REG - UK Oil & Gas PLC - Annual Accounts for year ended 30 September 2024
30/09/2025 18:00
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RNS Number : 4888B UK Oil & Gas PLC 30 September 2025
UK Oil & Gas Plc
("UKOG" or the "Company")
Annual Review and Accounts for the year ended 30 September 2024
UK Oil & Gas Plc (AIM: UKOG) is pleased to announce its full year results
for the full year ended 30 September 2024. A copy of the full annual report
will be posted to shareholders shortly. A copy of the full annual report will
also be made available on the Company's website: www.ukogplc.com
(http://www.ukogplc.com)
Following the publication of the 2024 Annual Report and the 2025 Interim
Report today, it is expected that the suspension of trading the Company's
ordinary shares will be lifted and trading will resume as soon as the annual
report and 2025 interim results are available on the Company's website.
Stephen Sanderson, UKEn's Chief Executive, commented:
"I would like to take this opportunity to thank our shareholders for their
patience and support during the past 6 months, a challenging period for all
concerned. The period has, however, helped us take stock of our transition
away from the petroleum sector into hydrogen storage and clean power. With
this transition at the forefront of our mind, the Company decided that it was
correct to impair its petroleum assets at this point so that the decks are
clear for the Company's clean power future. These clean power assets will
therefore constitute the Company's future core focus. We now look forward to
moving our hydrogen projects towards fruition and the intended submission of
applications for government revenue support in the coming year."
Qualified Person's Statement
Kris Bone, UKOG's Chief Technical Officer, who has 28 years of relevant
experience in the global petroleum industry, has approved the information
contained in this announcement. Mr Bone is a Chartered Chemical Engineer and
Petroleum Engineer.
For further information, please contact:
UK Oil & Gas PLC
Stephen Sanderson / Kris Bone/ Guzyal Mukhametzhanova Tel: 01483 941493
Zeus (Nominated Adviser and Broker)
James Joyce / James Bavister / Andrew de Andrade Tel: 0203 829 5000
CMC Markets (Joint Broker)
Douglas Crippen Tel: 0203 003 8632
Communications
Brian Alexander Tel: 01483 941493
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
Our Business - Hydrogen storage, hydrogen generation
UKOG is a pioneering energy developer transitioning away from its prior
onshore UK and Turkey petroleum business into Clean Power. We have a bold
vision to use our core subsurface, engineering and facilities skills to
develop at-scale salt cavern hydrogen storage projects in South Dorset and
East Yorkshire. We are one of a handful of first movers in this new and vital
energy storage sector, projected by National Grid and The Royal Society to
grow substantively from nearly zero today to 50-100 TWh demand by 2050.
Harnessing excess clean renewable power, converting it into green hydrogen and
storing for future use to generate electricity when the wind doesn't blow, or
the sun doesn't shine, or demand outstrips supply, is crucial for the UK's
Clean Power system, addressing the inherent intermittency of wind and solar.
It will remove the current necessity of using natural gas to fill the
intermittency gap. This will also help substantially reduce the UK's current
£1 billion annual spend on wind turbine curtailment.
Our Mission: Deliver our first UK hydrogen storage site by the early 2030s,
supporting the transition to net zero by 2050. Our 100% owned subsidiary, UK
Energy Storage (UKEn), has been diligently working on an underground hydrogen
storage project in South Dorset for the past four years. If delivered, this
will be the UK's largest, with an envisioned maximum annual capacity of up to
30 TWh. A second major site in East Yorkshire aims for an initial 7 TWh annual
capacity, with potential expansion to match Dorset's capacity.
Technology: Storage will be via large new-build underground salt caverns, a
proven, safe, and cost-effective technology established in the UK since the
1970s. Only three areas in the UK onshore have thick enough underground rock
salt deposits for large scale caverns; Dorset, East Yorkshire, and Cheshire.
Our proposed two sites in South Dorset and East Yorkshire will connect to the
UK-wide Project Union hydrogen pipeline, integrating into the national Clean
Power system.
Strategic Locations: Our two sites are strategically placed within the UK's
largest forecast hydrogen demand clusters: the South (including South Wales)
and the East Coast/Teesside, which together account for 70% of National Grid's
projected 2040 hydrogen demand. Our Yorkshire site will also help decarbonise
the East Coast Cluster, the UK's largest CO2 emitting region, by enabling the
adoption and optimisation of reliable renewable and hydrogen power.
Benefits: Our hydrogen storage will provide resilience, flexibility, and
security of supply to primary hydrogen clusters, buffering demand spikes and
ensuring pipeline stability. This will keep the lights on and support the
decarbonisation of the South and East Coast's gas-to-power plants - Drax Power
(the UK's and North's largest CO2 emitter) and Fawley Refinery, the South's
largest CO2 emitter.
We are also exploring early-stage green hydrogen generation opportunities
close to our storage projects, leveraging coastal locations for electrolysis,
identified offtakers and proximity to proposed new windfarm power landfalls to
help underpin and develop the nascent hydrogen economy.
Our Strategy
UKOG aims to build a diverse, sustainable and self-funding energy business
which has the following strategic objectives:
Hydrogen and Renewables:
1. Hydrogen generation and storage
· Investigate potential sites for green hydrogen generation, salt
cavern storage and hydrogen battery concept.
· Focus initially on the UK, with international expansion thereafter
if commercially viable opportunities arise.
· Early stage operated entry through planning permission stages, with
possible subsequent strategic partnerships/JV arrangements with large
infrastructure players.
· Strategic partnerships with sector technology specialists.
2. UK Energy Diversification - reduce carbon footprint of Company's
existing legacy petroleum sites
· Where viable, implement geothermal and/or solar energy cogeneration
plus electrical battery storage by repurposing existing petroleum wells/sites
to extend economic life cycle.
· Where viable, add new standalone geothermal and battery storage for
grid/heat export.
· Investigate replacement of diesel powered off grid mobile power
generation
3. Find and develop new stand-alone geothermal energy-hub projects
· Early stage entry, either operated or as joint venture partner.
· UK initial focus, international expansion thereafter if
commercially viable opportunities arise.
Petroleum:
1. Balance Risk and Reward
· Maximising return on investment by considering divestment after an
asset has been de-risked, where appropriate.
· Ensure risk-free operations of current sites
· Extend asset life with development of energy transition
opportunities such as repurposing to geothermal.
2. Targeted Portfolio Management:
· Continuously review and upgrade 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 its vision and strategy internally through dialogue with its
employees and externally to shareholders and stakeholders via public
announcements, the Company's website and the Annual Report and Accounts.
Chairman's Statement
It has been a year of shifting direction as the UKOG team have poured their
energies into Clean Power, as the new Government like to call renewable low
carbon energy. Our historic core petroleum exploration business of has taken
more of a back seat as the Company looks to store hydrogen in salt caverns a
mile or so under our feet and generate green hydrogen via electrolysis.
A hugely positive acknowledgement of UKOG's South Dorset hydrogen storage
project by the Prime Minister was followed by the publication of a report by
Quod, an independent planning and economics consultancy, predicting the
facility could make a significant and material financial contribution to the
local and national hydrogen economy and provide an equally impressive number
of jobs.
The Company's core skillsets can now be utilised to place subsidiary company
UK Energy Storage Ltd (UKEn) at the vanguard of providing the country with
much-needed hydrogen storage to keep the lights and the heating on over the
next decade and beyond.
There now follows an active period where we will look to prepare an
application for hydrogen storage revenue support in the Department of Energy
Security and Net Zero's (DESNZ) first allocation round, pursue the Company's
first green hydrogen generation and potential green ammonia/hydrogen
generation projects in Dorset, secure a strategic investor/partner and
conclude further letters of intent and MOUs with hydrogen producers,
offtakers and pipeline providers to further strengthen and support our
allocation submissions and Clean Energy business.
We will also continue our engagement with government ministers and DESNZ to
further both UKEn's individual business position and promote our strategic
positions in the Dorset Clean Energy Super Cluster and Solent Cluster, the
largest integrated clean power and decarbonisation clusters in the south of
the UK.
To help achieve these Clean Power goals we plan to continue discussions with
potential strategic investors to help fund our hydrogen storage projects. We
will also aim to restore production at Horse Hill in 2026 so that any future
revenues can be utilised to help fund our hydrogen ventures. Where appropriate
we will also investigate the future repurposing of our existing boreholes to
harness geothermal energy via our continued collaboration with one of the UK's
leading geothermal engineering companies, Ceraphi Energy Ltd.
Let us enjoy the journey towards a sustainable low carbon future.
Nicholas Mardon Taylor
Non-Executive Chairman
Chief Executive's Statement
Transition
The Company is advancing its transition from a petroleum exploration company
to a pioneering clean energy developer with a bold vision to deliver
nationally significant salt cavern hydrogen storage projects in South Dorset
and East Yorkshire. This transition is fully in line with the Government's
Clean Power 2030 target. We regard our planned at scale storage projects to be
key enablers to deliver the government's clean power targets in the south and
north east of the UK.
Clean Energy
UK Energy Storage Ltd (UKEn), our wholly owned subsidiary, is at the vanguard
of this exciting and real ambition and is one of a handful of potential
hydrogen storage operators liaising with the Department of Energy Security and
Net Zero's Hydrogen Storage Business Model group.
In March 2025 a report by Quod, an independent planning and economics
consultancy, specialising in modelling the economic impacts of major
infrastructure projects, stated that our South Dorset project could contribute
£2.3bn annually to the UK economy during its 30+ year operational life.
In addition, the Quod UKEn South Dorset project report states that a further
£665 million Gross Value Added (GVA) of direct and indirect/supply chain
economic benefits could result from the planned four-year construction phase,
meaning the creation of up to 2,100 jobs directly and a further 5,100 jobs in
the supply chain during construction.
In January of this year, we reported the findings of DEEP.KBB GmbH, one of
Europe's leading salt cavern design and underground energy storage engineering
groups, who had completed preliminary project design for our proposed new
storage facility located west of Weymouth in Dorset.
The design confirmed the site would comprise 24 caverns providing up to 1.01
billion standard m³ ("bcm") working hydrogen volume, 12% greater than our
original project at Portland Port, with hydrogen withdrawal and injection
rates providing up to 2.9 times the annual cycling capacity of Portland,
creating a technical maximum annual storage capacity of 30.2 TWh¹/yr vs
Portland's 10.4 TWh¹/yr.
The other key game-changer was the design's adoption of a conventional
"cushion gas" operating scheme which would significantly reduce project
development costs (CAPEX) by around 36% compared to Portland, reducing costs
by around £450 million. The design's resultant increased cycling capacity,
lower CAPEX and operating costs create potential for a significantly increased
future annual revenue base versus Portland and a more competitive submission
for government revenue support.
However, UKEn executed two Memorandums of Understanding with Portland Port to
jointly pursue hydrogen opportunities centred around the Port and our South
Dorset Storage site, including the generation of 1 GW of green hydrogen via
import by ship of green hydrogen carrier liquids, and the generation of green
hydrogen via electrolysis within Portland Port.
This addition of a potential material source of green hydrogen, directly
linked to UKEn's South Dorset storage site, would both enhance our project's
national significance and the prospects of UKEn securing revenue support in
the government's forthcoming Hydrogen Storage allocation round.
Our hydrogen storage projects have also received full letters of support from
Japanese conglomerate Sumitomo, SGN, RWE and The Solent Cluster, which
constitutes the primary near-term industrial user base. We have further
similar agreements in the pipeline.
The Solent Cluster is one of six large UK industrial clusters planning to
decarbonise via a switch to hydrogen and other sustainable low-carbon power
sources. It is the major industrial cluster and carbon emitter in the southern
half of England and encompasses UKEn's planned storage facility at its western
limit.
Complementing the Solent Cluster, the £28 billion Dorset Clean Energy Super
Cluster (DCESC) was officially launched at UKREiiF 2025. Anchored around
Portland Port and fully supported by Dorset Council, the initiative
encompasses the company's Dorset hydrogen projects alongside 2 GW of offshore
wind in the English Channel, carbon capture and storage (CCS), and the
development of a new deepwater facility for wind farm construction and
maintenance. This marks a pivotal and forward looking development for the
company, positioning it at the heart of one of the UK's most ambitious and
innovative clean energy clusters.
Petroleum
As Clean Power and hydrogen storage is now our primary focus, the Company has
also ceased its petroleum exploration and appraisal activities in Turkey.
After successful reperforating and extensive swab testing by operator Aladdin
Middle East ("AME"), we mutually concluded that, in the absence of commercial
rates of hydrocarbons, no further testing of Pinarova-1 would take place. We
have decided to end our exploration and appraisal activities in Turkey by
transferring our 50% interest in the Resan licence to our joint venture
partners AME.
With respect to Loxley, our 100%-owned hybrid gas and hydrogen feedstock
project, marketing activities by our appointed project marketing specialists,
Envoi Limited, to farmout up to a 50% working interest to fully fund the
planned Loxley-1 appraisal drilling and testing programme continued throughout
the period.
In an increasingly difficult and hostile environment for the UK petroleum
sector, notably following the introduction of the petroleum sector policies of
the new Labour government, Envoi Limited were unable to find a farminee and no
farmout resulted. Consequently, in June 2025 the Company decided to relinquish
PEDL234, containing the Loxley and Broadford Bridge discoveries.
However, at Broadford Bridge, negotiations are well advanced with CeraPhi
Energy Ltd and the North Sea Transition Authority regarding the repurposing
of the Broadford Bridge borehole and site into a CeraPhi operated geothermal
clean energy agriculture development. As the proposed new scheme falls outside
of the Petroleum Sector it does not require an oil & gas licence,
requiring Town and Country Planning consent for the development and the North
Sea transition Authority's consent to the switch of use and abandonment
obligations. The Company aims to conclude an agreement with Ceraphi to proceed
by the end of 2025.
In June last year, the Supreme Court finally decided by a three to two
majority that Surrey County Council's 2019 grant of planning consent for oil
production at Horse Hill did not consider in their assessment an estimate of
the end-use carbon combustion emissions of produced hydrocarbons.
Consequently, the existing planning consent was deemed to be invalid.
The ruling now retrospectively requires that the end-use combustion emissions
must be included in the Horse Hill's Environmental Impact Assessment ("EIA")
and assessed as part of the grant of planning consent for the development.
Consequently, we ceased all production and removed key equipment from the
site, whilst an updated planning application including the amended EIA is
prepared for submission later in 2025. The Company currently aims to restore
production at the site in H1 2026.
During the long shut-in period at Horse Hill, given the geology and historic
reservoir production behaviour of the field, we would expect a significant
reservoir pressure build-up to have occurred. Consequently, we expect that any
re-start of production is likely to be at higher rates than those immediately
prior to the shut-in date.
Should this be the case and given that the produced volumes to date represent
less than a few percent of the assessed oil in place the Company regards the
remaining untapped recoverable resource perspective as potentially
significant. Consequently, given the restoration of planning consent we
consider Horse Hill offers the potential to remain a future strategic asset
and to help contribute revenue towards our energy transition Clean Power
projects.
In the light of our general direction of travel into Clean Power, the Horse
Hill situation and relinquishments of Loxley and Turkey, we believe that the
most prudent course of action following our year-end impairment reviews was to
recognise impairments on these legacy oil and gas assets. The impairments are
detailed in the Financial Review.
In respect of Horse Hill, we expect that once planning consent is restored and
the potentially increased production rates are confirmed, the field has the
potential to regain asset value and to potentially partly or fully reverse the
current impairments which are detailed in the Financial Review.
Asset realisations
Fully in line with this shift of emphasis towards renewable energy storage,
post year-end we also agreed the sale of our 100%-owned subsidiary UKOG (GB)
Limited, subject to the customary petroleum sector regulatory approval, to
Servatec Holdings Limited for a cash consideration of £400,000. UKOG (GB)'s
assets are a 10% non-operated interest in the Horndean oil field and a 5%
non-operated interest in the Avington oil field.
