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British independent oil and gas exploration and development start-up United Oil & Gas has signed non-binding Heads of Terms on an agreement to sell North Sea blocks 15/18d and 15/19b to Anasuria Hibiscus UK for a consideration of up to $5m.

The AIM-listed company won the two blocks in the UK Oil and Gas Authority (OGA) 30th Licencing Round in August 2018 and holds a 95% equity interest. The blocks include the Crown Discovery, which was initially discovered by Conoco Philips in 1998. Data analysis conducted by the United team has brought value to the licence since acquisition.

An immediate and non-refundable payment of $1m will be made after completion of the sale and purchase agreement (SPA). Out of the total value, $950,000 will be payable to United and $50,000 to United’s minority partner Swift Exploration.

An additional $3m ($2.85m net to United) will be paid before the end of 2020 if further milestones are achieved. Furthermore, $1m ($950,000 net to United) will be paid once the field commences production. If these milestones are not reached, the licence will revert to United and Swift Exploration.

The deal is subject to completion of due diligence, including geological, legal and financial due diligence, regulatory OGA approval and definitive documentation.

United Oil and Gas CEO Brian Larkin said: “Our primary goal as a management team is to deliver value for our shareholders.

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“The work of our technical team in attaining and developing this licence has delivered an excellent outcome for the Company, allowing us, on completion, to realise a significant return in a very short space of time.

“Our strategy involves the active management of our portfolio of assets, and this transaction demonstrates our ability to deliver on that strategy.

“United remains committed to building a full cycle oil and gas company. The proceeds of this transaction will further strengthen our balance sheet to support the growth of the company.”