UKOG Announces Annual Review & Accounts for the Year Ended 30 September 2020

Source: www.gulfoilandgas.com 4/16/2021, Location: Europe

UK Oil & Gas Plc (UKOG), a UK and internationally focused energy company, is pleased to announce its full year results for the full year ended 30 September 2020. A copy of the full annual report and details of the Company's annual general meeting will be posted to shareholders in due course. A copy of the full annual report will also be made available on the Company's website: www.ukogplc.com

Qualified Person's Statement

Matt Cartwright, UKOG's Commercial Director, who has 38 years of relevant experience in the global oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.

STRATEGIC REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2020

OUR BUSINESS

UK Oil & Gas Plc ("UKOG") is an energy company currently primarily focused upon oil & gas exploration and production. We specialise in creating new geological ideas, concepts and methodologies to find and produce oil & gas from previously unexplored or overlooked rock formations within established petroleum producing provinces.

Our current operational focus is on the UK and Turkey onshore sectors, where we aim to build a sustainable oil & gas production base that can act as a springboard to further worldwide opportunities. UKOG has operated safely and environmentally responsibly in the UK since 2013.

Our current UK onshore portfolio consists of direct and indirect interests in six oil & gas exploration, appraisal, development and production assets, all situated within the Weald and Purbeck-Wight Basins of southern England. We are the largest acreage holder in the south of England, with assets covering 689 gross km².

We hold majority interests in four UK onshore oil & gas discoveries, the most notable being at Horse Hill and Loxley in Surrey, together with a significant position in the Kimmeridge Limestone (KL) oil deposit or "play". UKOG holds the largest acreage position within the play's most prospective area or "sweet spot", covering 489 gross km².

Our UK oil & gas portfolio contains a good balance of low-risk production, appraisal and development assets as well as upside exploration assets within both the Kimmeridge Limestone and Portland conventional plays.

Our expanding portfolio in Turkey consists of a 50% non-operated working interest in the 305 km² Resan licence in south east Turkey, containing the potentially significant undeveloped Basur-Resan oil discovery plus further exploration prospects. This project is assessed to contain significantly greater discovered oil volumes than any of our UK projects and, if successful, offers potentially transformational growth for the Company.

A joint application with our Turkish partner for four further blocks offsetting the Resan licence, all of which contain undrilled geological lookalikes to the Basur-Resan discovery, has also been submitted to the Turkish regulatory authorities.

In order to move our business forwards, we maintain a high level of operational activity, conducting near-continuous drilling and flow testing operations since May 2017.

Our portfolio, notably Basur-Resan in Turkey and Loxley in the UK, has the potential to generate significant returns for the Company and its shareholders.

As a diversification, we are increasingly active in the newly emerging geothermal energy field, where we possess the key subsurface and engineering skills necessary to make such projects work. As well as new standalone geothermal projects, we are currently investigating the viability of hybrid energy sites envisaged to derive power from both petroleum and geothermal. We are a founder member of the newly formed Geothermal Energy Advancement Association.

We are actively investigating hybrid geothermal projects at two of our UK sites and will review geothermal opportunities onshore Turkey.

OUR STRATEGY

UKOG aims to build a diverse, sustainable and self-funding energy business which has the following strategic objectives:

Oil & Gas:

1. Find and Develop Low-Cost and Long-life Assets

- Continuing to invest in our potential near-term production assets is a key priority.

- Once in production, the revenues from these assets will provide free cash flow to re-invest and deliver shareholder returns.

2. Resource and Reserve Growth

- Building our recoverable resources, reserves and future production through targeted and disciplined high-impact exploration, appraisal projects and acquisitions.

Geothermal and Renewables:

1. UK Energy Diversification - Reduce Carbon Footprint of Company's Existing Petroleum Producing Sites

- Where viable, implement geothermal and/or solar energy cogeneration plus battery storage from existing wells/sites.

- Where viable, add new standalone geothermal and battery storage for grid/heat export.

2. Find and Develop New Stand-alone Geothermal Projects

- Ground floor entry, either operated or as joint venture partner.