With our pivot to clean energy now firmly underway, we are building a platform
designed to meet the UK's future hydrogen needs at scale. The road ahead is
ambitious, but we are confident that our assets, partnerships, and vision
position us to lead, not follow, in the UK's energy transition.
Stephen Sanderson
Chief Executive
Hydrogen Storage Assets
Letters of support for UKOG's hydrogen storage projects in Dorset and East
Yorkshire were received from Sumitomo, SGN, RWE and The Solent Cluster. We
also became founding members of the Dorset Clean Energy Super Cluster, centred
on Portland Port.
South Dorset Hydrogen Storage (UKEn 100%)
DEEP.KBB GmbH, one of Europe's leading salt cavern design and underground
energy storage engineering groups, completed preliminary project design for
the Company's proposed new South Dorset underground hydrogen storage facility,
located west of Weymouth. The design confirms the suitability of the site for
a material scale hydrogen storage project, comprising 24 salt caverns (three
clusters of 8 caverns) at a depth of ~1330m below surface. The project is
fully in keeping with the Government's Clean Power 2030 ambitions.
The following metrics summarise the design and its advantages versus UKEn's
original Portland harbour site ("Portland"):
The Design comprises 24 caverns at South Dorset providing up to 1.01 billion
standard m³ ("bcm") working hydrogen volume, 12% greater than Portland's
0.9 bcm;
Calculated hydrogen withdrawal and injection rates at South Dorset could
provide up to 2.9 times the annual cycling capacity of Portland, creating a
technical maximum annual storage capacity of 30.2 TWh¹/yr vs Portland's 10.4
TWh¹/yr, a substantive increase;
If delivered and operated at full capacity, the site's technical maximum 30.2
TWh¹/yr annual storage capacity could represent a material proportion of the
currently predicted UK 2050 annual hydrogen storage demand of 50-100
TWh(1)/yr(2);
The design's adoption of a conventional "cushion gas" operating scheme would
significantly reduce project development costs (CAPEX) by around 36% compared
to Portland, reducing costs by around £450 million to £800 million;
The design's resultant increased cycling capacity, lower CAPEX and operating
costs create potential for a significantly increased future annual revenue
base versus Portland and a more competitive submission for government revenue
support;
The site also lies closer to the planned H2 Connect hydrogen trunk pipeline,
designed to connect South Dorset to the UK hydrogen transmission pipeline
system (Project Union) and the main hydrogen clusters in the South, East Coast
and Northwest.
Notes: (1) TWh = terawatt hours; 1 bcm of pure hydrogen has the energy
equivalent of ~3.0 TWh;
(2) based upon 2023 National Grid/NESO and Royal Society hydrogen demand
predictions as per RNS 27/06 and 21/08/2024.
The Design's significantly greater injection and withdrawal rates and
consequent increased annual energy storage capacity compared to Portland, are
a direct consequence of the underlying geology at the location. The Triassic
salt is thicker, permitting larger caverns, and lies 1,070m closer to surface
at 1,330m versus 2,400m at Portland. The associated lower hydrostatic pressure
and temperatures within the salt underlying the Site enable a simple,
conventional "cushion gas" scheme to be utilised to provide the minimum
necessary cavern working pressure required to maintain cavern integrity.
The cushion gas scheme, as proposed by DEEP.KBB, is a proven technology used
in numerous salt caverns in the UK, Europe and USA, offering a much simpler
development and operation than the required brine compensation scheme (see
glossary) at Portland. The Design's scheme requires no additional brine wells,
brine facility or brine pipelines, plus there is only one well per storage
cavern versus two for brine compensation.
Portland Energy Hub (UKEn 100%)
The Company has made a strategic decision that it will pursue revenue support
only for its more competitive South Dorset and East Yorkshire projects and
will no longer pursue the Portland project for storage.
However, given our positive relationship with Portland Port and the role of
hydrogen in decarbonising the marine sector, the Company believes that there
remain synergies between our South Dorset project and the port. To this end,
UKEn and Portland Port have executed two Memorandums of Understanding to
jointly pursue the following joint venture hydrogen opportunities centred
around the Port and UKEn's material scale South Dorset Storage site (see RNS
of 28 January 2025):
i. Generation of 1 GW of green hydrogen via import by ship of green hydrogen
carrier liquids (and/or compressed green hydrogen) into Portland Port.
Produced hydrogen gas to be piped locally into UKEn's nearby South Dorset salt
cavern hydrogen storage site and then onwards to the wider UK.
ii. a. Generation of green hydrogen via electrolysis within Portland
Port. Designed to capture excess 'locally' generated clean renewable
(wind/solar) energy in UKEn's South Dorset storage. Stored energy would
ultimately be converted to electrical power for future use/demand during low
wind/solar periods, thus helping 'cure' the inherent intermittency of
renewables (i.e., "a Hydrogen Battery").
b. Hydrogen to power generation within Portland Port. Designed to meet initial
power requirements for UKEn's South Dorset Storage site and its environs.
The company's South Dorset hydrogen projects are now positioned at the core of
the ambitious £28 billion Dorset Clean Energy Super Cluster (DCESC),
officially launched at UKREiiF in May 2025. With full backing from Dorset
Council, the cluster brings together clean hydrogen production and storage, 2
GW of offshore wind in the English Channel, carbon capture and storage (CCS),
and the development of a new deepwater facility for wind farm fabrication and
maintenance-all centred around Portland Port. The company is actively
collaborating with the DCESC team to advance its projects, strengthen
stakeholder engagement, and build both regional and national political
support.
East Yorkshire Hydrogen Storage (UKEn 100%)
The Company is planning a further hydrogen storage project in East Yorkshire,
located nearby to the existing SSE Thermal/Equinor Aldbrough gas storage site.
Petroleum Assets
OG Asset Status Summary
Asset / Licence Status Notes Date of Change
Horse Hill Oil Field (PEDL137 & PEDL246) Temporarily shut in, still owned Awaiting new retrospective planning consent following Supreme Court ruling; June 2024 (shut-in); new submission due 2025
production to resume if approved
Loxley (PEDL234) Relinquished Planning permission upheld, but no farmout secured; licence surrendered End-June 2025
Broadford Bridge (PEDL234) Relinquished Planning extension refused; licence surrendered; commercials negotiations with End-June 2025
Ceraphi Energy Ltd for re-purposing to geothermal
Turkey - Basur-Resan Licence Exited Pinarova-1 non-commercial; UKOG ceased activities and transferred 50% interest 2024/25
to AME
Horndean Oil Field (PL211, 10%) Post year end sale Sold via sale of UKOG (GB) Ltd to Servatec Holdings Ltd Early 2025
Avington Oil Field (PEDL070, 5%) Post year end sale (shut in) Included in sale of UKOG (GB) Ltd to Servatec; remains shut-in Early 2025
Horse Hill Oil Field, PEDL137 and PEDL246 (UKOG 85.635%)
The field and surrounding licences are operated by UKOG's subsidiary company
HHDL in which UKOG has 77.9% ownership. The Licensees are HHDL (65% interest)
and UKOG (137/246) Ltd (35% interest).
Following construction and baseline monitoring of three groundwater monitoring
boreholes, all permit pre-operational conditions were submitted to the
Environment Agency ("EA") for discharge in line with the permit requirements.
The EA subsequently awarded a permit for water injection operations via the
Horse Hill-2z well in Oct-2024.
In June 2024, the Supreme Court ruled that in its 2019 grant of planning
consent for the Company's oil production at Horse Hill, Surrey County Council
("SCC") did not request and consider in their assessment an estimate of the
end-use carbon combustion emissions of produced hydrocarbons. The ruling now
retrospectively requires that the end-use combustion emissions must be
included in the development's Environmental Impact Assessment ("EIA") and
assessed as part of the grant of planning consent for the development.
Consequently, the Company is working closely with SCC to rectify the
situation, via a new retrospective planning submission later in 2025. By
agreement with SCC Horse Hill oil production was temporarily shut in pending
restoration of planning approval. On resumption of its profitable production
operations the company will assess the future opportunities for Horse Hill.
At the time of this production shut-in 212,000 bbl of Brent quality crude had
been produced and exported from the Portland and Kimmeridge pools.
Loxley, Broadford Bridge, PEDL234 (UKOG (234) 100%)
In January 2024, the Court of Appeal issued a final decision refusing
permission for any further appeal regarding the planning consent granted for
UKOG's Loxley gas and hydrogen feedstock project in Surrey. This decision
upheld the High Court's July 2023 ruling, which similarly denied appeal
permission. Both judgments concluded that any appeal would have no reasonable
prospect of success. As a result, the planning permission for the Loxley site
remained valid for its full approved term.
Following this legal outcome, the North Sea Transition Authority (NSTA)
granted a one-year extension to the Retention Area Work Programme under
licence PEDL234, which includes the Loxley gas discovery.
UKOG engaged Envoi Limited, a UK-based specialist in oil and gas divestment
and project marketing, to facilitate a farmout of up to a 50% working interest
in the Loxley project. The objective of the farmout was to secure full funding
for the planned Loxley-1 appraisal drilling and testing programme, with UKOG's
share of costs to be carried by the farminee(s).
According to the February 2023 Competent Persons Report (CPR), the Loxley
discovery was assessed to contain mid-case recoverable 2C Contingent Resources
of 31.0 billion cubic feet net to UKOG. The associated net post-tax present
values to UKOG were estimated at £124 million based on 31 December 2022 gas
prices, and £87 million using RPS Energy's forward price forecast. Further
appraisal and development activities were required to reclassify these
resources as Reserves.
Separately, UKOG submitted an application to West Sussex County Council's
Planning Committee seeking a two-year extension of planning permission for the
Broadford Bridge-1z Kimmeridge oil discovery. This application was refused.
Due to the refusal of the Broadford Bridge extension and the absence of a
successful farmout amid challenging market conditions for UK onshore oil and
gas, UKOG elected to relinquish licence PEDL234, which includes both the
Loxley and Broadford Bridge discoveries, effective at the end of June 2025.
Commercial discussions continue with CeraPhi Energy Ltd regarding potential
for a geothermal energy agriculture project incorporating the Broadford Bridge
asset.
Turkey, Basur-Resan Licence (UKOG 50%)
The Basur-Resan anticline containing the Basur-1 oil discovery is located
within the surrounding 305 km² Resan M47-b1, b2 licence in SE Turkey, in
which UKOG's wholly owned subsidiary, UKOG Turkey Ltd, holds a 50%
non-operated interest.
In January 2024 licence operator Aladdin Middle East ("AME") successfully
completed reperforating and extensive swab testing at Pinarova-1. However,
UKOG and AME mutually concluded that, in the absence of commercial rates of
hydrocarbons, no further testing will take place.
As clean power and hydrogen storage are now UKOG's primary focus, the Company
ceased its activities in Turkey, transferring its licence interest to AME.
Horndean Oil Field (UKOG 10%)
UKOG's second producing field is Horndean located in Hampshire. Star Energy,
the Horndean oil field operator, carried out well interventions resulting in a
11% oil production increase in 2024 versus the budget. Horndean oil production
in 2025 is forecast to be 24% above 2024 actual production. January 2025
production averaged 200 barrels of oil per day, 60% higher than the production
in January 2024. As such, UKOG anticipates that Horndean reserves will be
increased when Star Energy issues its end-2024 Competent Persons Report.
As a result of this positive production news and in keeping with our strategic
move away from fossil fuels, the Company agreed the sale of its 100%-owned
subsidiary UKOG (GB) Limited to Servatec Holdings Limited for a cash
consideration of £400,000 post year-end. The carrying value of this cash
generating unit at 30 September 2024 exceeded recoverable amount,
necessitating impairments recognised in the year in the amount of £0.8m. This
included the minority non-operated interests in two UK onshore petroleum
licences, a 10% interest in PL211 and a 5% interest in PEDL070,
containing the Horndean and Avington oil fields, respectively. Both licences
are located in Hampshire.
Avington Oil Field (UKOG 5%)
Production from the Avington oil field remains shut in.
Kris Bone
Matt Cartwright
Chief Technical Officer
Commercial Director
Reserves and Resources
Total aggregate net discovered 2C (mid case) contingent resources and 2P (mid
case) reserves now stand at 2.8 mmboe.
HH-1 production remains in contingent resource category, as the company looks
to reinstate planning consent. Once the company reinstates planning permission
and gets sufficient data it intends to review the HH-1 production decline and
attribute reserves to HH-1, thus transferring them from Contingent Resources
to Reserves category.
Table 1: Recoverable Reserves mmbbl: Producing Fields, Gross and Net (as of 31
December 2024)
Asset UKOG % Interest Gross mmbbl Net Attributable mmbbl Operator
1P 2P 3P 1P 2P 3P
Horndean 1 10 0.88 1.01 1.14 0.09 0.10 0.11 Star Energy
TOTAL (mmbbl) 0.09 0.10 0.11
Notes: (1) DeGolyer and MacNaughton ("D&M") for Star Energy Jan
2024
Table 2: Contingent Resources mmbbl/mmboe (i.e., discovered and drill ready
recoverable volumes)
Licence UKOG Gross Net Attributable Operator
% mmbbl/mmboe mmbbl/mmboe
1C 2C 3C mean 1C 2C 3C mean
Horse-Hill Portland (1) PEDL137 85.64 0.4 1.3 3.4 1.7 0.4 1.2 2.9 1.5 HHDL
Horse-Hill Kimmeridge (4) PEDL137 85.64 0.4 1.6 6.1 2.7 0.3 1.4 5.2 2.3 HHDL
Avington (2) PEDL070 5 0.6 0.8 1.1 0.8 0.03 0.04 0.05 0.04 Star Energy
Horndean (2) PL211 10 0.3 0.8 1.3 0.8 0.03 0.08 0.13 0.08 Star Energy
TOTAL mmboe 0.8 2.7 8.3 3.9
Notes: (1) Xodus June 2018 less Portland production to end Dec 2024,
estimates for Horse Hill are deterministic based upon per well recoveries,
(2) D&M for Star Energy February 2025, estimates for Horndean and Avington
are deterministic, not probabilistic,
(3) RPS CPR February 2023, probabilistic based upon range of recovery factors,
4. RPS Jun 2019
Health, Safety and the Environment
UKOG is committed to providing, so far as is reasonably practicable, a quality
working environment that is safe and one that poses no risks to the health and
safety of our employees, contractors, the local community and stakeholders.
The health & safety of employees and the public, and the protection of the
environment are core business objectives of UKOG. They rank equally with the
company's other business objectives.
Health, safety and environmental ("HSE") risks associated with the business
practices of UKOG are addressed through the effective implementation of our
HSE Policy, which is designed to ensure that every person who works for UKOG
is responsible for ensuring that health and safety is managed in all aspects
of our business.
The Company's HSE aspirations are: "get it right, first time, every time with
no accidents, no harm to people, the ecology and the environment."
To achieve the identified objectives, we will ensure that all necessary and
reasonable resources are made available. We will confirm that objectives are
being met by reviewing and reporting on performance and auditing the
implementation and operation of UKOG's HSE Management System.
Our full HSE framework is available on our website:
http://www.ukogplc.com/page.php?pID=101 (https://ukogplc.com/page.php?pID=101)
Health & Safety Review
UKOG, under our operating subsidiary HHDL, continued production activities at
Horse Hill, until production was suspended post period. Post suspension of
production, the site remains under care and maintenance oversight.
There were no lost time injuries or environmental incidents on any of UKOG's
sites or at AME's Pinarova well site in Turkey during the reporting period or
post period. The lost time injury frequency was also zero.
