHARE DEALING POLICY
The Board has adopted the Share Dealing Policy in order to
comply with Rule 21 of the AIM Rules relating to directors' and
applicable employees' (as defined in the AIM Rules) and key
personnel dealings in Shares. It also complies with the
requirements of MAR.
The Share Dealing Policy applies to the Directors, other
relevant employees and key personnel of the Group. The Share
Dealing Policy provides that there are certain periods during which
dealing in Ordinary Shares cannot be made. Such periods include the
periods leading up to the publication of the Company's financial
results, including interim results, and any periods in which the
Directors and other relevant employees and key personnel may be in
possession of unpublished price sensitive information.
In addition, a clearance procedure must be followed before any
dealings by persons subject to the Share Dealing Policy can take
place (including dealings by their families and other
associates).
11. ANTI-BRIBERY AND CORRUPTION POLICY
The Company has implemented an anti-bribery and corruption
policy and also implemented appropriate procedures to ensure that,
inter alia, the Board, employees, key personnel, agency staff and
consultants comply with the Bribery Act 2010.
12. SOCIAL MEDIA POLICY
The Company has implemented a Social Media Policy which details
the ways in which all employees, officers, consultants,
contractors, volunteers, interns, casual workers and agency workers
interact with social media in relation to UKOG. This policy deals
with the use of all forms of social media, including Facebook,
LinkedIn, Twitter, Google+, Wikipedia, Whisper, Instagram, Vine,
Tumblr, ADVFN bulletin board, London South East bulletin board, iii
bulletin board and all other social networking sites, internet
postings, bulletin boards and blogs. It applies to use of social
media for business purposes as well as personal use that may affect
the business in any way. It is designed to ensure that there is no
unauthorised release of potentially price sensitive information
regarding the Company so that all such information is released in
the first instance through the correct authorised regulatory news
services and that no misleading information is contained in
unauthorised media channels. The Policy is also designed to
mitigate the risk of use of terminology in the media being
inconsistent with the Company's authorised regulatory
announcements. The Policy has been implemented following events in
2015 when UKOG was forced to provide clarifications on its earlier
RNS statements following media reports of the Company's
announcements and associated interviews with the Company's
management. Risks associated with Social Media details can also be
found within Part II of this Document.
13. SHARE OPTIONS, INCENTIVES AND WARRANTS
The Directors believe it is important for the success and growth
of the Company to employ highly motivated personnel and that equity
incentives are available to attract, retain and reward staff. On
Admission, the following directors and key personnel/employees have
the following shares and options:
Name Number of Number of Current shareholding
shares options options excluding
unexercised
Stephen Sanderson - 85,000,000 -
Kiran Morzaria 4,508,178 20,000,000 0.1%
Allen Howard - 10,000,000 -
Matt Cartwright - 40,000,000 -
As at the date of this Document, Warrants and Options for a
total of 251,055,555 Ordinary Shares are outstanding. Further
details on the outstanding Warrants are set out in Part V of this
Document. The Company does not intend to apply for the Warrants to
be admitted to trading on AIM.
14. FINANCIAL REPORTING
The Company operates a September year end. It is anticipated
that the preliminary statement of results for each year will be
announced by the end of March and that an interim statement of the
results for the first half-year will be announced in June each
year. It is intended to hold the Company's Annual General Meeting
during April of each year.
In accordance with Rule 28 of the AIM Rules, this Document does
not contain historical financial information on the Company, which
would otherwise be required under Section 20 of Annex I of the
Prospectus Rules. The Group's published financial information can
be located on the Company's website under AIM Rule 26 at the
following link:
http://www.ukogplc.com/page.php?pID=82
The most recently published Annual Report and Accounts for the
Year Ended 30 September 2017 and most recent interim results for
the period ended 31 March 2018 are contained within the Appendix to
this Document.
15. DIVID POLICY
The Directors do not intend to declare a dividend at the current
time.
16. ADMISSION AND DEALINGS IN SHARES
Application has been made to the London Stock Exchange for the
Existing Ordinary Shares to be admitted to trading on AIM. It is
expected that Admission will be effective and that dealings on AIM
will commence at 8.00 a.m. on 1 August 2018.
