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Solo Oil completes Horse Hill transaction with UKOG

Investors in both Solo and UKOG now eagerly await news from the production testing in Horse Hill’s deeper Kimmeridge zones

oil and gas operations
Solo will now hold 4.2% of UKOG, which in turn has a 46% interest in Horse Hill

Solo Oil PLC (LON:SOLO) has confirmed the completion of its deal to sell out of the Horse Hill project and simultaneously acquire a 4.3% shareholding in UK Oil & Gas Investments PLC (LON:UKOG)

The transaction was valued at £4.5mln, or 234mln new UKOG shares.

It means, in turn, that UKOG’s stake in the HHDL vehicle has now risen to 71.9% giving the investor a 46.735% beneficial interest in the underlying Horse Hill oil project (HHDL is a 65% stakeholder in the project).

Solo, through its new shareholding in UKOG, now also has exposure to its broader Weald basin portfolio.

"We are pleased to announce the close of this transaction ahead of the key Kimmeridge testing phase at Horse Hill,” said Dan Maling, Solo managing director.

READ: UKOG says Horse Hill’s Portland zone is “robustly commercial”

Solo remains a supporter of the project as we continue our exposure through our 4.2% stake in UKOG. We look forward to more updates from UKOG as the well testing continues."

At Horse Hill, an extended well test programme is continuing, with results soon anticipated for the priority Kimmeridge play.

Already, the programme has proved successful for the shallower conventional Portland reservoir after analysis of flow results suggesting a rate of 362 barrels of oil per day would be possible when full-scale production starts.

Earlier this month, UKOG highlighted that the re-perforation of the Portland in the Horse Hill 1 well has demonstrated a 65% increase in productivity from the past testing programme.

It is now planned, in light of the new analysis regarding the Portland’s “true flow potential”, fresh plans are being formulated for either a side-track to HH-1 or a new HH-2 well as a horizontal appraisal well. Such a well would target a production rate between 720 to 1,080 bopd, pitched some 2-3 times better than the calculated rate for the vertical HH-1 well.

A commercial operation from the Portland would be an important value adding opportunity, nonetheless, the emphasis of the Horse Hill project remains the larger and deeper Kimmeridge play, and the programme moved on to test two Kimmeridge zones.

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Price: 2.425 GBX

Market: AIM
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