The EA made a number of site visits to both Horse Hill and Broadford Bridge.
UKOG continues to maintain good housekeeping standards on its sites. The
Company continuously monitors all its live operations for noise, ensuring
noise from its sites is kept to a minimum and is compliant with the levels set
by the relevant site planning approval. UKOG only utilises service companies
that can demonstrate commitment to our HSE standards.
Community Engagement
Any complaints received are reviewed and responded to. Communication links are
in place with the residents close to our sites, who can call UKOG at any time.
The Company meets and communicates regularly with local police to give
operational updates where necessary.
Route to Development
UKOG operates within a highly regulated industry, led by the NSTA, a
government agency reporting to DESNZ, who among other things are responsible
for checking a company's financial and operational competency before issuing a
Petroleum Exploration and Development Licence ("PEDL") and other regulatory
approvals.
Once a potential site has been identified, UKOG must secure landowner consent
and a land lease to operate on the land, before the EA assess any risk to
groundwater and air quality, as well as the arrangements for waste management.
In parallel with seeking EA permits, discussions with local planning
authorities begin. They in turn seek the views of the local community and
statutory consultees. The Health and Safety Executive also regulates and
monitors all onshore oil & gas exploration and production activities.
Financial Review
Overview
The financial year ended 30 September 2024 marked a period of strategic
realignment for UKOG, with a shift in operational focus from oil exploration
and production to hydrogen storage. The Group maintained financial discipline
while progressing its flagship hydrogen storage projects in South Dorset and
East Yorkshire and managing its oil assets.
Income Statement
The Group recognised revenues of £1.1 million for the year (2023: £1.5
million), derived entirely from crude oil sales at Horse Hill and Horndean.
The reduction reflects the natural decline at mature assets and oil prices
reduction partially offset by increased production at Horndean.
Cost of sales totalled £0.9 million (2023: £1.3 million) and included:
Depletion, Depreciation and Amortisation (DDA): £0.3 million (2023: £0.2
million)
Gross loss for the year was £0.1 million (2023: profit £0.3 million).
Administrative expenses reduced to £2.8 million (2023: £3.3 million),
reflecting tighter cost control and overall strategic realignment.
A credit arising from the reassessment of decommissioning provisions,
reflecting updated cost estimates and discount rate assumptions, contributed
significantly to the Group's net finance income in the year. Net finance
income totalled £0.9 million (2023: cost £0.6 million), with the balance
largely attributable to the full repayment of the RiverFort convertible loan
facility in June 2024.
Impairment reviews
As part of the year-end review, the Group carried out impairment testing of
its oil and gas and exploration and evaluation assets in accordance with IFRS.
This resulted in impairments across a number of legacy oil and gas interests,
as summarised below.
The impairments primarily reflect external regulatory and commercial factors
beyond the Company's direct control, not adverse geological or operational
conditions. Importantly, the impairments are non-cash accounting charges that
while increasing reported losses do not impact the Group's cash resources.
Horse Hill was reviewed in light of the 2024 Supreme Court ruling which found
that Surrey County Council's (SCC) decision to grant planning consent was
unlawful as it had not assessed end use carbon emissions and that planning
consent must be redetermined before production can resume. By agreement with
SCC, oil production has been temporarily shut in from November 2024 until
planning approval is restored, after which the Company will resume production
and reassess the implementation of identified longer-term value opportunities
in the field. It should be noted that the Company's positive view of the
field's remaining recoverable oil and value remains essentially unchanged from
the prior reported values and the impairment is a result of the fact that the
field's consent to produce carries a level of uncertainty, being dependent on
SCC's redetermination post this audit period and the significant funds needed
to execute exploration projects in Horse Hill.
Licence/ Subsidiary Impairment (£m) Reason
Horse Hill (E&E) 20.0 Planning consent uncertainty; production resumption dependent on retrospective
approval by SCC; production shut-in agreed with SCC; political landscape,
significant funds needed to execute exploration projects
Horse Hill (producing) 2.1 Cash flows restricted to existing consents and shut-in status pending planning
resolution/retrospective approval
UKOG (GB) Ltd (Horndean) 0.8 Carrying value exceeded recoverable amount; disposal agreed in July 2025
Turkey 3.4 No further expenditure planned; commercial development unlikely, exit from
licence subsequent to 30 September
PEDL234 8.7 No further expenditure planned; commercial development unlikely, farm in
partner not found, subsequent relinquishment subsequent to 30 September 2024
By recognising the Horse Hill impairment in this audit cycle the Board has
adopted a prudent approach that ensures asset values reflect current
regulatory realities and is also fully consistent with the Company's goal to
transition into clean power via its hydrogen storage and generation
activities. The Board also notes that, should Horse Hill planning consent be
reinstated in 2026 as envisaged, given that the remaining recoverable oil
volumes remain positive and unchanged from the Company's last reporting,
there is a likelihood that a portion of current impairment could be
reversed in future periods. These impairments also allows the Group to
sharpen its focus on advancing its hydrogen storage and clean energy strategy.
While statutory losses for the year were significant, net operating cash
outflows fell compared with the prior year, underlining that the Group's
forward cash requirements are materially lower than headline losses suggest.
The Group recorded an operating loss of £37.8 million (2023: £4.1 million).
Capital Expenditure
During the period, the Group continued to invest in both its oil and gas and
hydrogen assets. Capital expenditure was funded through a combination of
operating cash flows, equity placings, and the previously secured debt
facility.
Balance Sheet
Non-current assets decreased to £2.1 million at 30 September 2024 (2023: £37
million), reflecting impairment charges recognised in the year. The balance
primarily comprised capital expenditure on the hydrogen storage project.
Exploration and evaluation assets relating to Turkey, PEDL 234 and Horse Hill
were impaired in full at the reporting date.
Cash Flow and Financing
Net cash outflow from operating activities was £1.8 million (2023: £2.9
million). The improvement was due to lower working capital outflows and
reduced investment related to Turkey.
Cash and cash equivalents at year-end stood at £1.0 million (2023: £1.9
million). During the year, the Group raised gross proceeds of £2.3 million
through equity placements to support working capital and advance project
development.
Summary
UKOG has made meaningful progress in reshaping its business toward hydrogen
storage. The Group retains a lean cost base, has exited legacy oil exploration
in Turkey, and is well-positioned to deliver long-term value through hydrogen
storage.
Princial Risks and Uncertainties
UKOG continuously monitors its risk exposures and reports its review to the
board of directors ("The Board"). The Board reviews these risks and focuses on
ensuring effective systems of internal financial and non-financial controls
are in place and maintained.
Key Risk Areas
The high-risk areas surrounding our existing business is tabulated below; the
key areas are Strategic, Operational and Financial.
Risk Mitigation Magnitude and likelihood
Strategic risks
Exposure to political risk, UKOG operates within the United Kingdom and may in Through industry associations and direct contact, the Company engages with Magnitude - High
future evaluate opportunities in other regions. Even within stable Government and other appropriate organisations to ensure the Company is kept
jurisdictions, political, economic and regulatory changes can arise that may abreast of expected potential changes and takes an active role in making Likelihood High
impact the Group. Examples include amendments to energy and environmental appropriate representations.
regulation, changes in taxation policy, evolving planning and permitting
requirements, and shifts in government priorities regarding fossil fuels and
the energy transition.
Climate change and energy transition risk - UK net-zero targets and investor, The Group is aligning with evolving UK climate policy and stakeholder Magnitude - Low to Moderate Likelihood - Low to Moderate
public and regulatory expectations may reduce demand for hydrocarbons and expectations and is actively developing hydrogen storage.
increase climate-related disclosure and operational costs. Could impact asset
viability and access to capital.
Operational risks
Permitting risk, planning, environmental, licensing and other permitting risks UKOG is compliant with regulations and is proactive in engagement with Magnitude - Moderate
associated with our operations particularly with hydrogen storage operations regulators, communities and the expertise and experience of the management
teams. Likelihood - Moderate to High
Exploration risk, the Company fails to locate and explore hydrocarbon-bearing Analysis of available technical information to determine the work programme. Magnitude - Moderate
prospects that have the potential to deliver commercially, e.g. key wells are Risk-sharing arrangements entered to reduce downside risk.
dry or less successful than anticipated.
Likelihood - Moderate
Oil production may not be resumed or achieved at the anticipated levels from In light of current developments, we continue to analyse available technical Magnitude - Low
the Group's assets, or production may not be economically viable, particularly data to enhance our understanding of the reservoir, while reviewing the cost
in light of the current regulatory and planning uncertainties base to ensure production remains economically viable. We also monitor and Likelihood - High
manage planning risks that may impact the timing and continuity of production.
Operational risks (continued)
Prices and markets. The Group's financial performance is exposed to The Group keeps this risk under review. At this point, the Group continues to Magnitude - Moderate
fluctuations in the prices of oil, gas and refined products. These prices are review costs where appropriate.
driven by international supply and demand dynamics and can be highly volatile.
Likelihood - Moderate to High
Contributing factors include political developments, increased supply from new
oil and gas projects or alternative low-carbon energy sources, technological
change, global economic conditions, and public health events.
Loss of key staff Provide and maintain competitive remuneration packages to attract the right Magnitude - Moderate
calibre of staff. Build a strong and unified team.
Likelihood - Low
Financial risks
Liquidity risk. The Group is exposed to liquidity risk through its operations, To mitigate this risk, the Group prepares regular cash flow forecasts, closely Magnitude - High
with a material uncertainty regarding its ability to generate and access monitors working capital, and seeks to align expenditure with available
sufficient funds to meet its obligations as they fall due. resources. The Group also relies on access to external funding, including Likelihood - Moderate
credit facilities and equity financing, and retains the flexibility to defer
or reduce discretionary expenditure where necessary.
Climate-Related Disclosures
The Company acknowledges the increasing relevance of climate-related risks and
opportunities to its operations, strategy, and financial position. In
alignment with the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD), the following narrative summarises the Group's
current approach across the four core TCFD pillars: Governance, Strategy, Risk
Management, and Metrics & Targets.
Governance
Board Oversight
Throughout 2023 and 2024, the Board retained ultimate responsibility for the
oversight of all material risks, including those relating to climate change.
The Board periodically reviewed updates from management on environmental and
regulatory developments, ensuring climate-related risks were appropriately
captured in the risk register and strategic plans.
Management's Role
Management is responsible for implementing the Group's sustainability
strategy, assessing emerging risks, and embedding climate considerations into
capital allocation and planning decisions. In 2024, this included specific
focus on energy transition activities such as hydrogen storage feasibility.
Strategy
Climate-related Risks and Opportunities
During 2023 and 2024, the Group continued to monitor the UK's evolving energy
policies and investor expectations around decarbonisation. Transition risks,
particularly regulatory and reputational, remain relevant to the Group's oil
and gas portfolio. In parallel, new opportunities are emerging from the
Group's plans to diversify into hydrogen storage, hydrogen production and
other low-carbon infrastructure.
Time Horizons
Short term (1-3 years): Reporting obligations and operational emissions
controls.
Medium term (3-5 years): Strategic pivot toward transitional energy assets.
Long term (5+ years): Repositioning business model in line with a lower-carbon
economy.
Impacts on Strategy and Financial Planning
Climate-related risks influenced the Group's impairment assessments and
licence development strategies in both 2023 and 2024. The business continues
to shift its focus from oil & gas projects to broader energy solutions
aligned with net-zero objectives.
Risk Management
Identification and Assessment
The Group uses a structured risk management framework, updated regularly, to
identify and evaluate emerging climate-related risks. These are considered
alongside other operational and market risks at management and Board levels.
Management Processes
Mitigation activities include asset diversification, regulatory engagement,
and ongoing environmental assessments. In 2024, enhanced emphasis was placed
on regulatory compliance related to emissions and energy usage.
Integration into Enterprise Risk Management
Climate-related risks have been embedded within the Group's enterprise risk
register and are reviewed at least annually. Specific climate-linked risks are
assigned owners and mitigation strategies.
Metrics and Targets
Emissions Monitoring
The Group plans to track and report Scope 1 and Scope 2 GHG emissions from its
Horse Hill site from 2025. Flaring rates are metered and reported monthly to
the NSTA. These have been zero since Horse Hill production was shut in post
period.
Key Targets
Once Scope 1 and Scope 2 emissions (tCO₂e) are tracked and reported, targets
for reduced emissions will be put in place
Reducing energy use per operating site
Full environmental permit compliance
Climate impact in project assessments (where applicable)
Key Performance Indicators (KPIs)
The Group monitors a range of financial and operational key performance
indicators (KPIs) to assess performance against strategic goals, ensure
efficient operations, and manage risks across its oil and gas portfolio. These
KPIs are reviewed regularly by management and the Board to inform
decision-making and resource allocation.
Operational KPIs
KPI Definition 2024 2023 Commentary
Average Daily Production (bopd) Gross barrels of oil produced per day from operated assets 45 bopd 92 bopd Slight production decline at Horse Hill and natural depletion; partially
offset by increased production at Horndean
Reserves & Resources KPIs
KPI Definition 2024 2023 Commentary
Total Net 2P Reserves Net mid-case proven plus probable reserves (mmboe) 0.10 mmboe 0.10 mmboe Stable reserves from Horndean field based on 2024 CPR
Total Net 2C Contingent Resources Net mid-case discovered resources (mmboe) 8.0 mmboe 8.1 mmboe Includes Horse Hill, Loxley, Horndean and others
Financial KPIs
KPI Definition 2024 2023 Commentary
Revenue Total oil sales revenue £1.1m £1.5m Reflects lower production at Horse Hill
Operating Loss Loss from continuing operations £37.8m £4.1m Driven by reduced production, impairment charges, strategic refocus on
hydrogen
Cash Balance Cash and cash equivalents £1.0m £1.9m Reflects investment in hydrogen storage and repayment of £2m loan facility
(Year-End)
Directors' Section 172 Statement
The following disclosure describes how the Directors have had regard to the
matters set out in section 172(1)(a) to (f) and forms the Directors' statement
required under section 414CZA of The Companies Act 2006.
The matters set out in section 172(1) (a) to (f) are that a Director must act
in the way they consider, in good faith, would be most likely to promote the
success of the Company for the benefit of its members as a whole, and in doing
so have regard (amongst other matters) to:
· the likely consequences of any decisions in the long term;
· the interests of the company's employees;
· the need to foster the company's business relationships with
suppliers/customers and others;
· the impact of the company's operations on the community and
environment;
· the company's reputation for high standards of business conduct;
and
· the need to act fairly between members of the company.
As set out above in the Strategic Report the Board remains focused on
providing value for shareholders through the long-term success of the Company.
The means by which this is achieved is set out further below.
Likely consequences of any decisions in the long term
The statement from the Chairman, the Chief Executive's Statement and the
Strategic Review set out the Company's strategy. In applying this strategy,
particularly in seeking new projects and developing current ones to deliver
reserves and resource growth, the Board assesses the long-term future of our
projects and investments with a view to maximise shareholder return. The
approach to general strategy and risk management strategy of the group is set
out in the Statement of Compliance with the QCA Code of Practice (Principles 1
and 4).
Interest of employees
The Group has a very limited number of employees and all have direct access to
the Executive Directors on a daily basis and to the Chairman, if necessary.
The Group has a formal Employees' Policy manual which includes processes for
confidential report and whistleblowing.
Need to foster the Company's business relationships with suppliers/customers
and others
The Group continuously interacts with a variety of suppliers and customers
important to its success. The Group strives to strike the right balance
between engagement and communication. Furthermore, the Company works within
the limitations of what can be disclosed to the various stakeholders with
regards to maintaining confidentiality of market and/or commercially sensitive
information. Our suppliers are fundamental to ensuring that the Group can
execute its development and production strategy on time and on budget. Using
quality suppliers ensures that as a business we meet the high standards of
performance that we expect of ourselves and vendor partners. Our management
team work closely with our suppliers, via one-on-one meetings and where
possible supplier site visits and facility reviews to ensure our suppliers are
able to meet our requirements.