- UK initial focus, international expansion if successful or commercially viable opportunities arise.

Targeted Portfolio Management:

Continuously review and high-grade our portfolio to either acquire or divest further stakes in existing assets. We also look to acquire assets at any stage in the life cycle and are not limited by geography, where we can create significant value for shareholders.

UKOG shares this vision and strategy through internal dialogue with employees and externally with shareholders and stakeholders via public announcements and dissemination of information through our website and the Annual Report and Accounts.

STATEMENT FROM THE CHAIRMAN

The worldwide Covid-19 pandemic has dominated our thoughts and our industry for the reporting period, yet I salute the Chief Executive and his team for thinking one step ahead and looking to broaden horizons internationally.

This has been my third year as Chairman of UKOG and I take this opportunity to repeat my applause for the volume of work undertaken by a small team of professionals. The core of that team, with the invaluable assistance from experts, has managed to overcome a series of hurdles and has taken the Company towards fresh fields and fresh opportunities that have the capability, if successful, to provide a step change in recoverable reserves and revenues.

Signing the Resan participation agreement with Aladdin Middle East Ltd in Turkey and applying for three further exploration licences exhibit our determination to achieve one of our strategic objectives of growing our reserves and resource. Along with a growing portfolio in Turkey, our Loxley, Arreton and Horse Hill assets will remain a significant part of UKOG's plans and thoughts in the coming year.

Over the past 18 months the team expended much effort in positioning our excellent Loxley asset ready for action in 2021. Consequently, we were all disappointed by November's rerun of Surrey County Council's planning consent meeting and the same 6 votes to 5 rejection as the original legally unsound June meeting. The UKOG team went to great lengths to answer all the questions raised in June, provide significant additional mitigations and to propose strong arguments about how development of hydrogen from the gas field would play a key part in the UK's net zero ambitions.

However, some of the committee appeared not to listen to the objective evidence presented to them and stuck rigidly to a narrow agenda which went against the conclusions and recommendations of the council's planning and highways officers. They preferred to focus on subjective local issues and failed to see the many positives at local, regional and national levels. So be it. Now UKOG has taken its case to a higher authority, who will hopefully decide upon facts not perceived fiction. The Loxley appeal will occupy much of this year with a decision expected by year end.

On the Isle of Wight, due to pandemic related delays, we now understand that our Arreton project's planning application should likely be determined in late second quarter, which, if granted, will allow us to schedule site construction and drilling once the pandemic situation stabilises.

Horse Hill has also proved to be another challenge, including the unlawful activities of climate change activists who have twice occupied the site in contravention of the UKOG injunction. The oil field has behaved like a talented but troublesome teenager: plenty of promise but with the expected problems too. In addition to the constant and mounting regulatory workload, the oil field's geology has proved unexpectedly complex. The team is determined to find technical solutions to make it the economic success story we want it to be.

From my base in Houston, Texas, I am in constant communication with Stephen Sanderson and his team. In addition, I monitor various chatrooms and blog sites and I read some of the frustration about the falling share values. Oil exploration is a complicated and time-consuming business. There are no guarantees of success and the regulatory procedure in the UK is clearly far lengthier and more intricate than we experience here in the States. It also has a habit of absorbing considerable time and money.

UKOG has no control over the day-to-day share price, it has no control over the price of Brent Crude and no control over the UK's complex attitude towards the oil & gas industry. Until our growing portfolio of appraisal projects produces reserves and positive cash flows, raising funds to keep developing, appraising and exploring in the interests of investors can only realistically be achieved via equity funding, but it will only be used when necessary.

We now look forward to a continued rise in Brent values and for a worldwide picture which offers stability and more reasons for optimism.

Allen D Howard

CHIEF EXECUTIVE'S STATEMENT

This has been a uniquely challenging year for the nation and our industry as we have wrestled with the dual shock of Covid-19 and the subsequent collapse of Brent Crude prices. I have experienced many oil price downturns in my career, but none have been as unexpected or severe as 2020. Fortunately, the Company and industry have been resilient enough to survive and adapt and to witness the hoped for bounce back in oil price. We all hope this will be long lived.

