UK Oil & Gas PLC (LON:UKOG) shares advanced in Thursday’s deals after the company inked a deal to partner in a Turkish project.
An agreement with Aladdin Middle East sees UKOG take a 50% non-operated interest in the Resan Licence where a 5 well programme is planned.
UKOG said it is set to play an active technical role in the programme which is expected to start this year depending upon weather and impacts of the pandemic.
The project is host to the undeveloped Basur oil discovery and the Resan "missed" oil pay opportunity.
In June 2020, a report by consultant Xodus Group estimated that the project contained 253mln barrel oil in place, and a ‘high case’ view estimates up to 495mln barrels.
Moreover, UKOG said its own internal evaluation sees upside resource potential than is currently identified by Xodus.
UKOG also noted that drilling costs are expected to be significantly lower than in the UK and it believes any future oil production is expected to be economically robust at current $40 per barrel oil prices.
The company is funding 100% of the five well programme and a 2D seismic survey in order to acquire the 50% stake in the asset.
"Whilst we remain committed to growing our core UK business, this was an irresistible opportunity to expand our horizons and to expose the company to potentially transformational recoverable oil reserves that can be rapidly monetised,” said Stephen Sanderson, UKOG chief executive.
“The quality of the Licence's geological address and opportunity is compelling, the targets being directly on trend with the geological look-alike East Sadak field and located within the same petroleum system as the major oil producing Kurdistan region of Iraq.”
He added: “The low cost of drilling compared to the UK also means that, in the success case, we plan to have a near continuous drilling programme, hopefully commencing this year, Covid and weather permitting.
“We expect this programme will provide a regular stream of newsflow.”
In London, UKOG shares climbed 9.94% to change hands at 0.19p each.