UK Oil & Gas plc (UKOG) recorded an impairment of £2.9 million of the Horse Hill-1 oil well near Gatwick Airport in Surrey.
HORSE HILL
The company’s annual review and accounts for the year ended 30 September 2022 states: “Following an impairment review carried out as at 30 September 2022, the net present value of the Horse Hill-1 well was determined to be lower than its recorded book value, and it was therefore determined that the value of associated oil and gas properties should be impaired by £2.9m.
“The directors have also assessed the fair value of the exploration and evaluation assets as at 30 September 2022.
“The directors have determined the net present value of the Horse Hill development to be £11.4 million, which takes into account drilling of additional wells in the field, and supports the value of intangible assets of Horse Hill.”
Post period the company signed a conditional farm-in with Pennpetro Energy plc for the Horse Hill oil field.
FINANCES
During the period under review UKOG’s revenues from sales of oil totalled £1.8 million (2021: £1.6m), driven by higher oil prices but offset by a fall in oil production the Horse Hill-1 (HH-1) well.
Operating loss for the year increased to £5.4 million (2021: £3.8m) while administration expenses rose to £2.7m (2021: £2.1m).
The group recorded a rise in gross profit for the year to £300,000 (2021: loss £200,000).
Finance costs doubled to £200,0000 (2021: £100,000), relating mainly to unwinding of discounts on decommissioning provisions.
Other cost of sales reduced to £700,000 (2021: £1.1m).
Non-current assets decreased to £35.9m (2021: £37.7m).
“This included mainly the effects of an impairment of oil and gas assets at Horse Hill offset by £2 million of capital expenditure on oil exploration and evaluation assets, primarily at the Basur-Resan oil discovery in Turkey,” added UKOG.
Cash and cash equivalents totalled £4.6m at the year-end (2021: £4.7m).
UKOG raised £3.9m which it used to fund investing activities (£2m).