UK Oil & Gas PLC (AIM:UKOG) has extended the deadline for the proposed Horse Hill farm-in deal with Pennpetro Energy (LON:PPP), with the expiry of the deal term sheet moving out to 30 June 2024.
At the end of the calendar first half, Pennpetro is expected to farm-in to the Horse Hill project though the company noted that the conditional deal remains subject to the completion of a formal agreement and necessary regulatory consents.
UKOG presently holds 85.635% of Horse Hill and the surrounding licences areas. The proposed partnership would see Pennpetro take up a stake in the HH-3 well – leaving UKOG with an effective net interest of 43.67% - whilst UKOG will retain its interest in production and revenue from the HH-1 and HH-2/2z wells.
"In addition to the continued profitability of the existing oil production from HH-1, which UKOG's subsidiaries will retain all rights to, this farm in offers the prospect of increased production and revenues to the company at zero capital cost,” UKOG chief executive Stephen Sanderson said in a statement.
Sanderson also noted that the deal would help preserve UKOG’s working capital for its “other significant growth projects”, including a hydrogen storage project in Dorset.
In London, UKOG shares were on the front foot, up 6% to change hands at 0.027p.