Impact of the Company's operations on the community and environment
The Group takes its responsibility within the community and wider environment
seriously. Its approach to its social responsibilities is set out in the
Statement of Compliance with the QCA Code of Practice (Principle 3).
The Company's commitment to maintain a reputation for high standards of
business conduct
The Directors are committed to high standards of business conduct and
governance and have adopted the QCA Code of Practice which is set out on pages
20 to 22. Where there is a need to seek advice on particular issues, the Board
will consult with its lawyers and nominated advisers to ensure that its
reputation for good business conduct is maintained.
The need to act fairly between members of the Company
The Board's approach to shareholder communication is set out in the Statement
of Compliance with the QCA Code of Practice (Principle 2) on page 23. The
Company aims to keep shareholders fully informed of significant developments
in the Group's progress. Information is disseminated through Stock Exchange
announcements, website updates and, where appropriate, video-casts.
During 2024, the Company issued numerous stock exchange announcements on
operational issues. All information is made available to all shareholders at
the same time and no individual shareholder, or group of shareholders, is
given preferential treatment.
Corporate Governance
Introduction to governance
The Directors recognise that good corporate governance is a key foundation for
the long-term success of the Company. As the Company is listed on the AIM
market of the London Stock Exchange it also is subject to the continuing
requirements of the AIM Rules. The Board is committed to maintaining high
standards of corporate governance and complies with the provisions of the
Quoted Companies Alliance (QCA) Corporate Governance Code 2018 ("QCA code").
The 2023 updates to the QCA Code, which are effective from financial years
beginning after 1 April 2024, are designed to better align with changing
expectations for corporate governance. There are three main aims of the Code -
to deliver growth, to maintain a dynamic management framework, and to build
trust.
Establish a strategy and business model which promote long- term value for shareholders
UK Oil & Gas Plc ("UKOG") provides shareholders with a full discussion of
corporate strategy within our Annual Report. A dedicated section explains how
we will establish long term shareholder value, as set out on page 6-7.
The Group is focused on three key strategic goals: moving into hydrogen
storage projects as a central element of its future growth strategy;
maximising production and recovery from its existing oil and gas portfolio;
and actively managing costs and risks through strong operational and
management oversight across all entities.
Projects are evaluated based on many characteristics to mitigate risk to our
current activities, including but not limited to, alignment with the Company's
core competencies, geography, time horizon and value creation. Further, a core
component of the Company's activities includes an active dialogue with our
legal and legislative advisors to ensure the Company remains up to date on
current legislation, policy and compliance issues.
Key business challenges and how they may be mitigated are detailed on pages 16
to 17.
Seek to understand and meet shareholder needs and expectations
UKOG encourages two-way communication with institutional and private
investors. The Chief Executive talks regularly with the Company's major
shareholders and ensures that their views are communicated fully to the Board.
Where voting decisions are not in line with the company's expectations the
Board will engage with those shareholders to understand and address any
issues. The Company Secretary is the main point of contact for such matters.
The Company seeks out appropriate platforms to communicate to a broad audience
its current activities, strategic goals and broad view of the sector and other
related issues. This includes but is not limited to media interviews, website
videos, in-person investor presentations and written content.
Communication to all stakeholders is the direct responsibility of the Senior
Management team. Managers work directly with professionals to ensure all
inquiries (through established channels for this specific purpose such as
email or phone) are addressed in a timely matter and that the Company
communicates with clarity on its proprietary internet platforms. Senior
management routinely provides interviews to local media and business reporters
in support of the company's activities. The Board routinely reviews the
Company communication policy and programmes to ensure quality communication
with all stakeholders.
Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Company seeks out methodologies, processes and expertise in order to
address the concerns of the non-investment community. As such, it actively
identifies the bespoke needs of local communities and their respective
planners. For example, the company provides for local hotlines and establishes
community liaison groups to address local questions and concerns.
UKOG seeks to maintain positive relationships within the communities in which
it operates. As such, UKOG is dedicated to ensuring:
· Open and honest dialogue
· Engagement with stakeholders at all stages of development
· Proactive addressing of local concerns
· Active minimisation of impact on our neighbours
· Adherence to a strict health and safety code of conduct
As a responsible OGA approved and Environmental Agency permitted UK operator,
UKOG is committed to utilising industry best practices and achieving the
highest standards of environmental management and safety.
Our operations:
· Continuously assess and monitor environmental impact
· Promote internally and across our industry best practices for
environmental management and safety
· Constant attention to maintaining our exemplary track record of
safe oil & gas production.
Embed effective risk management, considering both opportunities and threats, throughout the organization
Risk Management details risks to the business, how these are mitigated and the
change in the identified risk over the last reporting period.
The Board considers risks to the business at every Board meeting (at least 10
meetings are held each year) and the risk register is updated at each meeting.
The Company formally reviews and documents the principal risks to the business
at least annually.
Both the Board and senior managers are responsible for reviewing and
evaluating risk and the Executive Directors meet at least monthly to review
ongoing trading performance, discuss budgets and forecasts and new risks
associated with ongoing trading.
Maintain the Board as a well-functioning, balanced team led by the chair
Oversight of UK Oil & Gas Plc is performed by the Company's Board of
Directors. Nicholas Mardon Taylor, the Non-Executive Chairman, is responsible
for the running of the Board and Stephen Sanderson, the Chief Executive, has
executive responsibility for running the Company's business and implementing
Company strategy. All Directors receive regular and timely information
regarding the Company's operational and financial performance.
Relevant information is circulated to the Directors in advance of meetings. In
addition, minutes of the meetings of the Directors of the UK subsidiaries are
circulated to the Board. All Directors have direct access to the advice and
services of the Company Secretary and are able to take independent
professional advice in the furtherance of their duties, if necessary, at the
company's expense.
The Board comprises two Executive Directors and two Non-Executive Directors
with a mix of significant industry and business experience within public
companies. The Board considers that all Non-Executive Directors bring an
independent judgement to bear. All Directors must commit the required time and
attention to thoroughly fulfil their duties.
The Board has a formal schedule of matters reserved to it and is supported by
the Audit, Remuneration, Nomination and AIM Rules compliance committees. The
Schedule of Matters Reserved and Committee Terms of Reference are available on
the Company's website and can be accessed on the Corporate Governance page of
the website.
Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Nomination Committee will determine the composition of the Board of the
Company and appointment of senior employees. It will develop succession plans
as necessary and report to the Directors. Where new Board appointments are
considered, the search for candidates is conducted, and appointments are made,
on merit, against objective criteria and with due regard for the benefits of
diversity on the Board, including gender.
The Company Secretary supports the Chairman in addressing the training and
development needs of Directors.
As a small company, all members of the Board share responsibility for all
Board functions. As such the Board will from time to time engage outside
consultants to provide an independent assessment.
Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board intends to carry out an internal evaluation on individual Directors
on an ad-hoc basis in the form of peer reviews and appraisals. The individual
reviews and appraisals are used to identify group and individual targets which
are reviewed and assessed at the end of the financial year.
Promote a corporate culture that is based on ethical values and behaviours
The Company is committed to maintaining and promoting high standards of
business integrity. Company values, which incorporate the principles of
corporate social responsibilities (CSR) and sustainability, guide the
Company's relationships with clients, employees and the communities and
environment in which we operate. The Company's approach to sustainability
addresses both our environmental and social impacts, supporting the Company's
vision to remain an employer of choice, while meeting client demands for
socially responsible partners.
Company policy strictly adheres to local laws and customs while complying with
international laws and regulations. These policies have been integral in the
way group companies have done business in the past and will continue to play a
central role in influencing the Group's practice in the future.
The ethical values of UKOG including health, safety, environmental, social and
community and relationships, are set out on page 19 of the Annual Report.
Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Company has adopted a model code for directors' dealings and persons
discharging managerial responsibilities appropriate for an AIM company,
considering the requirements of the Market Abuse Regulations "MAR"), and takes
reasonable steps to ensure compliance is also observed by the Company's
employees (AIM Rule 21 in relation to directors' dealings).
The Corporate Governance Statement details the company's governance
structures, the role and responsibilities of each director. Details and
members of the Audit Committee and Remuneration Committee can be found on page
20 & 21.
Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Company encourages two- way communication with both its institutional and
private investors and responds quickly to all queries received. The Chief
Executive talks regularly with the Company's major shareholders and ensures
that their views are communicated fully to the Board.
The Board recognises the AGM as an important opportunity to meet private
shareholders. The Directors are available to listen to the views of
shareholders informally immediately following the AGM.
To the extent that voting decisions are not in line with expectations, the
Board will engage with shareholders to understand and address any issues.
In addition to the investor relations activities carried out by the Company as
set out above, and other relevant disclosures included within the Investor
Relations section of the Company's website, reports on the activities of each
of the Committees during the year are set out in the Annual Report.
While building a strong governance framework the Company also tries to ensure
that it takes a proportionate approach and that its processes remain fit for
purpose as well as embedded within the culture of the organisation. We
continue to evolve our approach and make ongoing improvements as part of
building a successful and sustainable company.
Board of Directors
The Board consists of a team of experienced multidisciplinary members who are
committed to delivering shareholder value.
Nicholas Mardon Taylor, Non-Executive Chairman
Nicholas Mardon Taylor served as the Chief Financial Officer of Hurricane
Energy PLC from May 2012 until January 2016. He has worked in the oil industry
for over 35 years, his first involvement in the North Sea being in the early
licensing rounds. He was with Hurricane from 2005 to January 2016 when he was
the Company's first CFO and was subsequently responsible for the Company's
Environmental Management System.
Stephen Sanderson, Chief Executive
Stephen Sanderson joined UK Oil & Gas Plc in September 2014. He was
appointed Executive Chairman and Chief Executive in July 2015 and in August
2018 ceded his role as Executive Chairman as part of improvements in corporate
governance. A highly experienced petroleum geologist, oil industry veteran and
upstream energy business leader, with over 30 years operating experience,
Stephen is a proven oil finder and has been instrumental in the discovery of
more than 12 commercial conventional fields, including the Norwegian
Smorbuk-Midgaard field complex.
Stephen held a variety of senior management roles for ARCO (which was acquired
by BP in 2000), Wintershall AG (a subsidiary of German chemical giant BASF)
and three junior start-ups. He created and ran successful new exploration
businesses in Africa, Europe and South America. He has significant technical
and commercial expertise in the petroleum systems of Africa, the North Sea,
Norway, onshore UK & Europe, South America, the South Atlantic, Middle
East, Asia, India, Australia and the USA. He is a graduate and Associate of
the Royal School of Mines, Imperial College, London, a Fellow of the
Geological Society of London and a member of the American Association of
Petroleum Geologists.
Kris Bone, Chief Technical Officer (Appointed on 1 October 2024)
Kris is a petroleum engineer with 28 years international exploration,
appraisal, development and production experience in oil, gas and energy
transition sectors. Before joining UKOG in April 2019, Kris held positions
including Well Engineering Director, Asset Manager, Subsurface Manager,
Production Manager, and senior operational and engineering roles. His
previous experience includes onshore and offshore UKCS, offshore Ireland,
Eastern and Central Europe, Central Asia, Caspian Region, Middle East Gulf and
North America. His leadership and management experience covers across
petroleum and subsurface engineering, drilling & completions, production
operations, gas storage, decommissioning, asset management and regulatory
compliance. Kris is a graduate of Newcastle University (BEng Chemical
Engineering) and Edinburgh Heriot-Watt University (MEng Petroleum
Engineering), a Chartered Engineer (CEng) with Institute of Chemical
Engineers.
Allen D Howard, Non-Executive Director
Allen Howard was Senior Vice President of Houston-based Premier Oilfield
Laboratories, having been Chief Operating Officer of well analysis experts
Nutech. Allen also held senior positions with Schlumberger. He holds a degree
in Chemical Engineering from Texas Tech University and an MBA from Mays
Business School in Texas. Allen was appointed as Non-Executive Chairman for
UKOG in August 2018, before taking up his current Executive role at the
beginning of 2022.
Kiran Morzaria, Non-Executive Director (resigned on 1 October 2024)
Kiran Morzaria holds a Bachelor of Engineering (Industrial Geology) from the
Camborne School of Mines and an MBA (Finance) from CASS Business School. He
has extensive experience in the mineral resource industry working in both
operational and management roles. Mr Morzaria spent the first four years of
his career in exploration, mining and civil engineering. He then obtained his
MBA and became the Finance Director of Vatukoula Gold Mines Plc for seven
years. He has served as a director of a number of public companies in both an
executive and non-executive capacity; he is a non-executive director of
European Metals Holdings Ltd and the Chief Executive Officer for Cadence
Minerals Plc. Mr Morzaria previously served in an Executive capacity as the
Finance Director of UKOG, transitioning to his current Non-Executive position
at the beginning of 2022.
Board and Committee membership at the date of approval of this Annual report
Member Board Title Audit Committee Title Remuneration Committee Title
Stephen Sanderson Chief Executive
Allen D Howard Non-Executive Director Member Member
Nicholas Mardon Taylor Non-Executive Chairman Chaiman (from 1 October 2024) Chaiman (from 1 October 2024)
Kris Bone Executive Director
The Board and its Committees
The Board of the Company consists of two Executive Directors and two
Non-Executive Directors. The Non-Executive Directors are not considered
independent under the QCA Code as they hold options and/or shares in the
Company. However, the Board considers that the Non-Executive Directors are
independent of management under all other measures and are able to exercise
independence of judgement.
The Board is responsible for formulating, reviewing and approving the
Company's strategy, financial activities and operating performance. Day-to-day
management is devolved to the executive directors, who are charged with
consulting the Board on all significant financial and operational matters. The
Board retains ultimate accountability for governance and is responsible for
monitoring the activities of the executive team.
The roles of Chairman and Chief Executive are split in accordance with best
practice. The Chairman has the responsibility of ensuring that the Board
discharges its responsibilities. The Chairman is also responsible for the
leadership and effective working of the Board, for setting the Board agenda,
and ensuring that Directors receive accurate, timely and clear information. No
one individual has unfettered powers of decision.
The Chief Executive has the overall responsibility for creating, planning,
implementing, and integrating the strategic direction of the Company. This
includes responsibility for all components and departments of the business.
The Chief Executive ensures that the organisation's leadership maintains
constant awareness of both the external and internal competitive landscape,
opportunities for expansion, customer base, markets, new industry developments
and standards.
The Board met regularly during the year. Tabulated below is the attendance of
Board Members during the reporting period.
Board Member Meetings attended (out of a total possible)
Nicholas Mardon Taylor 10/10
Stephen Sanderson 10/10
Allen D Howard 10/10
Kiran Morzaria 10/10
Audit Committee
The audit committee consists now of Nicholas Mardon Taylor (Chairman) and
Allen D Howard . Prior to 1 October 2024 the audit committee consisted of
Kiran Morzaria and Nicholas Mardon Taylor. The Audit Committee met once during
the year. Kiran Morzaria resigned on 1 October 2024.
Board member Meetings attended (out of a total possible)
Kiran Morzaria 1/1
(until 1 October 2024)
Nicholas Mardon Taylor 1/1
Allen Howard 1/1
The principal duties and responsibilities of the Audit Committee include:
· Overseeing the Company's financial reporting disclosure process;
this includes the choice of appropriate accounting policies
· Monitoring the Company's internal financial controls and assess
their adequacy
· Reviewing key estimates, judgements and assumptions applied by
management in preparing published financial statements
· Annually assessing the auditor's independence and objectivity
· Making recommendations in relation to the appointment,
re-appointment and removal of the company's external auditor
· The Audit Committee is responsible for overseeing the integrity
of the Group's financial reporting, the effectiveness of its risk management
and internal control framework, and the performance and independence of the
external auditors. During the year, the Committee met regularly with
management to review key accounting matters, significant judgements and
estimates, and to monitor the robustness of the Company's financial controls.