During these uncertain times at UK Oil & Gas Plc we have deliberately adopted a positive half-glass-full mindset, prudently reducing our costs where possible and making positive steps by acquiring new, highly material opportunities at a time when entry prices were low.

Despite the pandemic I am delighted to report that the addition of the Turkey Basur-Resan discovery into our portfolio plus Loxley's significant gas volumes has seen our total net discovered resources increase significantly to 37.48 mmboe, the highest level in the Company's short history. This represents a highly material increase of 129% compared to last year and, similarly, our reserves also increased by 13% compared to the last reporting period. Our plan remains to convert as much of our discovered resources into reserves and production as we can in 2021 via our appraisal drilling programme.

Although we significantly increased our recoverable reserve and resource base, the challenging price environment over the past year, coupled with the less than hoped for results at Horse Hill, has had an inevitable effect on the value of some of our assets. Consequently, in line with many other oil & gas companies, including many of our peers in the onshore UK, this year we have written down some £17.25 million of our historic investments, primarily at Horse Hill and the newly relinquished PEDL143 licence. The write down this year will therefore not impact upon any future success or revenues from our Turkish assets.

I would also like to stress, that in the current pricing environment, the significant cost reductions achieved at Horse Hill over the year and the forecast reduction in water handling costs via the conversion of HH-2z into a water injector means that, going forwards, Horse Hill production is forecast to be profitable. The planned HH-3 and HH-4 infill wells are also designed to boost production as we move forward in developing our asset. Horndean, which continues to produce very steadily, also remains profitable with current rates and prices.

As it had long been my vision to transform UKOG into an international organisation that could operate in areas that offer greater upside, lower costs and more rapid payback than the UK, these unprecedented times also provided the catalyst for action and a move to expand into pastures new.

Hence, in July 2020, we signed an agreement with Aladdin Middle East Ltd ("AME"), to take a 50% non-operated working interest in the Resan licence in Turkey, containing the material undeveloped Basur-Resan oil discovery, together with a subsequent application for four further exploration blocks containing similar potential to Resan. AME have operated successfully in Turkey for 60 years and we are fortunate to have them as our new partner.

I see this move into Turkey as crucial to the Company's continued success and prosperity. Our Weald Basin assets, although some of the best in the UK onshore, particularly Loxley and the Kimmeridge, simply do not offer the same step-change growth potential we aspire to and, due to the increasing regulatory burden, take far too long to monetise. In the Company's view, and as supported by published reserve metrics, the petroleum system and potential resource size in South East Turkey is simply in a different league from the Weald Basin and the UK onshore.

The Resan licence offers the rare opportunity to appraise a discovered oil accumulation with recoverable volumes greater than all of the Weald Basin's historic oil production and reserves combined. The new blocks, if awarded to us, each have the potential to add additional significant recoverable oil volumes to Basur-Resan.

What further drives our enthusiasm for Turkey is the low-cost environment and the ability to rapidly monetise any success in under a year, compared to 3-5 years in the UK. This has been ably demonstrated by our partner AME's success at their East Sadak field, the closest producing look alike field to Basur-Resan. Unlike the UK, Turkish Petroleum Law supports explorers and producers, as indigenous oil is given strategic importance by the government. If only that were the case in the UK.

Adding Basur-Resan into the portfolio was thus fully compliant with our stated growth strategy. It added a potentially long-life asset which can operate at a lower cost base than the UK and which significantly boosted our overall net attributable resources. The addition of Prospect A within the licence also more than compensated the loss of the volumes attached to the relinquishment of the PEDL143 A24 prospect.

Entry into the project also exemplifies our ongoing strategy of active portfolio management, in which we continually high grade our portfolio, both adding new higher potential value assets and divesting lower ranking assets as and when opportunities present themselves. In this way we can harness each asset's organic growth through the project execution stage.

