Shares in UK Oil & Gas PLC (AIM:UKOG) fell back 31% after it raised £3 million in a discounted placing to fund a transition away from the petroleum sector into cleaner power.
The shares, having stood at just over 1p at the start of 2022, had fallen to a low of 0.01p early this year, before spiking to 0.05p on Tuesday, when the company said its subsidiary UK Energy Storage has signed a memorandum of understanding with National Gas Transmission to collaborate on the development of a hydrogen pipeline network.
Today UKOG said it had raised the funds at a price of 0.03p per share.
The agreement with National Gas covers direct connections to UKOG’s proposed salt cavern hydrogen storage facilities in East Yorkshire and South Dorset, which was said to be critical to balancing supply and demand.
Both firms also intend to seek government revenue support under forthcoming hydrogen business model allocation rounds, due to begin in 2026. The first phase of the partnership, dubbed Project Union, is scheduled for 2032.
UKOG said it plans to use the proceeds for engineering concept and design studies to develop the project.
"Consequently, by funding both its planned hydrogen development activities and ongoing petroleum sector commitments this material placing will enable the company to advance its energy transition over the coming year," it said.
Planning approval was previously granted in 2008 for a methane gas storage project utilising salt caverns on the Isle of Portland, off the coast of Dorset, but UKOG has since said the salt caves will be "hydrogen ready".