UKOG Initiates farmout process for Loxley gas project
London-listed UK Oil & Gas (UKOG) has appointed divestment and project marketing specialists Envoi to facilitate a farmout of up to a 50% working interest in its 100% owned Loxley gas and hydrogen feedstock project in Surrey, it said on May 1.
The farmout initiative aims to secure funding for the planned Loxley-1 appraisal drilling and testing programme, with the selected farminee(s) expected to cover UKOG's share of costs. Notably, the Loxley project holds uncontested planning consent, UKOG said.
“The farmout process is designed to fully fund the Loxley appraisal programme and, if successful, remove the requirement for the company to raise additional funds for its share of costs for this material project,” UKOG CEO Stephen Sanderson said.
In addition to Envoi's involvement, UKOG revealed that active discussions are underway with two UK-listed energy companies expressing interest in participating in the farmout opportunity.
According to UKOG, the most recent competent persons report, dated February 2023, estimates mid-case recoverable 2C contingent resources of 31bn ft3 net to UKOG at the Loxley site. The company said that further development activities post-appraisal would be necessary to transition the 2C classification to reserves.