As investors anticipate news of a possible expansion UK Oil & Gas (LON:UKOG) shares advanced 13% on Thursday.
UKOG in June agreed to partner Europa Oil & Gas (LON:EOG) on an exploration project close to Gatwick airport, on a licence that neighbours UKOG’s Horse Hill well, but, the venture remains conditional on the outcome of a drawn out planning dispute.
Since 2011 the Holmwood project has been on hold though a new planning enquiry was launched this April, and the planners’ decision could be known in the coming days.
“All the parties in the enquiry have had full opportunity to express their views and make their case, and the planning inspectorate will return to us with a decision by August 7,” Europa chief executive Hugh Mackay told Proactive Investors in June.
If the project goes ahead UKOG will join the programme, which could potentially assess similar targets as the potentially significant Horse Hill well.
To acquire a 20% stake in the acreage UKOG proposes to pay for 40% of the cost of drilling a well (up to a maximum of £1.2mln).
Due to the success at Horse Hill it is envisaged that Holmwood will now assess Upper and Lower Portland Sandstone reservoir targets and, significantly, it will test the full Kimmeridge Clay section and the underlying Middle Jurassic Corallian Sandstone reservoir objective.
The latter targets are considered a ‘hybrid’ play and have been likened to world class fields in the United States. They are the basis of the very large oil-in-place estimates at Horse Hill (estimated recently at over 9bn barrels).
On AIM, UKOG shares are up 0.2p or 13.5% trading at 1.68p each. Shares in Europa, however, are unmoved.