UK Oil & Gas PLC (AIM:UKOG) stock soared some 35% higher in Tuesday’s early deals after it unveiled a new review of the Loxley gas discovery, near Guildford, which details the potential economic value of the project.
Loxley could be worth up to £124mln net to UKOG, in the ‘mid-case’ scenario, the company highlighted in a statement.
The new competent person's report (CPR) was penned by consultant RPS Energy, which based the study on an estimated 31bn cubic feet contingent gas resource.
In London, UKOG shares rose 35.54% to trade at 0.082p giving the small-cap energy stock a market value of £17.73mln.
UKOG said will now advance its programme which already has planning and environmental consents in place for an appraisal well, Loxley-1.
At present, the well is slated for the 2024 season and it is anticipated that it could be funded through a partnership.
"The CPR confirms that Loxley, one of the UK's largest onshore gas discoveries, possesses material present value in today's prevailing higher gas price world,” said chief executive Stephen Sanderson.
“Its potential future revenue streams have the capacity to deliver material shareholder value in the foreseeable future and its recoverable resources to contribute towards the UK's future energy security.”
“Loxley's illustrated potential commercial robustness also means that UKOG can now plan to fund a future development via normal conventional oil and gas debt funding.
“The option of a farmout, where UKOG's costs are carried by a new partner, remains a further viable funding option.
“Our focus will, therefore, now be on implementing the necessary steps to deliver the planned Loxley-1 appraisal programme during 2024 and, if successful, gas production and sales targeted from 2026.”
Sanderson, meanwhile, noted that the plan for monetising the Loxley gas envisages its reforming into low-carbon blue hydrogen and in the long-term, after it is depleted by 2036, it is intended that it could be used for hydrogen storage.
--Updated to include share price detail--