This past year in the UK, we also submitted new planning applications for Arreton oil appraisal on the Isle of Wight and Loxley gas appraisal in Surrey, the latter of which is now the subject of a formal Appeal to the Planning Inspectorate to be heard via public inquiry in July 2021. We remain confident that the Appeal will be successful and that the Loxley project, one of the UK onshore's largest ever gas discoveries, can take its place as a source of feedstock for reformation into hydrogen, a key new sector to help the UK meet net zero.

We have also spent significant time looking at the feasibility of enhancing our UK sites to include renewable energy. Our vision is that our UK sites could become integrated hybrid energy hubs, encompassing solar, closed loop geothermal, petroleum and battery storage. We have also been evaluating stand-alone closed-loop geothermal activities as an addition to our traditional UK business. Whilst this sector is still in its infancy in the UK, we believe we have the key technical and project management skills necessary to make such projects work.

In order to further our geothermal projects and credentials we became a founder member of a new geothermal stakeholder organisation, the Geothermal Energy Advancement Association.

Further prudent financial decisions were also made during the reporting period, which, in response to rapidly falling oil prices included a 55% reduction in overall Administration expenses, representing a £2.18 million saving from the last reporting year. The saving included management and staff electing to take an effective 20% temporary reduction in salary.

In an ongoing series of cost cutting measures, the Company also significantly reduced the Horse Hill oil field's operating costs. From January 2020, operating costs were reduced by a substantial 66% overall, even though water handling costs increased substantially. The savings place Horse Hill in a good position to take advantage of the strengthening Brent crude prices seen post reporting period.

Horse Hill was also granted full long-term production consent by the Oil and Gas Authority ("OGA") in March 2020, which thus moved the status of HH-1 production into the proven developed producing ("PDP") reserves category, a pre-requisite for any future potential debt-based funding to help finance further Portland and Kimmeridge infill wells.

Market Place

From September 2019 until the impact of the pandemic was felt, oil prices remained remarkably stable, with Brent hovering around the low $60s per barrel ("bbl."). However, this was not to last, as the value of Brent crude reached an unprecedented low on 21 April 2020 in direct response to a worldwide pandemic-induced slump in demand. An American analyst described that day as "crazy" and "a moment we never ever expected to see". The crazy day saw Brent plummet to $15.98 per bbl as unimaginable negative values were experienced in US benchmark prices.

A month after the beginning of the UK's initial lockdown, the Covid-19 pandemic created a 30 per cent collapse in the global demand for oil, with the dramatic cut in air travel having a huge impact. In 2020, total demand for primary oils in the UK dropped 19 per cent compared to 2019 with refinery production following suit and dropping to its lowest ever level.

In the UK transport demand, which usually accounts for almost 70% of domestic oil consumption, dropped 28 per cent compared to 2019, led by a fall in aviation demand, which itself fell 60 per cent compared to pre-pandemic levels. Similarly, UK diesel demand fell by 17 per cent and petrol demand dropped 21 per cent in 2020.

Whilst petrol and diesel have shown a recovery, jet fuel consumption remains in the doldrums due to the international travel ban. All this took the use of oil & gas in UK transport down to levels last seen in the mid-1980s.

Following the pandemic's first wave, the OPEC cartel, plus Russia and other significant producers, agreed to cut supplies by 10 per cent to lessen the burden on over-flowing oil storage facilities. This, combined with a slowing of infection rates in developed countries corresponding with summer in the northern hemisphere, saw prices recover to around $40 per bbl. by June 2020 and stay at the same level through summer and autumn. Developing countries who rely heavily on their oil exports, including Algeria, Iran, Iraq and Libya, were particularly adversely affected. Even the global majors, BP, Shell and Exxon Mobil, suffered multi-billion-pound losses.

Post the reporting period, in response to successful Covid-19 vaccine trials announced in November 2020, the global picture improved, with prices rising consistently, now reaching over $60 per bbl. from end February 2021, recently briefly exceeding pre-Covid levels. A far cry from the values of $140 in the early noughties, but still a healthy bounce back. The vaccination programme worldwide has had a positive impact on the financial mood of the markets, although the position remains volatile.

