UK Oil & Gas: Ukog share price falls as pre-tax losses widen

 
Jessica Morris
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Ukog said Horse Hill could hold up to 100bn barrels of oil (Source: Getty)

The figures:

UK Oil & Gas' pre-tax losses widened by around 87 per cent to £1.7m, from £906m a year earlier.

This was largely due to costs associated with the group's investments and assets, particularly within its core Weald Basin Portland and Kimmeridge tight oil licences and the new Isle of Wight portfolio.

The Aim-listed company invested £3.7m during this period, up from £1.6m in 2014. Most of this was related to expenditures on exploration and evaluation of assets and acquisitions of subsidiaries.

The company's shares fell as much as 3.9 per cent to 2.72p this morning.

Why it's interesting:

Ukog became one of last year's most watched penny stocks, after saying that test results showed one of its sites could hold up to 100bn barrels of oil.

While the company has a string of developing and generative projects, the drama centres on its Horse Hill site in Sussex’s Weald Basin, located near Gatwick airport. Following the announcement the discovered in April, investors have been taken on a roller coaster ride, with a series of announcements sending its shares yo-yo-ing.

The company subsequently issued a "clarification" saying that its original figure was probably a little over-optimistic - actually it was probably more like "between 50bn-100bn". And of that, between three and 15 per cent could actually be extracted.

Most recently, Ukog shares jumped nearly 60 per cent after it discovered "significant" amounts of "moveable oil" of good quality, and would begin further testing to establish if it could become a "sustainable commercial production".

What Ukog said:

"The board recognises that this is an exciting period for the company as it continues to maximise value from its existing investments," Stephen Sanderson, chief executive of Ukog, said.

"The board will seek to further capitalise upon its vanguard position in the new and exciting Weald Basin plays recently proven by the first HH-1 flow test."

"The board believes that current low oil prices combined with the company's technical and financial strength provide an ideal opportunity to significantly expand the company's acreage position. We shall evaluate and seek additional investments as opportunities arise."

In short:

Ukog losses widened as it expanded its activities through a number of investments and acquisitions of during this period.

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