17. TAXATION
Your attention is drawn to the further information regarding
taxation set out in Part V of this Document. These details are,
however, intended only as a general guide to the current tax
position for UK resident Shareholders under UK taxation law and you
should seek independent advice if you are in any doubt as to your
tax position and/or if you are subject to tax in a jurisdiction
other than in the UK.
18. THE TAKEOVER CODE
The Company is incorporated in England and its Ordinary Shares
are admitted to trading on AIM. Accordingly, the Takeover Code
applies to the Company.
19. GENERAL MEETING
As described above, the change of status of the Company from an
Investing Company to an Operating Company is classified as a
fundamental change of the Company under the AIM Rules and therefore
is conditional upon the approval of Shareholders at the General
Meeting. Accordingly, set out at the end of this Document, is a
notice convening the General Meeting at which the following
resolutions will be proposed:
l Resolution 1 seeks to approve the change of the status of the
Company from an Investing Company to an Operating Company with a
material trading activity for the purposes of the AIM Rules and to
approve the Admission;
l Resolution 2 seeks to authorise the Directors to issue up to
GBP170,000 in nominal value of Ordinary Shares following Admission;
and
l Resolution 3 seeks to disapply pre-emption rights in
connection with the issue of up to
GBP170,000 in nominal value of Ordinary Shares following
Admission.
The attention of Shareholders is also drawn to the voting
intentions of the Directors set out in paragraph 23 below.
20. COMPETENT PERSON'S REPORT
A technical report prepared in accordance with the 2011
Petroleum Resources Management System (as defined by the Society of
Petroleum Engineers, American Association of Petroleum Geologists,
World Petroleum Council and the Society of Petroleum Evaluation
Engineers), and the "AIM Note for Mining and Oil & Gas
Companies" as published in June 2009 by the London Stock Exchange
that is effective 1 July 2018 (the "Competent Person's Report")
prepared by Xodus Group is available in this document, and on the
Company's website.
A competent person's report had been published by the Company on
6 June 2018 which has not been used in this Document. The reason
for this is that PEDL233 has expired since this competent person's
report had been prepared and accordingly that report no longer
complies with the AIM Note for Oil & Gas Companies as it does
not accurately detail the oil and gas interests of the Company as
at the date of this Document. The Competent Person's Report used is
an updated version of the
6 June 2018 report and reaches the same conclusions included
therein save for any changes required as a result of the expiry of
PEDL233.
21. FURTHER INFORMATION
Your attention is drawn to the further information set out in
Parts III and V of this Document, and the "Risk Factors" set out in
Part II. You are advised to read the whole of this Document rather
than relying on the summary information set out in Part I of this
Document before making any decision to invest in the Company.
22. ACTION TO BE TAKEN
Shareholders will find enclosed with this Document a Form of
Proxy for use at the General Meeting. Whether or not you intend to
be present at the General Meeting, you are requested to complete,
sign and return your Form of Proxy to Share Registrars Limited at
The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR or sent by
email to voting@shareregistrars.uk.com, as soon as possible but, in
any event, so as to arrive no later than 10.00 a.m. BST on 27 July
2018.
Completion of a Form of Proxy will not preclude a Shareholder
from attending and voting at the General Meeting in person save
that in each case the Shareholder should contact Share Registrars
Limited in advance to confirm what identity documents they should
bring with them and to complete a form of representation (available
on request from Share Registrars Limited) if necessary.
23. RECOMMENDATION
The Board believes that the Proposal is in the best interest of
the Company and its Shareholders and therefore recommends that
Shareholders vote in favour of resolutions to be proposed at the
General Meeting as they intend to do so in respect of their own
beneficial holding of Ordinary Shares which in aggregate amounts to
4,508,178 Ordinary Shares representing 0.1% of the Existing Share
Capital.
Yours faithfully,
Stephen Sanderson
Executive Chairman and CEO
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCUOORRWOABAAR
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