Muted response to UKOG Horse Hill news - no cause for concern

UKOG share price Sep 24th 2019

It has been frustrating to see UKOG shares flat the last 2 days after the news in relation to the rig arrival at Horse Hill and commencement of drilling operations.

HH-2 vertical pilot - complete end October

HH-2z, with a planned trajectory of around 1000m wholly within the Portland reservoir - End November.

So drilling operations are expected to be completed in approximately 60 days. The good news is that the wells will be drilled with simultaneous production from the kimmeridge reservoir as Kimmeridge test production is planned to continue throughout the drilling campaign.

As a choked production of 307 bbl x $37 net revenue per barrel (after lift, marketing, transport) x 30 = $340,770 per month , revenue net to $293,062. (86% share to UKOG of Horse Hill).

Therefore over the duration of the drill nearly $600,000 of revenue net will be generated by Horse Hill kimmeridge to offset a large proportion of drill costs (excluding any shut ins).

Horse hill rig up Sep 24th 2019 @Adrian

Horse hill rig up Sep 24th 2019 @Adrian

The shares have risen from around 1p to 1.25-1.3p but I am surprised given these revenues, drilling and the crucial planning meeting approval with Surrey that the price is not closer to 2p. The Yorkville Associates (YA) overhang is having an effect but the short term fundamentals are excellent if drilling goes to plan. Patience required and no need for panic, lets not forget the shares are up 30%+ in the last few weeks(albeit way down on 52 weeks highs). The drilling of the horizontal well in November will be transformational if the flows are anything like the company expects as long as there are no Broadford Bridge mess ups and I think lessons have been learnt! Keep the faith folks.