· Significant accounting and reporting matters
In considering the Annual Report and Accounts for the year ended 30 September
2024, the Committee focused on those areas which involved the greatest degree
of judgement and estimation, and which were also highlighted by the external
auditors in their report. These included the Group's ability to continue as a
going concern, impairment assessments of producing and exploration assets, the
accounting treatment of exploration and evaluation expenditure and hydrogen
storage projects.
· For each of these matters, the Committee received detailed
reports from management, scrutinised the key assumptions and sensitivities,
and discussed conclusions with the external auditors before determining the
appropriateness of the accounting treatment and disclosures. In particular,
the Committee challenged the cash flow forecasts underpinning the going
concern assessment, the assumptions used in impairment models, and the
valuation techniques applied to decommissioning provisions for each asset.
· The Committee is satisfied that, taken together, these activities
provided a sound basis for the Board's confirmation that the Annual Report and
Accounts, taken as a whole, are fair, balanced and understandable.
Remuneration Committee
The Remuneration Committee consists now of Nicholas Mardon Taylor (Chairman)
and Allen D Howard . Prior to 1 October 2024 the committee consisted of Kiran
Morzaria and Nicholas Mardon Taylor. The Committee met once during the year.
Kiran Morzaria resigned on 1 October.
Board member Meetings attended (out of a total possible)
Kiran Morzaria 1/1
Nicholas Mardon Taylor 1/1
The principal duties and responsibilities of the Remuneration Committee
include:
· Setting the remuneration policy for all Executive Directors
· Recommending and monitoring the level and structure of
remuneration for senior management
· Approving the design of, and determining targets for, performance
related pay schemes operated by the company and approve the total annual
payments made under such schemes
· Reviewing the design of all share incentive plans for approval by
the board and shareholders
None of the Committee members have any personal financial interest (other than
as shareholders and option holders), conflicts of interest arising from
cross-directorships or day-to-day involvement in the running of the business.
No director plays a part in any financial decision about his or her own
remuneration.
Internal controls
The Board is responsible for establishing and maintaining the Company's system
of internal controls and reviewing its effectiveness. The procedures that
include financial, operational, health and safety, compliance matters and risk
management are reviewed on an ongoing basis.
The Company's internal control procedures include the following:
· Board approval for all significant projects, including corporate
transactions and major capital projects;
· The Board receives and reviews regular reports covering both the
technical progress of projects and the Company's financial affairs to
facilitate its control;
· There is a comprehensive budgeting and planning system for all
items of expenditure with an annual budget approved by the Board;
· The Company has in place internal control and risk management
systems in relation to the Company's financial reporting process and the
Company's process for preparing consolidated accounts. These systems include
policies and procedures to ensure that adequate accounting records are
maintained, and transactions are recorded accurately and fairly to permit the
preparation of consolidated financial statements in accordance with UK-Adopted
IAS; and
· The Audit Committee reviews draft annual and interim reports
before recommending their publication to the Board. The Audit Committee
discusses with the Chief Financial Officer and external auditors the
significant accounting policies, estimates and judgements applied in preparing
these reports.
The internal control system can only provide reasonable and not absolute
assurance against material misstatement or loss. The Board has considered the
need for a separate internal audit function but, bearing in mind the present
size and composition of the Company, does not consider it necessary at the
current time.
UK Bribery Act
UK Oil & Gas Plc has reviewed the appropriate policies and procedures to
ensure compliance with the UK Bribery Act. The Company continues actively to
promote good practice throughout the Company and has initiated a rolling
programme of anti-bribery and corruption training for all relevant employees.
Relations with shareholders
Communications with shareholders are considered important by the Directors.
The primary contact with shareholders, investors and analysts is the Chief
Executive. Other senior management, however, regularly speak to investors and
analysts during the year.
Company circulars and press releases have also been issued throughout the year
for the purpose of keeping investors informed about the Company's progress and
in accordance with AIM regulations.
The Company also maintains a website (www.ukogplc.com) which is regularly
updated and contains a wide range of information about the Company.
Directors' Remuneration Report
This report explains our remuneration policy for Directors and sets out how
decisions regarding Directors' pay for the period under review have been
taken.
Directors' remuneration policy
The Company's policy is to maintain levels of remuneration sufficient to
attract, motivate and retain senior executives.
Executive Director's remuneration currently consists of basic salary,
pensions, annual bonus (based on annually set targets) and long-term
incentives (to reward long term performance).
The Company seeks to strike an appropriate balance between fixed and
performance-related reward so that the total remuneration package is
structured to align a significant proportion to the achievement of performance
targets, reinforcing a clear link between pay and performance. The performance
targets for staff, senior executives and the Executive Directors are each
aligned to the key drivers of the business strategy, thereby creating a strong
alignment of interest between staff, Executive Directors and shareholders.
The Remuneration Committee will continue to review the Company's remuneration
policy and make amendments, as and when necessary, to ensure it remains fit
for purpose and continues to drive high levels of executive performance and
remains both affordable and competitive in the market.
Remit of the Remuneration Committee
The remit of the Remuneration Committee is provided in the Corporate
Governance section.
Share price movements during the year
The share price range during the year was £0.000140 to £0.00035 due to share
consolidation (2023: £0.00033 to £0.0012).
Current arrangement in financial year (audited)
Executive Directors are employed under rolling contracts with notice periods
of 12 months or less from the Company. Non-Executive Directors are employed
under rolling contracts with notice period of three months, under which they
are not entitled to any pension, benefits or bonuses.
During the years ended 30 September 2024 and 2023 the Directors occupied the
following Board positions: Nicholas Mardon Taylor (Non-Executive Chairman),
Stephen Sanderson (Chief Executive Officer), Allen D Howard (Executive
Director), Kiran Morzaria (Non-Executive Director), The Directors' emoluments
for the year were as follows:
2024 Fees and Bonuses Pension Benefits Share based payments (*) Total
salaries
£'000
£'000
in Kind
£'000
£'000
£'000
£'000
Stephen Sanderson 313 - 1 - - 314
Kiran Morzaria 27 - - - - 27
Allen Howard 62 - - - - 62
Nicholas Mardon Taylor 54 - - - - 54
Total 456 - 1 - - 457
2023 Fees and Bonuses Pension Benefits Share based payments (*) Total
salaries
£'000
£'000
in Kind
£'000
£'000
£'000
£'000
Stephen Sanderson 337 - 1 - - 338
Kiran Morzaria 27 - - - - 27
Allen Howard 82 - - - - 82
Nicholas Mardon Taylor 61 - - - - 61
Total 507 - 1 - - 508
* Share based payments are non-cash remuneration by way of the issue of share
options in the company.
As at 30 September 2024, the outstanding long-term incentives, in the form of
options, held by the Directors who served during the period are set out in the
table below.
Share options At 1 October 2023 Issued during the year lapsed / exercised during the year At 30 September 2024 Exercise price Date from which exercisable Expiry date
No. million
No. million
No. million
No. million
Stephen Sanderson 25 - (25) - 0.0130 27/09/2020 25/09/2024
Total 25 - (25) -
Share options At 1 October 2023 Issued during the year lapsed / exercised during the year At 30 September 2024 Exercise price Date from which exercisable Expiry date
No. million
No. million
No. million
No. million
Kiran Morzaria 6.5 - (6.5) - 0.0130 27/09/2020 25/09/2024
Total 6.5 - (6.5) -
Share options At 1 October 2023 Issued during the year lapsed / exercised during the year At 30 September 2024 Exercise price Date from which exercisable Expiry date
No. million
No. million
No. million
No. million
Allen Howard 5 - (5) - 0.0130 27/09/2020 25/09/2024
Total 5 - (5) -
Share options At 1 October 2023 Issued during the year lapsed / exercised during the year At 30 September 2024 Exercise price Date from which exercisable Expiry date
No. million
No. million
No. million
No. million
Nicholas Mardon Taylor 4 - (4) - 0.0130 27/09/2020 25/09/2024
Total 4 - (4) -
Report of the Directors
The Directors present their annual report together with the audited
consolidated financial statements of the Group for the year ended
30 September 2024.
Business review and future developments
A review of business activities in the year and future developments is
outlined in the Chief Executive's Statement, the Statement from the Chairman,
and the Operational Review.
Principal activity and business review
The principal activity of the Group is hydrogen storage and exploring for,
appraising and developing oil & gas assets.
Results and dividends
Loss on ordinary activities of the Group amounted to £37,824,000 (2023: loss
of £4,069,000). The Directors do not recommend the payment of a dividend
(2023: £nil). The Company has no plans to adopt a dividend policy in the
immediate future.
Principal risks and uncertainties
Information of the principal risks and uncertainties facing the Group is
included in the Principal Risks and Uncertainties section of the Strategic
Report.
Financial risk management objectives and policies
The Group's principal financial instruments are trade receivables, trade
payables, cash at bank, and borrowings. The main purpose of these financial
instruments is to fund the Group's operations.
It is, and has been throughout the period under review, the Group's policy
that no trading in financial instruments shall be undertaken. The main risk
arising from the Group's financial instruments is liquidity risk. The Board
reviews and agrees policies for managing this risk and this is summarised
below.
Liquidity risk
The Group's objective is to maintain a balance between continuity of funding
and flexibility through the use of equity and its cash resources. Further
details of this are provided in the section "Going concern" below and the
financial statements.
Key Performance Indicators ("KPIs")
KPIs adopted by the Group are detailed in the KPIs section of the Strategic
Report.
Going concern
The accounts have been prepared on a going concern basis.
The Directors note the losses and cash outflows incurred by the Group for the
year ended 30 September 2024. In assessing the Group's ability to continue as
a going concern, the Directors have prepared detailed cash flow forecasts
covering the period to 30 September 2026. These forecasts incorporate
assumptions regarding anticipated production levels and operating costs, the
forward Brent crude oil price curve, expected revenue streams, and access to
external funding. The Board recognises, however, that unforeseen events
outside its control could affect these forecasts.
These forecasts indicate that in order to both maintain its ongoing status as
a going concern and to further progress its Clean Power and hydrogen storage
projects the Group anticipates the need to enact an already advanced number of
financing initiatives during the next 6 months, namely;
· the Group is advancing the disposal of its subsidiary UKOG (GB)
Ltd, with completion anticipated in the middle of October 2025; and
· the Group has agreed key commercial terms with a finance provider
for a new credit facility and plans to execute by the end of October 2025.
The group has already secured sufficient share headroom to conduct an equity
placing as a further potential source of funding. In addition, the Company has
successfully implemented wide raging cost reductions and management would, if
necessary, seek to implement further cost control measures and negotiate
extended payment terms with key suppliers.
At 30 September 2024, the Group reported a net current liability position.
This is being managed through a combination of close working capital
management and constructive negotiations with certain creditors. Borrowings
now consist solely of shareholder loans relating to Horse Hill Development
Ltd, which are not expected to be repaid until Horse Hill returns to
production. In addition, the Board has implemented reductions in discretionary
expenditure and is closely monitoring cash flows.
The Board recognises that certain assumptions in the forecasts are subject to
uncertainty, particularly the timing of proceeds from the planned disposal of
a subsidiary and the amount of equity financing that may be secured. If these
inflows are lower or later than expected, the Group has a number of mitigating
options available, including drawing on the credit facility, tighter cost
control, and deferral of expenditure.
While these actions are expected to provide the necessary resources, the
Directors acknowledge that there can be no absolute assurance that the funding
initiatives will complete as planned or that the forecast inflows will
materialise when required. These conditions represent a material uncertainty
that may cast significant doubt on the Company and the Group's ability to
continue as a going concern.
Notwithstanding this material uncertainty, the Directors remain confident in
the Group's ability to secure the required funding, given the advanced
progress made on the credit facility, the subsidiary disposal, and the Group's
established track record of raising capital. Accordingly, the financial
statements have been prepared on a going concern basis. The independent
auditor's report draws attention to this material uncertainty.
Events after the reporting period
Events after the Reporting Period are outlined in Note 24 to the Financial
Statements.
Corporate governance
Information in relation to the Corporate Governance of the Group is contained
within the Corporate Governance Section of the Strategic Report.
Suppliers' payment policy
The Group's policy is to agree terms and conditions with suppliers in advance;
payment is then made in accordance with the agreement provided the supplier
has met the terms and conditions. Suppliers are typically paid within 30 days
of issue of invoice.
Charitable contributions
During the year, the Group made charitable donations amounting to £Nil (2023
- £Nil).
Substantial shareholdings update
As at 30 June 2025, the Company had been notified of the following substantial
shareholdings in its ordinary share capital:
Shareholder Number of Ordinary Shares Holding %
Interactive Investor (Manchester) 3,012,249,826 17.42
Hargreaves Lansdown Asset Mgt (Bristol) 2,932,801,301 16.96
Halifax Share Dealing (Halifax) 1,449,171,381 8.38
A J Bell Securities (Tunbridge Wells) 945,409,763 5.47
Trading 212 (London) 902,800,015 5.22
MUFG Corporate Markets Trustees (Nominees) Limited (Regional (England)) 864,485,685 5.00
Current Board and directors' interests
Nicholas Mardon Taylor Non-Executive
Chairman
Stephen Sanderson Chief
Executive
Allen D
Howard
Non-Executive Director
Kris
Bone
Executive Director
The directors hold options to purchase new ordinary shares in the Company,
details of which are specified in the Remuneration Report. In addition,
Stephen Sanderson holds 12,457,310 ordinary shares in the Company and Kiran
Morzaria holds 4,508,178 ordinary shares in the Company.
Annual General Meeting
Notice of the forthcoming Annual General Meeting will be provided separately.
Statement of directors' responsibilities
The Directors are responsible for preparing the annual report and financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors have elected to prepare the Group
and Parent Company financial statements in accordance with UK-adopted
international accounting standards in conformity with the requirements of the
Companies Act 2006. Under Company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit or
loss of the Group for that period. These financial statements have been
prepared in accordance with:
· UK-adopted international accounting standards
· The requirements of the Companies Act 2006.
In preparing these financial statements, the Directors are required to:
· Select suitable accounting policies and then apply them
consistently;
· Make judgements and estimates that are reasonable and prudent;
· Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and
Company and enable them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions. The Company's website is maintained in accordance with AIM Rule
26.
Delay in publication of this Annual report
PKF Littlejohn LLP resigned as the Company's auditor on 24 January 2025, and
Moore Kingston Smith LLP was appointed. However, the Company experienced
timing challenges encountered during the audit. The audit did not progress in
line with expectations, ultimately affecting the Group's ability to meet the
reporting deadline under AIM Rule 19. As a result of the delay in publishing
the audited annual results, the Company's shares were temporarily suspended
from trading on AIM, in accordance with AIM Rule 19.
In July 2025, MKS LLP resigned, and the Board subsequently appointed PKF
Littlejohn LLP as the Company's new auditor. MKS's resignation letter did not
raise any matters to be brought to the attention of shareholders. While this
transition was necessary to move the audit forward, it inevitably resulted in
some disruption to the overall timetable.
Statement as to disclosure of information to the auditor
As at the date of this report the serving directors confirm that:
· So far as each Director is aware, there is no relevant audit
information of which the Group's auditors are unaware, and
· They have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit information
and to establish that the Group's auditor are aware of that information.
