UK Oil & Gas plc incurred heavy losses due to lost time, extra operational work and relinquishment of a licence from its onshore operations in the South of England.
The company also announced its aim to diversify into geothermal and renewable energy and add international sites, with easier regulatory requirements than the UK, to its current Turkish interests.
In its full year results ended 30 September 2020, UKOG showed oil production from Horse Hill HH-1 near Gatwick and output from Horndean generated revenue of £0.91 million (2019: £0.21m).
However, higher costs due to interventions and optimisation work at HH-1 resulted in a gross loss of £1.63m (2019 gross profit £0.12m), including depletion, depreciation and amortisation of £1.37m (2019: £0.225m).
Impairment expenses including the relinquishment of the PEDL143 licence and at Horse Hill saw a significant rise to £14.195m (2019: £0.02m).
The company’s total current assets stand at £2.38m (2019: £8.07m).
During the period under review, UKOG’s net cash outflow from operating activities prior to cash outflows in relation to investing activities was £2.77m (2019: cash outflow £5.73m), mainly due to lower administration costs of £1.76m (2019: £3.94m).
UKOG raised £7.73m which, after investing activities and repayment of convertible loan notes, was reduced to £1.83m. Cash and equivalents was recorded at £1.63m (2019: £6.8m).
UKOG chairman Allen Howard, based in Houston, said that Horse Hill had been a challenge and had behaved “like a talented but troublesome teenager: plenty of promise but with the expected problems too.”
He added that the oil field’s geology was “unexpectedly complex” but that the company was determined to find technical solutions to make the site an economic success.
During the year, UKOG faced protests at Horse Hill and an application for a judicial review for its operations at Loxley.
The company submitted new planning applications for Arreton oil appraisal on the Isle of Wight and the company added the Turkey Resan interest to its portfolio.