UK Oil & Gas moves to 'strengthen performance', raises £4.2m

UK Oil & Gas announced on Thursday that it plans to carry out a number of material actions, designed to strengthen its overall financial and oil production performance during the current low oil price environment.

The AIM-traded firm said the first was full repayment of the convertible loan with Riverfort Global Opportunities PCC and YA II PN, making it debt-free.

It said the repayment would eliminate the uncertainty attached to loan note conversion timings and pricing - something the board said it felt was perceived to exert a negative influence on UKOG’s share price.

The second action was to materially reduce Horse Hill oil field operating costs by a further $4 per barrel, via a £1.65m purchase of currently-rented surface production equipment.

Overall asset level operational expenditure would now reduce to around $13 per barrel at current production rates, which it claimed was among the lowest in the UK oil sector.

Thirdly, UKOG said it had finalised plans for a “short but material” intervention in the Horse Hill-1 well, designed to further boost production rates in the summer.

Finally, the company said it had raised £4.2m at 0.2p per share to provide funding for those three actions, and other key activities.

Those key things, the board said, would include preparations for work at the Loxley Portland gas appraisal well site, if planning approval is granted on 29 June, and follow-up of the Arreton planning application on the Isle of Wight.

“With the lockdown rules easing and encouraging signs of recovery in the Brent oil price, the company has acted decisively to both strengthen its financial position, target further profitability of its flagship Horse Hill asset and start preparations for its next appraisal wells at Loxley and on the Isle of Wight,” said chief executive officer Stephen Sanderson.

At 1107 BST, shares in UK Oil & Gas were down 13.15% at 0.2p.