On behalf of the board
Stephen Sanderson
Director
30 September 2025
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UK OIL & GAS PLC
Opinion
We have audited the financial statements of UK Oil & Gas Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 30 September
2024 which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent company Statement of Financial Position, the
Consolidated and Parent company Statement of Changes in Equity, the
Consolidated and Parent company Statement of Cash Flows and notes to the
financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable
law and UK-adopted international accounting standards and as regards the
parent company financial, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
· The financial statements give a true and fair view of the state
of the group and the parent company's affairs as at 30 September 2024 and of
the group's loss for the year then ended;
· the group financial statement have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statement have been properly
prepared in accordance with UK-adopted international accounting standards; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2a in the financial statements, which indicates that
[the group require additional funding in quarter four 2025 in order to meet
their ongoing cash requirements. Whilst the directors anticipate that such
funding may be obtained from a number of sources, including a planned equity
placing and/or via the use of a credit facility there can be no certainty
that such sources of funding will be obtained in the timeframes necessary. As
stated in note 2a, these events or conditions, along with the other matters as
set forth in note 2a, indicate that a material uncertainty exists that may
cast significant doubt on the company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue to adopt
the going concern basis of accounting included:
· a review of budgets and cash flow forecasts covering a period of
at least 12 months from the date of approval of the financial statements,
· challenging of management on assumptions used within the
forecasts and obtaining support for inputs and various payment plans, together
with ascertaining the most recent cash position of the group;
· assessing the Group's plans to raise further finance and
considering the timing and amounts required ;
· reviewing the latest management accounts, and identifying
subsequent events that may impact the going concern;
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements are free from
material misstatement, we define materiality as a magnitude of misstatement
that makes it probable that the economic decisions of a reasonable
knowledgeable person, relying on the financial statements, would be charged or
influenced. We also determine a level of performance materiality which we use
to assess the extent of testing needed to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements
exceed materiality for the financial statements as a whole.
Materiality for the group financial statements was set at £75,000 (2023:
£666,000). This was calculated based on 2% of gross assets (2023: 2% of net
assets). Gross assets was used as the benchmark for the basis of materiality
being the key area of relevance to stakeholders in assessing the financial
performance of the group in its early years of production, exploration and
hydrogen storage. The basis for the calculation of materiality for the Parent
company financial statements was 3.5% of adjusted loss before tax being
£48,000 (2023: £665,999 2% net assets). The basis of materiality changed
from the prior year due to the significant impairments processed during the
year which have impacted the net asset position and we considered the gross
assets benchmark more appropriate for the Group and given the losses generated
in the parent company and impairment of the investments in and loans to the
subsidiaries we considered that loss before tax is the most appropriate
benchmark.
We also determine a level of performance materiality which we use to assess
the extent of testing needed to reduce to an appropriately low level
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole. Performance
materiality for the group and Parent company was set at £48,000 (2023:
£432,900) and £30,000 (2023: £432,899) respectively, being 65% of
materiality for the financial statements as a whole.
We agreed to report to those charged with governance all corrected and
uncorrected misstatements we identified through our audit with a value in
excess of £3,500 (2023: £33,300) for group and £2,400 (2023: £33,300) for
Parent company. We also agreed to report any other audit misstatements below
that threshold that we believe warranted reporting on qualitative grounds.
Our approach to the audit
The scope of our audit was influenced by our application of materiality. The
quantitative and qualitative thresholds for materiality determine the scope of
our audit and the nature, timing and extent of our audit procedures.
As part of our planning, we assessed all components of the group for their
significance under ISA (UK) 600 in order to determine the scope of the work to
be performed. Those entities of the group which were considered to be material
components and subject to full scope audit procedures, being UK Oil & Gas
plc and Horse Hill Developments Limited, and those considered to be material,
being UKOG (137/246) Limited, UKOG (234) Limited, UKOG Turkey Limited, UKOG
GB, UK Energy Storage Limited and UK Geothermal Limited were subject to audit
procedures on significant and identified risk areas and material balances
only, in accordance with ISA (UK) 600. Procedures were then performed to
address the risks identified and for the most significant assessed risks of
material misstatement, the procedures are outlined below in the key audit
matters section of this report.
We did not rely on the work of any component auditors.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section we
have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value and correct classification of exploration and evaluation assets
(Note 11)
The Group accounts for exploration and evaluation (E&E) costs in Our work in this area included:
accordance with the requirements of IFRS 6 - Exploration for and evaluation of
mineral resources. Costs such as exploration licences, leasehold land and • Vouching a sample of additions in the period to supporting
property acquisition costs and costs directly associated with an exploration documentation and ensuring they have been capitalised in line with the
well are capitalised as exploration and evaluation intangible assets. classification requirements of IFRS 6;
There is a risk that the exploration and evaluation assets are incorrectly • A review of management's indicators of impairment review and
valued or need to be impaired. If no future activity is planned, the licence performing an independent assessment to ascertain whether indicators of
has been relinquished or has expired, or where development is likely to impairment exist under IFRS 6. This included challenging estimates and
proceed but there are indications that the E&E asset costs are unlikely to assumptions made by management;
be recovered in full, the carrying value of the asset is written off to the
income statement. • Obtaining and reviewing the latest Competent Person's Report for
Horse Hill and Horndean, as well as any other relevant technical reports, and
During the year, Broadford Bridge (UKOG 234) and UKOG Turkey were fully considering the impact of any key findings on the indicators of impairment
impaired by the Group. Planning permission for the Horse Hill licence and review;
development was suspended in 2024 with the last production at HH-1 taking
place in October 2024. The changing landscape for the UK oil and gas industry • Assessing whether good title to the licences in place remains and
during 2024 further increased the risk. whether they are valid for the period under review;
The projects also need to be assessed to determine whether they are correctly • Reviewing the terms of the licenses to identify any stipulations
classified under IFRS 6 or whether they should be classified under a different and assessing whether these have been met;
accounting standard.
• Ensuring disclosures made in the financial statements in relation
This risk is classed as a KAM given that management's review for indicators of to critical accounting estimates and judgments are adequate and in line with
impairment may be subject to significant judgements and estimates and is one our understanding of the group and its activities.
of the most significant balances on the statement of financial position.
• Critically assessing the impairment reviews for projects where
indicators of impairment were identified agreeing impairment charges for the
exploration projects amounting to £32,544,000.
• Critically assessing the classification of the Group's hydrogen
storage project and agreeing the re-classification to a development asset in
the year.
Carrying value of producing assets (Note 12)
The Group carries a material amount of producing assets on its statement of Our work in this area included:
financial position. Management reviews the Group's producing assets annually
to determine whether any indication of impairment exists. Where indicators • A critical assessment of managements impairment review of the
exist, a formal estimate of the recoverable amount is made, which requires the carrying value of the producing assets, including management's net present
use of key assumptions and judgements such as long-term oil prices, foreign value workings, and challenging key assumptions made including the discount
exchange rates, discount rates, reserves, production profiles and capital rate, forecasted oil price, production levels and reserves estimates;
expenditure all of which are subject to risk and uncertainty.
• Verifying the mathematical accuracy of the calculations prepared
There is therefore a risk of material misstatement around the carrying value by management;
of PPE, as to whether any impairment is required.
• Assessing the completeness and accuracy of the impairment charges
Planning permission for the Horse Hill licence and development was suspended identified; and
in 2024 with the last production at HH-1 taking place in October 2024.
• Ensuring disclosures made in the financial statements in relation
This is classed as a KAM given that management's valuation workings are to critical accounting estimates and judgments are adequate and in line with
subject to significant judgements and estimates. our understanding of the group and its activities.
Carrying value of investments - company only (Note 13)
The investments held in UKOG Plc have a significant balance. At the end of Our work in this area included:
each year the Directors carry out an impairment review of the Company's
investment in subsidiaries applying the same assumptions used for the · Reviewing valuation and/or impairment workings, including testing
impairment review of oil and gas properties within Horse Hill Developments key inputs to supporting documentation and challenging estimates and
Ltd, impairment review of exploration assets within the other subsidiaries and assumptions made by management;
impairment review of producing assets
· Agreeing investment holdings to supporting documentation to
There is a risk that these investments in subsidiaries are not fairly valued support the ownership;
as there have been historic impairments of investments and impairment of
investments in the current year. · Agreeing capitalisation of intercompany loans to supporting
documentation; and
This risk is classed as a KAM given that management's valuation and
classification of investments are subject to significant judgements and · Reviewing the impairment charges recognised in the current year
estimates. and assessing the completeness and accuracy of the charge recognised..
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not visited by us;
or
· the financial statements are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the company and the sector in
which it operates to identify laws and regulations that could reasonably be
expected to have a direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management, industry
research and application of cumulative audit knowledge and experience of the
sector.
· We determined the principal laws and regulations relevant to the
company in this regard to be those arising from:
o Companies Act 2006
o UK adopted International Accounting Standards
o Employment Law
o Bribery Act 2010
o Tax legislation
o Health and Safety legislation
o Environmental law
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the company
with those laws and regulations. These procedures included, but were not
limited to:
o enquiries of management
o review of RNS announcements
o review of board and other committee minutes
o review of legal correspondence
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls and in revenue recognition, that the potential for management bias
was identified in relation to the impairment of the carrying value of
exploration and evaluation assets, oil and gas assets and investments in
subsidiaries. We addressed this by challenging the assumptions and judgements
made by management when auditing them. We did not identify any significant
fraud risks.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
Daniel Hutson (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London
E14 4HD
30 September 2025
Financial Statements
Consolidated statement of comprehensive income
for year ended 30 September 2024
Notes 30 Sep 2024 30 Sep 2023
£'000
£'000
REVENUE 6 1,110 1,538
Cost of sales
Depletion, Depreciation and Amortisation (303) (244)
Other Cost of Sales (912) (1,019)
Gross (loss)/ profit (105) 275
Operating expenses
Administrative expenses (2,835) (3,320)
Impairment of oil and gas assets (3,227) -
Impairment of E&E assets 11 (32,544) (402)
Foreign exchange gain/ losses 1 (33)
Operating loss 5 (38,710) (3,480)
Net finance income/(cost) 8 886 (589)
Loss before taxation (37,824) (4,069)
Taxation 9 - -
Retained loss for the year (37,824) (4,069)
Retained loss attributable to
Equity holders of the Parent (37,168) (3,777)
Non-Controlling Interests (656) (292)
(37,824) (4,069)
There are no other comprehensive income or expenses during the two reported
periods to disclose.
All operations are continuing.
Note Pence Pence
Earnings per share
Basic and diluted 10 (0.09) (0.02)
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated statement of financial position
as at 30 September 2024
Notes 30 Sep 2024 30 Sep 2023
£'000
£'000
ASSETS
Non-current assets
Exploration & evaluation assets 11 - 33,201
Development assets 11 1,497 -
Oil & Gas properties 12 598 2,276
Property, Plant & Equipment 12 13 1,439
Total non-current assets 2,108 36,916
Current assets
Inventory 14 2 18
Trade and other receivables 15 614 754
Cash and cash equivalents 16 1,039 1,868
Total current assets 1,655 2,640
Total assets 3,763 39,556
LIABILITIES
Current liabilities
Trade and other payables 17 (1,268) (635)
Borrowings 18 (3,310) (4,784)
Total current liabilities (4,578) (5,419)
Non-current Liabilities
Provisions 19 (759) (1,451)
Total non-current liabilities (759) (1,451)
Total liabilities (5,337) (6,869)
Net Assets (1,574) 32,687
Equity
Share capital 20 14,846 13,808
Share premium account 113,766 110,915
Own shares held in trust (326) -
Share based payment and other reserve 21 82 2,039
Accumulated losses (127,964) (92,753)
405 34,009
Non-controlling interest (1,979) (1,322)
Total shareholders' equity (1,574) 32,687
These financial statements were approved by the Board of Directors on 30
September 2025 and are signed on its behalf by:
Stephen
Sanderson
Allen Howard
Director
Director
The accompanying accounting policies and notes form an integral part of these
financial statements.
Company statement of financial position
as at 30 September 2024
Notes 2024 2023
£'000
£'000
ASSETS
Non-current assets
Exploration & evaluation assets 11 - 1,166
Development assets 11 638 -
Investment in subsidiary companies 13 197 26,242
Property, Plant and Equipment 12 5 1,412
Total non-current assets 840 28,820
Current assets
Trade and other receivables 15 617 172
Intercompany balances 15 1,018 13,157
Cash and cash equivalents 16 751 497
Total current assets 2,386 13,826
TOTAL ASSETS 3,226 42,646
LIABILITIES
Current liabilities
Trade and other payables 17 (657) (254)
Borrowings - (1,540)
Total Current Liabilities (657) (1,794)
TOTAL LIABILITIES (657) (1,794)
Net Assets 2,569 40,852
Shareholders' Equity
Share capital 20 14,846 13,808
Share premium account 113,766 110,915
Share based payment and other reserves 82 2,039
Accumulated losses (126,126) (85,910)
Total shareholders' equity 2,569 40,852
As permitted by section 408 of the Companies Act 2006, the profit and loss
account of the parent company has not been separately presented in these
accounts. The parent company loss for the year was £42,172,916 (2023: loss
£16,757,000).
These financial statements were approved by the Board of Directors on 30
September 2025 and are signed on its behalf by:
Stephen
Sanderson
Allen Howard
Director
Director
Registered number: 05299925
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated statement of changes in equity
for the year ended 30 September 2024
Share capital Share premium Share based payment reserve Own shares held in trust Accumulated losses Total Non-controlling Interests Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 30 September 2022 13,693 110,480 1,745 (88,976) 36,942 (1,030) 35,912
Loss for the year - - - (3,777) (3,777) (292) (4,069)
Total comprehensive income - - - (3,777) (3,777) (292) (4,069)
Loan conversion 115 435 - - 550 - 550
Warrants issued - - 294 - 294 - 294
Total transactions with owners 115 435 294 844 - 844
Balance at 30 September 2023 13,808 110,915 2,039 (92,753) 34,009 (1,322) 32,687
Loss for the year - - - (37,168) (37,168) (656) (37,824)
Total comprehensive income - - - (37,168) (37,168) (656) (37,824)
Issue of shares 682 1,968 - (326) - 2,324 - 2,324
Share options expiry (1,957) 1,957
Loan conversion 356 884 - - 1,240 - 1,240
Total transactions with owners 1,038 2,852 (1,957) (326) 1,957 3,564 - 3,564
Balance at 30 September 2024 14,846 113,766 82 (326) (127,964) 405 (1,979) (1,574)
Company statement of changes in equity
for the year ended 30 September 2024
Share capital Share premium Share based payment reserve Accumulated losses Total
£'000
£'000
£'000
£'000
£'000
Balance at 30 September 2022 13,693 110,480 1,745 (69,055) 56,863
Loss for the year (1,716) (1,716)
Total comprehensive income (1,716) (1,716)
Issue of shares 485 3,764 - - 4,249
Cost of share issue - (381) 163 - (218)
Share options expired - - (474) 474 -
Total transactions with owners 485 3,383 (311) 474 4,031
Balance at 30 September 2023 13,808 110,915 2,039 (85,910) 40,852
Loss for the year (42,174) (42,174)
Total comprehensive income (42,174) (42,174)
Issue of shares 682 1,967 - - 2,649
Loan conversion 356 884 - - 1,240
Share options expired (1,957) 1,957 -
Total transactions with owners 1,038 2,852 3,889
Balance at 30 September 2024 14,846 113,766 82 (126,126) 2,569
Consolidated statement of cash flow
for the year ended 30 September 2024
2024 2023
£'000
£'000
Cash flows from operating activities
Loss before tax (37,824) (4,069)
Depletion & impairment of oil and gas assets 3,227 244
Impairment of E&E assets 32,544 402
Movement in provisions (692) (8)
Inventories 16 (15)
Decrease/Increase in Trade & other receivables 140 (6)
Increase/ Decrease in Trade & other payables 633 (167)
Finance costs 150 683
Net cash outflow from operating activities (1,808) (2,936)
Cash flows from investing activities
Expenditures on exploration & evaluation assets (840) (1,448)
Expenditures on oil & gas properties (61) (225)
Expenditures on plant, property & equipment (2) -
Net cash outflow from investing activities (903) (1,673)
Cash flows from financing activities
Proceeds from issue of share capital 2,342 -
ARepayment of/ Proceeds from convertible loan (330) 1,882
Repayment of shareholders loan (103)
Net cash inflow from financing activities 1,879 1,882
Net change in cash and cash equivalents (829) (2,726)
Cash and cash equivalents at beginning of the period 1,868 4,595
Cash and cash equivalents at end of the period 1,039 1,868
Company statement of cash flow
for the year ended 30 September 2024
2024 2023
£'000
£'000
Cash flows from operating activities
Loss before tax (42,173) (16,757)
Depletion & impairment 40,078 14,690
Decrease/(increase) in trade & other receivables (444) 136
(Decrease)/increase in trade & other payables 404 (71)
Interest income (903) (724)
Finance cost 1 502
Net cash (outflow) from operating activities (2,249) (2,224)
Cash flows from investing activities
Expenditure on development assets 261-
Expenditures on property, plant & equipment (2) (2)
Loan advanced to subsidiary 484 (2,792)
Net cash (outflow) from investing activities (220) (2,794)
Cash flows from financing activities
Proceeds from issue of share capital 2,643 -
Loan transaction fees (30)
Repayment/ Proceeds from loan (330) 1,882
Net cash inflow from financing activities 2,283 1,882
Net change in cash and cash equivalents 254 (3,137)
Cash and cash equivalents at beginning of the period 497 3,635
Cash and cash equivalents at end of the period 751 497
Notes to the Financial Statements
1. Corporate information
The consolidated financial statements of UK Oil & Gas Plc (the Company)
and its subsidiaries (collectively, the Group), for the year ended 30
September 2024 were authorised for issue by the directors on 30 September
2025. UK Oil & Gas Plc (the Company & parent) is a public limited
company incorporated in England and Wales under the UK Companies Act and
listed on the Alternative Investment Market (AIM). The registered office is
located at The Broadgate Tower, 20 Primrose Street, London EC2A 2EW.
