UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that as per its 5th July announcement, it proposes to raise up to £4.7m (before expenses) via an Open Offer of up to 2,643,429,529 Open Offer Shares at £0.0018 per New Ordinary Share, the same price per share as its placing of 2nd July 2021. Under the Open Offer, the Company intends to provide all Qualifying Shareholders (other than, subject to certain exceptions, Restricted Shareholders and US persons) with the opportunity to subscribe for up to 1 Open Offer Share for every 5 Existing Ordinary Shares held by them.

The total amount that the Company could raise under the Open Offer is £4.7 million (before expenses), assuming all the Open Offer Entitlements are taken up.

Background to and reasons for the Open Offer and use of proceeds

The Company is an energy company primarily focused upon oil and gas exploration and production in the UK and Turkey onshore sectors. The Company aims to build a sustainable oil and gas production base that can act as a springboard to further worldwide petroleum opportunities and to help its diversification into the emerging geothermal and renewable energy fields.

Its UK onshore portfolio consists of direct and indirect interests in six oil and gas exploration, appraisal, development and production assets, all situated within the Weald and Purbeck-Wight Basins of southern England.

The Company holds a majority operating interest in the producing Horse Hill oil field which has the necessary planning consent for further infill drilling in the Portland and underlying Kimmeridge reservoirs and a water injector well. It also has a non-operating interest in the long established producing Horndean oil field and holds majority interests in four further UK onshore oil and gas discoveries, including the significant Loxley Portland gas discovery, assessed to be the second largest gas accumulation ever discovered and flow tested in the UK onshore (see the Company's RNS of 21 September 2020).

The Company's portfolio in Turkey consists of a 50% non-operated working interest in the 305 km² M47-b1, b2 licence (the Resan Licence) in south east Turkey, containing the potentially significant undeveloped Basur-Resan oil discovery and a further identified exploration prospect, Prospect A.

As stated in the Company's announcement of 15th January 2021, the Basur-Resan appraisal project is assessed to contain significantly greater discovered oil volumes than any of the Company's UK projects. It is therefore the focus of the Company's 2021 activities.

The Resan Licence is the subject of ongoing operational activities, with the construction of the well site and drilling pad for the first modern appraisal well, Basur-3, near complete. The company has contributed its share of Basur-3 site construction costs, long lead well equipment and all 2D seismic reprocessing costs necessary to define the Basur-3 drilling location and well plan. As previously reported, the Company expects the Basur-3 well to commence drilling in summer this year.

As announced on 23rd July and 14th October 2020, under the terms of the Company's acquisition of its 50% interest in the Resan Licence the Company agreed to wholly fund the first $5 million of the Resan Licence's commitment work programme, currently 4 wells and 100 km of seismic. Thereafter the Company will pay its 50% working share of all costs.

The agreed 2021 joint venture work programme of Basur-3 and 120 line km of seismic is estimated at an aggregate gross cost of approximately $5 million (drilling $3.5 million, seismic $1.5 million) excluding coring, post well analyses, seismic processing and drill and seismic related contingencies. A further appraisal well Resan-6 is expected to be drilled next year post processing and interpretation of the new seismic data.

As per the Company's announcement of 9th December 2020, it has also applied to the Turkish regulatory authorities for a 50% interest in four further blocks within 3 licences lying to the south and south east of the Resan Licence, covering approximately 600 km² in total.

The four application blocks have received little prior historic exploration activity and straddle multiple large identified undrilled surface geological features, each geologically similar to the Company's Basur-Resan oil discovery and the nearby East Sadak producing oil field. The block immediately adjacent to the South East of the Resan Licence is assessed to contain a possible extension of the Basur-Resan oil accumulation.

Should the block immediately to the SE of the Resan Licence be awarded to the Company and its joint venture partner, the Basur-Resan seismic programme is planned to be extended into the new block. This will ensure that any extension of the Basur-Resan accumulation can be properly assessed and included in a forward drilling programme. Any additional acquisition will increase gross seismic acquisition costs directly in proportion to the additional kilometres acquired.

In addition, within its UK portfolio, the Company also plans to fund regulatory works at Horse Hill, ongoing licence obligations and work related to the planning applications to drill at its Loxley and Isle of Wight sites, together with costs related to developing new geothermal projects at its sites and elsewhere.

In order to deliver the Company's stated strategy and growth objectives, it will require further funds in the near future for, amongst other things, its funding obligations under the agreed work programme for the Resan Licence and any of the new Licence applications should they be awarded to the Company and its partner.

KeyFacts Energy: UKOG UK country profile