Interestingly in Q4 2020 indigenous UK production of primary oils was down 9.5 per cent compared to Q4 2019, following delayed maintenance and lack of investment, both direct results of the pandemic. Going forward it therefore remains a possibility that a similar lack of investment in oil supply within the global sector over the past year, notably in US shale and non-core Opec production, could limit supply levels to below pre-pandemic levels even with a return to pre-pandemic demand once vaccinations are fully rolled out and wider global travel resumes.

Such a potential global supply shortfall could also potentially be exacerbated by the prospect of the marginal cost of US oil being raised via President Biden's possible 'carbon taxes' on the 3 MMMBop of oil from federal lands. This 'tax' could see US marginal shale and conventional projects remain shut in. A wider post-Covid economic surge could further exacerbate any upwards price pressure due solely to supply limitations. Consequently, there is room for cautious optimism for future oil prices.

Those projects with low operating costs and set within fiscal and operating regimes that allow rapid monetisation and payback could therefore stand to benefit more from any price increase cycle. Such projects will also likely be able to better compete for capital as they offer greater returns. The Company's exposure to operations in Turkey is therefore well positioned to take advantage of this scenario should it materialise.

As per oil demand, UK gas demand in 2020 fell by 6.2 per cent compared to 2019, resulting in a weakening of prices. Partly due to a colder than expected winter, prices recovered this year. Whilst UK imports dropped to around 59% of demand, the make-up of imports appears to have changed significantly, seeing a 12% reduction in gas imported via pipeline and a 4.8 per cent increase in Liquefied Natural Gas ("LNG") compared to 2019. The willingness of continental Europe to pay more for gas during the pandemic resulted in a significant shortfall of pipeline supply from Norway, mostly taken up by cheaper opportunistic LNG supply from Trump's USA.

Overall, LNG made up 42 per cent of all gas imports, up from 39 per cent in 2019. Imports of LNG were particularly high in the first half of 2020, reaching 62 per cent of total imports in Q2. Qatar, which has shareholding influence in the UK's National Grid, remains the dominant import source of LNG, contributing 48 per cent of total LNG in 2020, stable on 2019 levels. As new projects have come on stream, the number of LNG import sources has increased in recent years. Notably in 2020, imports from the US increased by 72 per cent on 2019. Ironically much of the US LNG derives from tight or fracked gas projects which would currently not be possible in the UK due to the moratorium relating to induced seismicity concerns.

As LNG has 3-4 times the carbon footprint of indigenous UK gas, such as UKOG's Loxley, any longer term UK import increase in LNG is potentially problematic with respect to reaching UK net zero targets. Given the UK Government's backing for low carbon (blue) hydrogen and BP's recently announced large scale Teesside blue hydrogen plant (which will reformulate natural gas into clean burning hydrogen) it would be ironic if the blue hydrogen were to rely upon high carbon footprint imports at the expense of lower footprint indigenous gas like Loxley.

Consequently, in order to meet UK net zero targets and to generate inward UK investment, the Company envisages that conventional indigenous gas such as Loxley will continue to play an important role in supplying the lowest carbon footprint gas for reformation into hydrogen through the projected 15-20 year life of the project. Additionally, if the government were committed to a level carbon footprint playing field, it is also conceivable that any future carbon taxes might 'protect' low footprint indigenous gas, further enhancing the viability of projects like Loxley.

Financials

I acknowledge the concerns of private investors about 'dilution' of shares in the Company. However, it is our view that until such time as the Company has sufficient positive cash flow and or significant proven and probable reserves upon which to secure debt funding, raising funds from equity remains the most sensible and realistic way to fund projects for forward growth.

All oil and gas companies, from majors to relative minnows, must find ways to survive and flourish and our liquidity in the market is a valuable tool when there are no other funding options available.

That said, we believe that success in Turkey could dramatically improve the Company's financial strength in the near term due to the sheer magnitude of the potential prize and the ability to rapidly monetise a successful well.

