UK Oil & Gas announces £3m committed funding facility

The AIM-traded firm said the funding would play a crucial role in supporting its upcoming activities over the next 12 months.

It said the primary objective of the secured funds was to provide the necessary working capital for the advancement of several key projects.

The projects would include further testing of the Pinarova-1 well and additional drilling preparations and studies in Turkey.

Additionally, the funding would support the discharge of planning conditions and site construction preparations for the Loxley gas discovery.

There was also the possibility of a farm-out, which could cover the planned appraisal and development programme of the Loxley gas discovery.

Furthermore, the funds would aid UKOG in executing the water reinjection work-over at the Horse Hill field, as well as preparing for 3D seismic acquisition and drilling operations for Horse Hill-3.

Those activities are part of a previously-announced farm-out agreement with Pennpetro.

Lastly, UKOG said it intended to use the funding for planning application work and conceptual engineering studies related to the Portland hydrogen storage project operated by UK Energy.

“The facility provides the company with working capital at competitive terms to fully fund its planned key UK and Turkey activities over the coming year,” said chief executive officer Stephen Sanderson.

“The discharge-conversion terms are attractive in that they will be either at zero discount to the lowest daily volume-weighted average price in the 15-days prior to conversion, or at a premium of 35% to the reference price of the relevant drawdown, whichever is lower.

“This is in contrast to the likely heavy discount to the company's share price associated with a more traditional share placing in today's financial climate.”

At 1355 BST, shares in UK Oil & Gas were down 0.86% at 0.06p.

Reporting by Josh White for Sharecast.com.