UK Oil and Gas is bullish about the potential for its Horse Hill prospect, despite mounting losses

Losses at the company behind the so called “Gatwick gusher” in Surrey have widened, despite the company claiming it may have found the country’s largest onshore oil field.

UK Oil and Gas (Ukog) – which is controlled by Monaco-based David Lenigas – has said that it made a pre-tax net loss of £383,000 for the six months ending March 31, compared with £290,000 in the same period a year earlier.

Despite the mounting losses, the company said it was in a strong financial position with about £8m of cash available to fund its operations, which are heavily focused on proving the potential of the Horse Hill-1 well in Surrey.

In a series of reports this year, Ukog and its partners in Horse Hill have claimed that billions of barrels of oil in place (OIP) lie under the 55-square-kilometre licence area in the Weald Basin.

However, experts have questioned how much of this oil will be recoverable and the viability of large scale drilling ever taking place in the Mole Valley.

The company said in its earnings statement: “In due course, it is intended to undertake exploration and appraisal stage operating activities, such as seismic acquisition and drilling, as and when the required UK regulatory approvals and planning permissions are in place.”

In response to questions from the Telegraph about the project, Mr Lenigas has said via Twitter that it is too early to provide details on the scale of the project - a key factor in determining the environmental impact of the scheme on the local community.

Although Ukog has said that it has no plans to use controversial hydraulic fracturing, or fracking, to lift the oil that may be within reach at Horse Hill, onshore developments nearby have proved controversial.

Last year, Celtique Energie had its plans to explore for shale oil in the South Downs National Park rejected. According to the British Geological Survey, around 4.4bn barrels of shale oil lies beneath the Weald area.

It's also unclear how much of the oil thought to be within reach near Gatwick will be commercially viable to produce in the current low price environment.

Drillers in proven areas, such as the North Sea, are already cutting back hard as prices around the $65 per barrel mark are making it harder to operate.

Source: www.telegraph.co.uk

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