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Proactive weekly oil and gas news summary - Horse Hill, UKOG, Solo Oil, Tethys Petroleum and Gulf Keystone

Published: 09:01 11 Apr 2015 BST

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It could be said there was only really one oil story in town this week. But then, the Shell/BG merger comes to mind.

Shares in those involved in the Horse Hill consortium shares rocketed on claims of a 100bn oil find near Gatwick

On Thursday,UK Oil and Gas (LON:UKOG), which has a 20.36% stake, jumped over 170% to 2.99p. Solo Oil (LON:SOLO), which owns 6.5%, climbed 28% to 0.74p while smaller partner Alba Minerals rose 133% to 0.84p.

Neil Ritson, chief executive of Solo Oil (LON:SOLO) said production could be underway in as little as two years.

“It’s not like we need a giant North Sea rig,” he told Proactive, adding there were a number of other fields nearby already in production.

He also played down the suggestion that fracking would be required to extract the oil.

Earlier, UKOG’s chief executive Stephen Sanderson had told the BBC that the site near Gatwick may become a world class resource after estimates of oil in place at the site were upgraded to 158mln barrels per square mile, excluding a discovery already made at Portland.

"Based on what we've found here, we're looking at between 50 and 100 billion barrels of oil in place in the ground. By 2030 we could produce 10%-to-30% of the UK's oil demand from within the Weald area," Sanderson said.

In big oil, Shell's (LON:RDSB) £47bn takeover of smaller rival BG Group (LON:BG.) is a “compelling deal from a value perspective” insisted the boss Ben van Beurden.

The mega-merger, announced early on Wednesday, was the second biggest oil and gas deal on record after Exxon and Mobil's US$75.3bn merger in 1998.

Under the terms, Shell - which already the largest FTSE 100 constituent by a considerable margin - is paying a 52% premium to the average price of BG the shares over the past 90 days.

Speaking to analysts van Beurden stressed that a tie-up had always made sense. Still, the merger seems to have been brought to life by slumping crude oil prices, which have fallen by 50% in the past six months.

Also from the sector this week, Gulf Keystone Petroleum (LON:GKP) shares fell on the same day as it unveiled a huge widening of its 2014 loss to US$248.2mln from US$32mln in 2013 and said it is still owed millions.

The firm is owed US$100mln by the Kurdistan regional government for crude exports.

The Kurdistan administration is in dispute with Iraq's central government about the export issue.

GKP is also continuing talks with a number of parties, it said, over sales of assets or a full company sale to raise funds.

Elsewhere, Tethys Petroleum (LON:TPL) is mulling a number of options in the event the sale of half of its Kazakh oil and gas assets does not go ahead, it emerged yesterday.

The oil and gas group negotiated the disposal, for US$75mln to Chinese private equity group Sinohan, over 13 months ago, but is still waiting for approval from the Kazakhstan Ministry of Energy.

The completion, or longstop, date is May 1 and Tethys said it needs to get approval imminently to comply with the all of the sale conditions.

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