The Group is engaged in oil production and oil & gas exploration and
evaluation (see Note 4) and salt cavern hydrogen storage projects in South
Dorset and East Yorkshire. Information on the Group's structure is provided
in Note 13 and information on other related parties is provided in Note 25.
2. Principal accounting policies
a) Basis of preparation
The consolidated financial statements of the UK Oil & Gas Plc (the
Company) and subsidiaries (the Group) have been prepared in accordance with
UK- Adopted International Accounting Standards in conformity with the
requirements of the Companies Act 2006 as they apply to the Group for the year
ended 30 September 2024.
The accounting policies have been applied consistently throughout the
preparation of these financial statements, the financial report is presented
in Pound Sterling (£) and all values are rounded to the nearest thousand
pounds (£'000) unless otherwise stated. The consolidated financial statements
provide comparative information in respect of the previous period.
(i) Subsidiary undertakings exempt from audit
UK Oil & Gas Plc has guaranteed the liabilities of the subsidiaries listed
below under section 479A of the Companies Act 2006 in respect of the year
ended 30 September 2023.
· UK Energy Storage Ltd - 14108327
· UKOG (234) Ltd - 07055133
· UKOG (GB) Limited - 04050227
· UKOG (137/246) Holdings Ltd - 09010542
· UKOG (137/246) Ltd - 06807023
· UK Oil & Gas Investments Ltd - 11252712
· UKOG (Turkey) Ltd - 10212262
· UK Geothermal Ltd - 13386906
(ii) New and amended standards and interpretations
There is no material impact on the financial statements following the adoption
of new standards and interpretations.
(iii) New and amended standards, and interpretations issued and effective for the financial year beginning 1 October 2023
There were no new standards, amendments or interpretations effective for the
first time for periods beginning on or after 1 October 2023 that had a
material effect on the Group or Company financial statements.
New standards, amendments and interpretations in issue but not yet effective
At the date of approval of these financial statements, the following
standards, amendments and interpretations had been issued by the IASB but were
not yet effective and have not been early adopted by the Group:
· Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (effective 1 January
2024). These amendments clarify how covenants and other conditions affect the
classification of liabilities.
· Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of
Accounting Policies (effective 1 January 2024). These amendments aim to
improve the relevance of accounting policy disclosures by requiring entities
to focus on material information.
· Amendments to IFRS 16 Leases: Lease Liability in a Sale and
Leaseback (effective 1 January 2024). These amendments clarify the subsequent
measurement of lease liabilities arising from sale and leaseback transactions.
· Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements
(effective 1 January 2024). These amendments introduce additional disclosure
requirements about supplier finance (reverse factoring) arrangements.
· Amendments to IAS 21: Lack of Exchangeability (effective 1
January 2025). These amendments provide guidance on how to determine the spot
exchange rate when exchangeability between two currencies is lacking.
· Amendments to IFRS 9 and IFRS 7: Classification and Measurement
of Financial Instruments (effective 1 January 2026). These amendments modify
certain requirements for derecognition, presentation and disclosures of
financial instruments.
· IFRS 18 Presentation and Disclosure in Financial Statements
(effective 1 January 2027). This new standard will replace IAS 1 and introduce
revised presentation and disclosure requirements, including new categories for
the statement of profit or loss and enhanced disclosure requirements.
· IFRS 19 Subsidiaries without Public Accountability: Disclosures
(effective 1 January 2027). This new standard permits eligible subsidiaries to
apply reduced disclosure requirements while applying full recognition and
measurement of IFRS.
The Directors do not expect that the adoption of these new standards and
amendments will have a material impact on the Group's consolidated financial
statements in future periods, although additional disclosures may be required.
a) Going concern
The accounts have been prepared on a going concern basis.
The Directors note the losses and cash outflows incurred by the Group for the
year ended 30 September 2024. In assessing the Group's ability to continue as
a going concern, the Directors have prepared detailed cash flow forecasts
covering the period to 30 September 2026. These forecasts incorporate
assumptions regarding anticipated production levels and operating costs, the
forward Brent crude oil price curve, expected revenue streams, and access to
external funding. The Board recognises, however, that unforeseen events
outside its control could affect these forecasts.
These forecasts indicate that in order to both maintain its ongoing status as
a going concern and to further progress its Clean Power and hydrogen storage
projects the Group anticipates the need to enact an already advanced number
of financing initiatives during the next 6 months, namely;
· the Group is advancing the disposal of its subsidiary UKOG (GB)
Ltd, with completion anticipated in the middle of October 2025; and
· the Group has agreed key commercial terms with a finance provider
for a new credit facility and plans to execute by the end of October 2025.
The group has already secured sufficient share headroom to conduct an equity
placing as a further potential source of funding. In addition, the Company has
successfully implemented wide raging cost reductions and management would,
if necessary, seek to implement further cost control measures and negotiate
extended payment terms with key suppliers.
At 30 September 2024, the Group reported a net current liability position.
This is being managed through a combination of close working capital
management and constructive negotiations with certain creditors. Borrowings
now consist solely of shareholder loans relating to Horse Hill Development
Ltd, which are not expected to be repaid until Horse Hill returns to
production. In addition, the Board has implemented reductions in discretionary
expenditure and is closely monitoring cash flows.
The Board recognises that certain assumptions in the forecasts are subject to
uncertainty, particularly the timing of proceeds from the planned disposal of
a subsidiary and the amount of equity financing that may be secured. If these
inflows are lower or later than expected, the Group has a number of mitigating
options available, including drawing on the credit facility, tighter cost
control, and deferral of expenditure.
While these actions are expected to provide the necessary resources, the
Directors acknowledge that there can be no absolute assurance that the funding
initiatives will complete as planned or that the forecast inflows will
materialise when required. These conditions represent a material uncertainty
that may cast significant doubt on the Company and the Group's ability to
continue as a going concern.
Notwithstanding this material uncertainty, the Directors remain confident in
the Group's ability to secure the required funding, given the advanced
progress made on the credit facility, the subsidiary disposal, and the Group's
established track record of raising capital. Accordingly, the financial
statements have been prepared on a going concern basis. The independent
auditor's report draws attention to this material uncertainty.
b) Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases. All intercompany transactions and balances between Group companies,
including unrealised profits arising from them, are eliminated in full.
At 30 September 2024, the Group comprised the Company and entities controlled
by UK Oil & Gas Plc (its subsidiaries) (note 13).
c) Business combinations
The acquisition method of accounting is used to account for all business
combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
· fair values of the assets transferred
· liabilities incurred to the former owners of the acquired
business
· equity interests issued by the group
· fair value of any asset or liability resulting from a contingent
consideration arrangement, and
· fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. The group recognises
any non-controlling interest in the acquired entity on an
acquisition-by-acquisition basis either at fair value or at the
non-controlling interest's proportionate share of the acquired entity's net
identifiable assets. Acquisition-related costs are expensed as incurred.
d) Joint arrangements
Some of the Group's licence interests are held jointly with others under
arrangements whereby unincorporated and jointly controlled ventures are used
to explore, evaluate and ultimately develop and produce from its oil & gas
interests. The Group's share of assets, liabilities, income and expenditure of
these joint operations, have been classified in the appropriate balance sheet
and income statement headings, except where its share of such amounts remain
the responsibility of another party in accordance with the terms of carried
interests.
When the Group, acting as an operator or manager of a joint arrangement,
receives reimbursement of direct costs recharged to the joint arrangement,
such recharges represent reimbursements of costs that the operator incurred as
an agent for the joint arrangement and therefore have no effect on profit or
loss.
e) Revenue
Revenue comprises the invoiced value of goods and services supplied by the
Group, excluding value added tax and trade discounts. Revenue is recognised
when control passes to the customer and there is no unfulfilled obligation
that could affect the customer's acceptance of the goods. In the case of oil
and petroleum products, this generally occurs when the product is physically
transferred into a vessel, pipe or other delivery mechanism.
Revenue from the production of oil, from fields in which the Group has an
interest with other producers, is recognised based on the Group's working
interest and the terms of the relevant production sharing contracts.
Differences between oil lifted and sold and the Group's share of production
are not significant.
f) Non-current assets
(iv) Intangible exploration and evaluation assets
The Group accounts for exploration and evaluation costs in accordance with the
requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources as
follows:
· Pre-licence costs (costs incurred prior to obtaining the legal
rights to explore an area) are expensed immediately to the Income Statement.
· Exploration licence and leasehold land and property acquisition
costs are capitalised in intangible assets.
· Licence costs paid in connection with a right to explore in an
existing exploration area are capitalised and amortised over the term of the
permit.
· Costs directly associated with an exploration well are
capitalised as exploration and evaluation intangible assets until the drilling
of the well is complete and the results have been evaluated. These costs
include directly attributable employee remuneration, materials and
consumables, drilling (including coring and sampling), evaluation of technical
feasibility and commercial viability (including appraisal drilling and
production testing).
Exploration and evaluation assets are assessed for impairment at each
reporting date, before reclassification and whenever facts and circumstances
suggest that they may be impaired. If no future activity is planned, the
licence has been relinquished or has expired, or where development is likely
to proceed but there are indications that the exploration and evaluation asset
costs are unlikely to be recovered in full either by development or through
sale, the carrying value of the asset is written off to the Income Statement.
(v) Property, plant and equipment - oil & gas properties
Oil & gas properties are stated at cost, less accumulated depreciation and
accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction
cost, any costs directly attributable to bringing the asset into operation,
the initial estimate of the decommissioning obligation and, for qualifying
assets (where relevant), borrowing costs. The purchase price or construction
cost is the aggregate amount paid and the fair value of any other
consideration given to acquire the asset. The capitalised value of any
associated finance lease is also included within property, plant and
equipment.
Oil & gas properties are depreciated/amortised on a unit-of-production
basis over the total proved developed and undeveloped reserves of the field
concerned. The unit-of-production rate calculation for the
depreciation/amortisation of field development costs takes into account
expenditures incurred to date, together with sanctioned future development
expenditure.
The Group's interests in oil & gas properties are assessed for indicators
of impairment including events or changes in circumstances which indicate that
the carrying value of an asset may not be recoverable. Any impairment in value
is charged to the Income Statement.
(vi) Intangible Assets
Intangible assets are recognised at cost, less any accumulated amortisation
and impairment losses. Expenditure on research activities is recognised as an
expense in the period in which it is incurred. Development expenditure is
capitalised only when it meets the recognition criteria under IAS 38,
including the demonstration of technical feasibility, intention and ability to
complete the asset, and availability of resources to do so.
Intangible assets with finite useful lives are amortised on a straight-line
basis over their estimated useful lives and assessed for impairment whenever
there is an indication that the carrying amount may not be recoverable.
The Group's Hydrogen Storage project has been classified as an intangible
asset with an indefinite useful life. This assessment reflects the following
factors:
the project is at a development stage and will not be subject to systematic
amortisation until it is available for use;
there is no foreseeable limit to the period over which the project is expected
to generate net cash inflows, given the long-term strategic demand for
large-scale energy storage;
the Group has no legal, regulatory, contractual, or economic factors that
would indicate a finite limit to the project's useful life.
Intangible assets with an indefinite useful life are not amortised but are
tested for impairment annually, or more frequently if events or changes in
circumstances indicate that they might be impaired.
(vii) Other property, plant and equipment
Other property, plant and equipment is stated at cost to the Group less
accumulated depreciation. These assets are generally depreciated on a
straight-line basis over their estimated useful lives, depending on the type
of asset.
(viii) Decommissioning assets
A decommissioning asset is recognised in the appropriate category of the
Group's non-current assets (intangible exploration and evaluation assets and
property, plant and equipment) depending on the underlying accounting
treatment for the operations or asset leading to the associated
decommissioning provision. The asset is assessed for impairment as necessary
and otherwise depleted on a straight-line basis over the estimated period to
future removal of production facilities or site restoration.
g) Decommissioning provisions
A provision for decommissioning is recognised where a liability for the
removal of production facilities or site restoration exists. Provisions are
measured at the present value of the amount expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to the obligation. The
increase in the provision due to the passage of time is recognised as interest
expense.
h) Segmental information
An operating segment is a distinguishable component of the Group that is
involved in oil production, oil exploration or related activities, within a
particular economic environment, which is subject to risks and rewards that
are different from those of other segments.
Operating segments are reported in a manner consistent with internal reporting
provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors of the Company.
i) Financial instruments
(ix) Financial assets
Financial assets are divided into the following categories: loans and
receivables and available-for-sale financial assets. Financial assets are
assigned to the different categories by management on initial recognition,
depending on the purpose for which they were acquired, and are recognised when
the Group becomes party to contractual arrangements. Both loans and
receivables and available for sale financial assets are initially recorded at
fair value.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Trade
receivables, most other receivables and cash and cash equivalents fall into
this category of financial assets. Loans and receivables are measured
subsequent to initial recognition at amortised cost using the effective
interest method, less provision for impairment. Any change in their value
through impairment or reversal of impairment is recognised in the income
statement.
Cash and cash equivalents comprise cash on hand and short-term deposits. Any
interest earned is classified as interest income within finance income.
A financial asset is derecognised only where the contractual rights to the
cash flows from the asset expire or the financial asset is transferred, and
that transfer qualifies for derecognition. A financial asset is transferred if
the contractual rights to receive the cash flows of the asset have been
transferred or the Group retains the contractual rights to receive the cash
flows of the asset but assumes a contractual obligation to pay the cash flows
to one or more recipients.
