This morning it was announced that civil works have now begun on Horse Hill site, which is just 3 kilometres from Gatwick airport.
The well is planned to test a number of promising conventional oil and gas targets, and is scheduled to be completed by the end of August.
Estimates put the Horse Hill prospect’s gross prospective recoverable resources at 87mln barrels of oil.
The project is being advanced by Horse Hill Development Ltd (HHDL), which owns 65% of the project, and Magellan Petroleum (NASDAQ:MPET).
A number of AIM quoted oil juniors in turn are set to own stakes in HHDL. Farm in agreements put in place in recent weeks will see these companies acquiring interests in the venture in return for funding the drilling of the Horse Hill well before the deadline of the PEDL137 licence.
David Lenigas chaired UK Oil & GAS (LON:UKOG) has agreements in place to acquire 7.5% of HHDL as well as a 6% interest in Angus Energy which owns 65% of HHDL.
Solo Oil and Welsh gold miner Stellar Resources (LON:STG), both of which are also chaired by Lenigas, also recently agreed to acquire interests in the venture. The former is to acquire 10% of HHDL, whilst the latter will have 7.5%.
Doriemus Plc (LON:DOR), which is chaired by Donald Strang, Stellar’s finance director, is set to acquire 10% of HHDL following an agreement in January.
Investors across the board welcomed today’s update, with share prices rising for all four companies.
Notably, Stellar rose most adding 10.5% to trade at 0.52p. Doriemus gained 5.6% to 0.19p, UKOG rose 4% to 0.62p and Solo Oil edged 2.6% higher to 0.19p.
Broker SP Angel, in a note, said that given the size of the Horse Hill prospect and that it is onshore UK, means it could not only be a “company maker” for Solo Oil, it would be hugely profitable too.
The broker told investors to “watch this space”.
Elsewhere, Old Park Lane Capital analyst Barney Gray said today’s update represents “major progress” for the Horse Hill project.
He also believes Horse Hill will be the first in a series of acquisitions into projects, for project exposure of about 10%, over the medium term which will build an increasingly diverse portfolio of assets for the company.
Neil Ritson, Solo Oil’s executive director, this morning said: "Whilst the potential of the Horse Hill prospect has been recognised for some time it is only the recent receipt of planning permission and other associated approvals that provides impetus to the project.
“The news that the site preparation is now underway is a further endorsement of the HHDL team and their ability to drill this well later in the year."
Meanwhile, in UKOG’s statement, Lenigas said: "Horse Hill has significant potential to discover oil, especially after the results of Esso in the 1960's, but the company particularly excited about the potentially of locating significant convention gas deeper down the Horse Hill-1 well in the Triassic."
Together Angus Energy, UKOG, Solo, Stellar and Doriemus will own 100% of the HHDL vehicle.