Horse Hill: Who is behind the Gatwick Gusher?

If you don’t yet have a horse in the race, here are the runners and riders.

Who owns what? How much cash do they have? And what else do they own?

You’ve no doubt heard, or read, about the Horse Hill oil project - the #gatwickgusher - and the group of small AIM quoted companies that have struck black gold a taxi ride away from Gatwick airport.

According to those involved in the project the Horse Hill well has the potential to revolutionise Britain’s onshore industry and can deliver billions of pounds to the British economy.

Past analysis, by US contractors, led to estimates of ‘billions of barrels’ of oil locked in the ground, but, until recently there was a great deal of scepticism about how much of that ‘in-place’ oil could be recovered.

Flow testing of the well, in the past month, has far exceeded expectations.

The well has shown it can produce at a rate in excess of 1,300 barrels per day (in aggregate, over short term tests).

That news has sent the share prices of the AIM quoted stakeholders sharply higher.

Here, we take a closer look at who the Horse Hill players are, what their stakes are, and what else they own.

If you don’t yet have a horse in the race, here are the runners and riders.


UK Oil & Gas Investments (LON:UKOG) : Horse Hill largest (UK listed) stakeholder

As name suggests this is the thoroughbred, in as much as it is solely invested in Britain.

Currently, largest listed stakeholder in Horse Hill. It was formed from the carcass of Sarantel Plc in late 2013 with the stated strategic goal to "seek investments in the domestic conventional oil and gas sector". All of its interests are focussed on onshore UK.

UKOG recently agreed to acquire stake in neighbouring Holmwood block where a well is planned, and in late 2015 secured rights to half of the Isle of Wight - where it sees similarities to Horse Hill.

Financial results for the year to September 31, released last week, showed it had £4.59mln of cash and equivalents.


Solo Oil (LON:SOLO) : Horse Hill Plus Tanzanian gas

Neil Ritson’s oil and gas firm has a 6.5% stake in Horse Hill. And the project’s recent successes saw the shares rise some 88% since December to 0.41p.

Beyond the Horse Hill project, it is also on the verge of its first proper revenues as the Kiliwani North gas field starts up in Tanzania.

The company owns 6.5% of Kiliwani North, in partnership with Aminex and which  it also partners in the potentially larger Ruvuma project, where Solo has a 25% stake in an area which is estimated to contain more than 4 trillion cubic feet of gas-in-place.

At the end of June, Solo Oil had £1.34mln of cash and equivalents.


ALBA Minerals (LON:ALBA) : Horse Hill plus residual mining interests

The junior mining firm had been looking for new direction before the Horse Hill opportunity came along.

It acquired 5% of Horse Hill Developmnet Ltd (the holdings comapny that all the AIM firms have invested in) back in July 2014, before taking further stakes in March 2015 and September.

Alba owns 15% of HHDL, which gives it 9.75% of the project.

At the end of February, it raised £525,000 through a placing of 131.25mln shares at a price of 0.4p. It was the latest in a number of placings, following raises of £160,000 and £385,000 in October, and a £355,000 raise in June.


Regency Mines (LON:RGM) : Back in Horse Hill

Having sold a 5% stake in HHDL to Alba last year, Regency last week acquired a new 5% stake in HHDL from unlisted Angus Energy. The share-based deal will give Angus about a third of Regency’s equity.

Andrew Bell’s junior mining vehicle also has interests in nickel other mineral exploration assets. And it has a 3.75% in Bell’s other listed company, Red Rock Resources (LON:RRR).


Stellar Resources (LON:STG) : Horse Hill plus Welsh gold

Run by Donald Strang, Stellar Resources has 6.5% of the HH project

Stellar's main focus prior to Horse Hill was Welsh gold mining.  It has a 49% stake in Gold Mines of Wales, which has an exclusive crown estate exploration option over the Dolgellau Gold-Belt in north Wales.

