UK Oil & Gas plc (UKOG) has secured a £3 million loan to fund planned activities over the next 12 months at its onshore operations in England and Turkey.
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The loan, from previous lenders RiverFort Global Opportunities PCC Ltd and YA II PN Ltd, holds 0% interest and is repayable 18 months after each advance.
The first tranche will be for £2 million followed by two each of £500,000 between two days after completion and 16 February 2024, with 1.3 billion UKOG shares issued in return.
A further advance of up to £2m will be arranged by mutual consent.
UKOG will use the funds as working capital for key planned activities over the next 12 months including further testing of the Pinarova-1 well and drilling preparations/studies in Turkey.
The company will also discharge planning conditions, prepare site construction, and potentially farm out a planned appraisal and development programme at the Loxley gas discovery.
At Horse Hill in Surrey, a water reinjection work-over, preparation of 3D seismic acquisition and drilling Horse Hill-3 under the farm-out to Pennpetro is planned.
The company will additionally use the funds for its Portland hydrogen storage proposals.
The loan agreement follows publication of UKOG’s unaudited results for six months ended 31 March 2023, which showed little change from the same period to 31 March 2022.
Operating loss for the six months to 31 March 2023 amounted to £1.3m and revenue was £900,000.
UKOG said that a slight decrease in oil production at Horse Hill was offset by an increase in average oil sales price.
Net cash outflow from operations increased from £1.4m to £1.6m mainly due to working capital movements and operating cash flows from Horse Hill.