Just before the first Covid-19 lockdown in March 2020, the Company paid the final £1 million to complete the acquisition of Magellan Petroleum (UK) Investment Holdings Limited. This was the deferred consideration element to Tellurian Investments LLC, the former owner. Via this payment, UKOG now holds irrevocable ownership of Magellan, renamed UKOG (137/246) Ltd, which owns a direct 35% interest in the Horse Hill oil field and the surrounding highly prospective PEDL137 and PEDL246 licences. As a result, UKOG holds a controlling 85.635% in the field and surrounding licences.

In June 2020, the Company fully repaid its convertible loan with Riverfort Global Opportunities PCC Limited and YA II PN Ltd. The repayment of the outstanding balance of £1.825 million eliminated the uncertainty attached to loan note conversion timings and pricing, something the Company believed was having a negative influence on UKOG's share price.

During the reporting period we raised £2.0 million in December 2019 from a single institutional investor, partly to accelerate long-lead time surface facilities and other related works necessary to bring the field into stable long-term oil production. An additional £1.275 million was raised in April 2020 to implement a series of cost reduction measures and we then added a further £4.2 million in June 2020 to fund full repayment of the convertible loan, as detailed above, and f or the purchase of key surface facilities at Horse Hill . Post period in October 2020 we raised a further £2.2 million to fund our share of initial costs in Turkey.

Operations

UKOG's UK operational activities concentrated upon the Horse Hill oil field, located near Gatwick Airport, plus we also pushed ahead with our other Weald Basin licences at Loxley in Surrey and Arreton on the Isle of Wight.

By end February 2021, post period, the Horse Hill field had produced and exported over 137,000 bbl of Brent quality crude from its Kimmeridge and Portland oil pools, providing the Company with a solid revenue base.

Activity at the Horse Hill field centred around reducing operating costs and a series of interventions on Horse Hill-1 ("HH-1"), designed to optimise pumping efficiency and minimise the expected water cut i.e., standard conventional oil field routine. The final intervention cycle finished in November 2020, seeing the safe reperforation of the full Portland oil producing section, insertion of a new simplified production tubing string and the downhole pump set at a deeper level to increase Portland pumping efficiency.

A further series of multi-week production optimisation trials to achieve the best balance between oil revenues and water handling and other operational costs were also undertaken, achieving stable water influx levels by the end of 2020. Work is also in hand, subject to regulatory permissions, to convert HH-2z into a water injector which should significantly reduce current water handling costs and help maximise oil recovery by supporting reservoir pressure.

It is expected that the further HH-3 Portland and HH-4 Kimmeridge infill wells will be planned in detail and drilled at Horse Hill following the completion of the Company's potentially transformational initial Turkey Basur-Resan appraisal drilling campaign.

As part of our UK energy diversification strategy, at Horse Hill we are actively evaluating the addition of 250 kW of photovoltaic solar power and 100 kW of battery storage to reduce site energy consumption, CO 2 emissions and operating costs, further underpinning long term site economic value and reducing greenhouse gas emissions. Alongside this we have also invested in a scoping study aimed at cogeneration and standalone geothermal energy at Horse Hill.

As operator of PEDL143, and as part of our portfolio management strategy, we carried out a detailed study examining the viability of drilling the A24 (formerly Holmwood) Portland and Kimmeridge prospect from selected sites outside the Surrey Hills Area of Outstanding Natural Beauty. We concluded this was not economically feasible and as a result UKOG and its partners relinquished their interests in the licence. It remains a source of irritation and regret that the prior operator did not drill this handsome prospect when it had planning permission to do so.

It should be noted, however, that the additional exploration potential of our Resan licence, namely the drill ready Prospect A, resulted in a net 13% gain to the Company's prospective resources, more than compensating for the relinquishment of PEDL143.

Turkey

In July 2020 and after much prior consideration, we decided to broaden our horizons with an agreement to take a 50% non-operated working interest in the 305 km² Resan oil appraisal and exploration licence in south east Turkey. Applications for three further follow-on exploration licences, comprising four 150 km² blocks, were also submitted to the Turkish regulatory authorities, again with 50% non-operated working interests.

UKOG's board views the forthcoming 2021 Basur-Resan appraisal drilling programme, aimed initially at proving the commerciality of the Basur-Resan oil discovery, to present a compelling and potentially transformational growth opportunity. If awarded the additional licences could each add similar oil resource potential as Basur-Resan to the Company's portfolio.