In recent weeks, Stellar has raised just shy of £900,000 through share placings. And, interim results released last September, revealed that at the end of June it had £1.37mln of cash.

Doriemus (LON:DOR) : Horse Hill plus other Weald ventures

Also run by Strang, Doriemus was transformed (and concurrently rebranded) in 2013 away from its legacy endowment trading business.

It has 6.5% of Horse Hill, and also owns other interests in the UK’s weald basin - namely stakes in the currently modest Lidsey and Brockham fields.

The group is transferring from AIM to the ICAP’s ISDX, and it has a stated strategy of investing in or acquiring European oil and gas assets.

As of February 29 it had £700,000 of cash.


Evocutis (LON:EVO): A smaller Horse Hill steak and other shareholdings

Lead by executive chairman Hamish Harris and executive director Donald Strang, Evocutis holds a 1.3% interest in Horse Hill venture via a 2% stake in HHDL.

It has some further indirect exposure via a 3.13% (22mln shares) stake in Alba Minerals.

The natural resources investment group - which used to be a lab-based skincare company – also owns a 10% interest in Brazil Tungsten Holdings and a 3.01% (29.2mln shares) stake in Noricum Gold.

Last month, Evocutis raised £350,000 through a share placing, priced at 0.07p per share, to support working capital needs. Financial results, for the twelve months to July 31, were released in December and revealed the company ended the period with £452,000 of cash and equivalents.


Egdon (LON:EDR) : Holmwood, and broader UK onshore opportunities

Egdon doesn’t have any stake in Horse Hill at all. It does, however, have a 18.4% stake in the nearby Holmwood project having recently accepted UKOG as its new partner.

UKOG agreed to pay 40% of the cost of a new well at Holmwood in return for a 20% stake in the project. The Holmwood well was finally approved for planning permission (after a four year dispute) in late 2015.

The well, scheduled for 2016/17, is expected to test a conventional oil prospect, as well as the deeper features encountered in the nearby Horse Hill well.

Specifically, it aims to penetrate the Upper and Lower Portland Sandstone conventional reservoir targets, the full Kimmeridge tight oil section and the underlying Middle Jurassic Corallian Sandstone reservoir objective.

The upper target has previously been estimated to have 5.6mln barrels of prospective resources.

The potential resources within these Horse Hill like deeper targets have yet to be estimated formally, though given the high profile success this project is now likely to attract more attention.

Aside from Holmwood, EDR has a more mature portfolio of UK onshore assets. It is also the operator of 2015’s other notable onshore success: the Wressle discovery in Lincolnshire, where a series of conventional reservoirs flowed in excess of 700 barrels oil equivalent in testing.

Wressle is now advancing through field development planning, and could potentially be brought online in the relatively near future.

On top of all that, Egdon also has exposure to the UK’s emerging shale gas sector with acreage in key areas that are deemed to host unconventional hydrocarbons.


Europa Oil & Gas (LON:EOG): Holmwood, Wressle & offshore Ireland

It is also a partner in Holmwood and Wressle, owning stakes of 40% and 33% respectively, but, at the moment, much of the investor focus in on ‘billion barrel potential’ offshore Ireland.

AIM quoted Europa was the only ‘small cap’ explorer and was in high calibre company as it secured new acreage offshore Ireland last month. The junior’s offshore licence award came alongside ENI/BP, ExxonMobil, Statoil and CNOOC’s Nexen.

Its technical work has already identified some 3bn barrels of prospective resources, though it will need to find and negotiate with a suitable partner before it can drill in the Atlantic waters.

Europa’s onshore UK assets are on the face of it much smaller (albeit the Kimmeridge potential in the Weald has yet to be factored in), but, it represents a potentially nearer term opportunity with fewer big budget hurdles.

For investors, it could offer an alternative avenue of exposure to the UK Weald basin, with some very significant but early stage ‘blue-sky’ opportunities offshore Ireland.

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