Exploration firm UK Oil & Gas (UKOG) has gained another 35% stake in the Horse Hill oil field for a £12m consideration comprising cash and UKOG shares, following the acquisition of Magellan Petroleum from Tellurian Investments.
Following the acquisition, UKOG has now increased its stake in the Horse Hill oil field from 50.635% to 85.635%.
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The addition of Magellan’s 35% direct interest in the field was held through the PEDL137 and PEDL246 licences.
UKOG expects that the ongoing civil works at Horse Hill, which are necessary to enable simultaneous Horse Hill-2/2z (HH-2/2z) drilling and HH-1 Kimmeridge test production, will be completed this week.
Drilling is scheduled to commence before the end of this month.
The £12m transaction will be paid in three tranches, with the first £8m upon completion of the share purchase agreement. A £3m deferred payment of UKOG shares or cash is to be made before the end of this year.
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By GlobalDataThe remaining £1m will also be paid as a deferred payment in UKOG shares or cash before 31 March 2020.
UKOG chief executive Stephen Sanderson said: “The completion of this transformational acquisition of a further 35% in our flagship asset means UKOG is now firmly in the driving seat at Horse Hill, holding a controlling 85.635% interest.
“Our operations team is now poised to commence simultaneous Horse Hill-2/2z Portland drilling and HH-1 Kimmeridge test operations before month’s end.
“The remainder of the year at Horse Hill looks set to be highly eventful and, hopefully, financially transformative, as we drive to seek to establish permanent oil production by year-end.”
UKOG initially agreed to acquire the entire share capital of Magellan in August.