Post period, we received formal government consent for the Resan acquisition and subsequently completed the transaction with AME.

Having recently begun construction of the Basur-3 drilling pad, both the Company and AME will now work towards finalising the design and delivery of a successful first appraisal well, aimed at establishing the commerciality of the aerially extensive and as yet undeveloped Basur-Resan oil discovery. Work is also ongoing to design and shoot a c. 120 km 2D seismic programme this year and a further Resan-6 appraisal well.

The Basur-Resan oil discovery was assessed by Xodus Group Ltd to contain an estimated mean case discovered recoverable oil volume of approximately 34 million bbl gross, potentially delivering to UKOG approximately 17 mmbbl for its net 50% interest. The high case target offers approximately 67 mmbbl gross and 33.5 mmbbl net UKOG. Rapid monetisation of the discovery's success case is possible within a year in Turkey, plus drilling and operating costs are significantly lower than the UK.

Basur-Resan, therefore, has the potential to significantly surpass the recoverable oil & gas volumes currently assigned by Xodus to both our Loxley and Arreton appraisal projects and the entire aggregate sum of the Company's UK portfolio. As previously mentioned, to add a comparative scale, Resan's mean case gross discovered recoverable oil volume of approximately 34 million bbl exceeds the 32 million bbl of the total historic production and current remaining reserves of all the Weald Basin's historic 13 producing fields.

We also look forward to hearing the outcome of our application with AME for three further exploration licences in south east Turkey, lying to the south and south east of our Basur-Resan Licence. The most northerly block, M47-b3, is interpreted to contain a potentially significant extension of Basur-Resan and the most south easterly block, M48-d1, an extension of the recent Bukat-1 discovery well.

Covid-19

The Covid-19 emergency has provided us all with extraordinary new challenges. In early March 2020 we implemented a wide series of Covid-19 procedures and practices that protect the health and safety of our staff, consultants and stakeholders.

The policy adopts the Government's medical guidance at all times, including social distancing, and ensures appropriate levels of manpower and resources are maintained to ensure the safety of our operations as well as the health and safety of our team. At Horse Hill, we have adopted the policy of deploying essential staff only, all of whom are designated as "key workers" under the Government's emergency legislation.

Strict hygiene and distancing practices are in place to ensure that production continues at Horse Hill whilst protecting our team's health. As the plan minimises external contractor visits to those essential for safety, regulation and crude export, the planned series of further well interventions have been put on temporary hold until the current emergency passes.

Our Guildford office staff have also been adhering to best advice and practices, by working from home and communicating remotely using video conferencing technology which, fortunately, had been in active use within UKOG prior to the emergency.

Loxley

Following a post period rerun of the June 2020 Loxley planning committee meeting in November 2020, brought about by the Company's legal challenge to the lawfulness of the original meeting's conduct, Surrey County Council ("SCC") repeated their June performance, with the members voting 6 to 5 to narrowly refuse planning permission for appraisal drilling and testing at the Loxley gas exploration site near Dunsfold in Surrey.

This disappointing decision was, for the second time, contrary to the recommendation of the Council officers' report which recommended approval, all issues concerning planning, environmental and highways having been resolved to their professional satisfaction.

Crucially, the decision also ignored the key role domestic natural gas plays in the government's stated future low-carbon hydrogen policy in which natural gas is reformed into clean burning hydrogen. This new sector is an integral element of UK infrastructure strategy designed to help achieve net zero and underpin the UK's recovery from record Covid-19 induced debt levels.

Post period, on 8th February 2021, an appeal against SCC's refusal was lodged with the Planning Inspectorate, with a public inquiry lasting up to nine days now scheduled to commence on 27th July. We expect that a decision should be handed down some time in Autumn 2021.

Leading Counsel continues to advise that there are strong grounds to expect a positive appeal outcome, as the cited grounds for refusal are in direct conflict with the advice of its professional Planning and Highway Officers and their respective recommendations for approval.




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