Shares in UK Oil & Gas PLC (AIM:UKOG) were ‘off to the races’ after the Environmental Agency granted the company a full production permit for its Horse Hill asset.
The shares galloped 23% higher in early deals after the contentious project, which is in the heart of Surrey’s stockbroker belt, finally received the green light ending a saga that spanned two-and-a-half years.
The permission allows UKOG to use one of its wells to re-inject wastewater from production into the oil-bearing rocks.
The net effect will be to lower operating costs per barrel and remove the need for tankers, which would clog up the roads around Horse Hill.
“The ability to reinject makes both environmental and economic good sense,” said Stephen Sanderson, chief executive of UKOG, which owns almost 86% of the field.
Horse Hill, when discovered, effectively opened up a new oil frontier in the south of England.
UKOG estimates its two exploration licences are host to a ‘mean’ 10bn barrels of crude – though this is over a number of oil horizons.
Horse Hill will only initially produce from Portland rock, and at a modest initial production rate belying its potential.