A financial asset that is transferred qualifies for derecognition if the Group
transfers substantially all the risks and rewards of ownership of the asset,
or if the Group neither retains nor transfers substantially all the risks and
rewards of ownership but does transfer control of that asset.
(x) Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets
and are recognised when the Group becomes a party to the contractual
provisions of the instrument.
All financial liabilities initially recognised at fair value less transaction
costs and thereafter carried at amortised cost using the effective interest
method, with interest-related charges recognised as an expense in finance cost
in the income statement. A financial liability is derecognised only when the
obligation is extinguished, that is, when the obligation is discharged or
cancelled or expires.
(xi) Impairment of financial assets
At the end of each reporting period, a provision is made if there is
sufficient evidence that a financial asset or group of financial assets has
been impaired. Provision against trade receivables is made when there is
objective evidence that the Group will not be able to collect all amounts due
to it in accordance with the original terms of those receivables. The amount
of the write-down is determined as the difference between the asset's carrying
amount and the present value of estimated future cash flows.
j) Inventories
Inventories are stated at the lower of cost and net realisable value. The cost
of materials is the purchase cost, determined on first-in, first-out basis.
The cost of crude oil and refined products is the purchase cost, the cost of
refining, including the appropriate proportion of depreciation, depletion and
amortisation and overheads based on normal operating capacity, determined on a
weighted average basis. The net realisable value of crude oil and refined
products is based on the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated costs
necessary to make the sale.
k) Taxation
The tax charge includes both current and deferred tax.
Current tax assets and liabilities are measured at the amount expected to be
paid to or received from the tax authorities, calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date. Taxable
profits or losses differ from the reported profit or loss before taxation in
the Income Statement as it excludes items that are taxable or deductible in
different periods, as well as items that are never deductible or taxable.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on
the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries
and joint ventures is not provided if reversal of these temporary differences
can be controlled by the Company and it is probable that reversal will not
occur in the foreseeable future. In addition, tax losses available to be
carried forward as well as other income tax credits to the Company are
assessed for recognition as deferred tax assets.
No deferred tax liability was recognised as the Group has substantial
brought-forward ring-fence and supplementary charge losses. These are
offsetable against future tax liabilities and offsetable with the same tax
authority. PPE are in entities that have the losses and any tax base
differences have merely been recognised as unrecognised deferred tax losses .
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that
are charged or credited directly to equity in which case the related deferred
tax is also charged or credited directly to equity.
l) Share-based payments
The Group operates a number of equity-settled, share-based compensation plans,
under which the entity receives services from employees as consideration for
equity instruments (options) of the Company. The fair value of the employee
services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference to the
fair value of the options granted:
· Including any market performance conditions;
· Excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period; and,
· Including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest. The total expense is recognised over the
vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied.
In addition, in some circumstances, employees may provide services in advance
of the grant date, and therefore the grant-date fair value is estimated for
the purposes of recognising the expense during the period between service
commencement period and grant date.
At the end of each reporting period, the entity revises its estimates of the
number of options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares. The proceeds
received, net of any directly attributable transaction costs, are credited to
share capital (nominal value) and share premium.
m) Equity
Equity comprises the following:
· "Share capital" representing the nominal value of equity shares.
· "Share premium" representing the excess over nominal value of the
fair value of consideration received for equity shares, net of expenses of the
share issue.
· "Share based payment reserve" represents the value of equity
benefits provided to employees and directors as part of their remuneration and
provided to consultants and advisors hired by the Group from time to time as
part of the consideration paid.
· "Accumulated losses " represents retained and (losses).
· "Own shares held in trust" represents shares held by Employee
Benefit Trust
n) Employee Benefit Trust (EBT)
The Company has established an Employee Benefit Trust ("EBT") to facilitate
the operation of its employee share incentive schemes. In accordance with IFRS
10 Consolidated Financial Statements, the EBT is consolidated as it is
considered to be controlled by the Company. The assets, liabilities, income
and expenses of the EBT are therefore included in the consolidated financial
statements on a line-by-line basis.
Own shares of the Company held by the EBT are presented as a deduction from
equity within "Own shares held in trust". No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the Company's
own equity instruments by the EBT. Transactions of the EBT relating to the
Company's own shares are accounted for directly in equity.
o) Foreign currencies
The consolidated financial statements are presented in UK pound sterling, the
functional currency of the Group. Transactions in other currencies are
translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the balance sheet date. Non-monetary items that
are measured at historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction. Non-monetary items that are
measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in the profit or loss in the period in which
they arise. Exchange differences on non-monetary items are recognised in other
comprehensive income to the extent that they relate to a gain or loss on that
non-monetary item taken to other comprehensive income, otherwise such gains
and losses are recognised in the income statement. The Group and Company's
functional currency and presentational currency is Sterling.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires
management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses during the reporting period, and
reported amounts of assets and liabilities, and the disclosure of contingent
liabilities at the date of the consolidated financial statements. Estimates
and assumptions are continuously evaluated and are based on management's
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. However, actual outcomes
can differ from these estimates.
In particular, the Group has identified the following areas where significant
judgements, estimates and assumptions are required, and where if actual
results were to differ, this could materially affect the financial position of
financial results reported in a future period. Further information on each of
these areas and how they impact the various accounting policies are described
below and also in the relevant notes to the financial statements.
Judgements
(i) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the consolidated financial
statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market change or circumstances
arising beyond the control of the Group. Such changes are reflected in the
assumptions when they occur.
(ii) Hydrocarbon reserve and resource estimates
The Group estimates and reports hydrocarbon reserves in line with the
principles contained in the SPE Petroleum Resources Management Reporting
System (PRMS) framework. As the economic assumptions used may change, and as
additional geological information is obtained during the operation of a field,
estimates of recoverable reserves may change.
The volume of proved and probable oil & gas reserves is an estimate that
affects:
· the unit of production depreciation of producing oil & gas
property, plant and equipment (see Note 11);
· the measurement of decommissioning provisions (see Note 19);
· impairment calculations of oil & gas properties (see Note
11).
· Proved and probable reserves and contingent resources are
estimated using standard recognised evaluation techniques. Estimates are
reviewed at least annually and are regularly assessed by independent
consultants. Future development costs are estimated taking into account the
level of development required to produce the reserves, by reference to
operators (where applicable) and internal engineers.
(iii) Recoverable value of intangible exploration and evaluation assets
The Group has capitalised intangible exploration and evaluation assets in
accordance with IFRS 6. Significant judgement is required to determine whether
it continues to be appropriate to carry these costs on the balance sheet and
whether the assets have been impaired.
The key areas in which management have applied judgement include the Group's
intention to proceed with a future work programme for a prospect or licence,
the likelihood of licence and planning permission renewal, plans for
relinquishment, assessment of results from wells or geological or geophysical
studies, and the assessment of whether the carrying value of the exploration
and evaluation assets is unlikely to be recovered in full from successful
development or by sale.
In both the above areas, the assessments include estimates and assumptions
such as long-term oil prices, foreign exchange rates, discount rates,
reserves, production profiles and capital expenditure, all of which are
subject to risk and uncertainty. It is possible therefore that changes in
these estimates may impact the recoverable values of exploration and
evaluation assets.
Details of the Group's intangible exploration and evaluation assets are
disclosed in Note 11 to the financial statements.
(iv) Recoverable value of property, plant and equipment
At each reporting date, management reviews the Group's property, plant and
equipment to assess whether there is any indication of impairment. If such an
indicator exists, the recoverable amount of the asset or cash-generating unit
(CGU) is estimated. The recoverable amount is the higher of (i) fair value
less costs of disposal and (ii) value in use, which is determined by
discounting the expected future cash flows from the asset or CGU.
This assessment requires significant judgement, including assumptions on
long-term oil price forecasts, foreign exchange rates, discount rates,
reserves, production profiles, and capital expenditure plans, all of which
involve risk and uncertainty. Changes in these assumptions could materially
affect the recoverable amount and lead to the recognition or reversal of
impairment losses.
Impairment losses are recognised in the income statement when the carrying
amount of an asset or CGU exceeds its recoverable amount. Where an impairment
loss is subsequently reversed, the carrying amount is increased to the revised
estimate of the recoverable amount, subject to not exceeding the carrying
amount that would have been determined had no impairment been recognised
previously.
Further details of the Group's property, plant and equipment are provided in
Note 12 to the financial statements.
(v) Decommissioning costs
The estimated cost of decommissioning at the end of the producing lives of
fields is periodically reviewed and is based on forecast prices and technology
at the balance sheet date which are provided by technical teams. Provision is
made for the estimated cost using a discounted cash flow method and a weighted
average costs of capital. Details of the Group's decommissioning provisions
are disclosed in Note 19 to the financial statements.
4. Segmental reporting
In 2024 and 2023, all the Group's assets and operations were in the United
Kingdom and Turkey. For management purposes, the Group is organised into
business units based on the main types of activities and has three reportable
segments, as follows:
· Oil production: includes producing business activities
· Oil exploration and evaluation: includes non-producing activities
· Head Office, corporate and administrative, including parent
company activities.
The Board of Directors monitors the operating results of its business units
separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on operating
profit or loss and is measured consistently with operating profit or loss in
the consolidated financial statements. However, the Group's financing
(including finance costs and finance income) and income taxes are managed on a
group basis and are not allocated to operating segments.
The accounting policies used by the Group in reporting segments internally are
the same as those used in the financial statements.
Revenues of £829,018 are derived from a single external customer. These
revenues are attributed to the oil production segment.
Year ended 30 September 2024
Group Oil Oil exploration & Corporate & Consolidated
production
evaluation
administrative
£'000
£'000
£'000
£'000
REVENUE
External Customers 1,110 - - 1,110
Total revenue 1,110 - - 1,110
Results
Depreciation, Depletion & Amortisation (220) - (84) (303)
Exploration write offs & Impairment charges (959) (34,812) - (35,771)
Finance income/ costs (916) - 30 (886)
Loss before taxation (2,853) (12,923) (22,048) (37,824)
Taxation - - - -
Loss after taxation (2,853) (12,923) (22,048) (37,824)
Segment assets 776 777 2,210 3,763
Segment liabilities (4,310) (368) (658) (5,337)
Other disclosures:
Capital expenditure ((1)) - 840 2 842
(1) Capital expenditure consists of capitalised exploration
expenditure, development expenditure, additions to oil & gas properties
and to other intangible assets including expenditure on assets from the
acquisition of subsidiaries.
Year ended 30 September 2023
Group Oil Oil exploration & Corporate & Consolidated
production
evaluation
administrative
£'000
£'000
£'000
£'000
REVENUE
External Customers 1,538 - - 1,538
Total revenue 1,538 - - 1,538
Results
Depreciation, Depletion & Amortisation (98) (49) (98) (244)
Write offs & Impairment - (402) - (402)
Finance costs (135) (92) (505) (731)
Loss before taxation (779) (630) (2,881) (4,069)
Taxation - - - -
Loss after taxation (779) (630) (2,882) (4,069)
Segment assets 1,036 4,675 33,846 39,556
Segment liabilities (3,049) (2,021) (1,798) (6,868)
Other disclosures:
Capital expenditure ((1)) 225 1,448 - 1,673
(1) Capital expenditure consists of capitalised
exploration expenditure, development expenditure, additions to oil & gas
properties and to other intangible assets including expenditure on assets from
the acquisition of subsidiaries.
5. Operating loss
Group 2024 2023
£'000
£'000
Operating (loss) is stated after charging:
Directors' remuneration - fees & salaries 456 490
Auditors' remuneration
Audit-related assurance services (PKF) 90 85
Audit-related assurance services (MKS) 75
Non-audit services - -
Depletion of oil & gas properties 26 125
6. Revenue
The Group has recognised the following amounts relating to revenue in the
statement of comprehensive income:
Group 2024 2023
£'000
£'000
Revenue from contracts with customers 1,110 1,538
Total 1,110 1,538
All revenue is derived from sales of oil from one geographic location and is
recognised at a point in time.
7. Directors and employees
The Company employed the services of an average of 12 employees in the year
(2023: 14). Remuneration in respect of these employees was:
Group 2024 2023
£'000
£'000
Employment costs, including Directors, during the year:
Wages and salaries 1,613 1,628
Social security costs 210 215
Employee pension costs 13 13
Benefits in kind 18 11
Total 1,854 1,867
Employee pension costs payable at the end of the year amounted to £2,000
(2023: £2,000).
Average number of persons, including Executive Directors employed
2024 2023
No.
No.
Administration 7 8
Operations 6 6
Total 13 14
Further details of Directors' remuneration, including share-based payments,
pension contributions and other benefits, are provided in the Directors'
Remuneration Report (pages 32-33).
8. Finance costs
2024 2023
£'000
£'000
Loan interest due to non-controlling interests 169 139
Interest income - 31
Unwind discount on decommissioning provision (note 19) 62 128
Change in estimate of decommissioning liability 625 (68)
Convertible loan fees 30 502
Total - Finance income/cost 886 589
9. Income tax
The Group's oil and gas activities in the UK fall within the ring fence
corporation tax regime. Profits from these activities are subject to a
combined rate of 40% (2023: 40%), comprising mainstream corporation tax at 30%
and a supplementary charge of 10%.
The tax reconciliation below shows how the reported loss before taxation would
reconcile to the theoretical tax charge at the applicable ring fence rate.
However, no deferred tax asset has been recognised in respect of
carried-forward tax losses, reflecting the uncertainty over the timing of
their utilisation.
2024 2023
£'000
£'000
Loss for the year before tax (37,824) (4,069)
Tax rate 40% (30% for ring-fenced activities plus 10% ring fence supplement) 40% 40%
Expected tax credit (15,130) (1,628)
Impairments and exploration write-offs not deductible for tax 12,550 322
Tax impact of losses carried forward 2,573
Tax impact of capital allowances (20) (10)
Temporary differences not recognised 55 699
Utilisation of losses brought forward (30) 0
Other movements 2 487
Total - Actual tax expense - -
At 30 September 2024, the Group had accumulated tax losses available for carry
forward of £56,376,149 (2023: £20,313,000). No deferred tax asset has been
recognised in respect of these losses, impairments or other deductible
temporary differences due to the uncertainty over future taxable profits
against which they may be utilised.
No deferred tax liability was recognised as the Group has substantial
brought-forward ring-fence and supplementary charge losses. These are
offsetable against future tax liabilities and offsetable with the same tax
authority. PPE are in entities that have the losses and any tax base
differences have merely been recognised as unrecognised deferred tax losses .
Deferred tax assets have not been recognised in respect of the unprovided
deferred taxation items because it is not probable that future taxable profit
will be available to utilise these deductible temporary differences.
During the year, the Group recognised a credit of £0.9 million from the
remeasurement of decommissioning provisions. The associated deferred tax
impact of approximately £0.2 million has not been recognised, consistent with
the Group's policy of not recognising deferred tax assets where utilisation
against future taxable profits is uncertain.
10. Earnings per share
The calculation of the basic loss per share is calculated by dividing the
consolidated loss attributable to the equity holders of the Company by the
weighted average number of ordinary shares in issue during the year.
Group 2024 2023
£'000
£'000
Loss attributable to ordinary shareholders (37,168) (3,777)
Group 2024 2023
No.
No.
Weighted average number of ordinary shares for calculating basic loss per 4,343,546,436 2,224,191,162
share (restated in 2023 due to share consolidation)
Group 2024 2023
Pence
Pence
Basic and diluted loss per share (0.09) (0.02*)
*Restated due to share consolidation
As inclusion of the potential ordinary shares would result in a decrease in
the earnings per share, they are considered to be anti-dilutive, as such,
diluted earnings per share is not included. The potential number of dilutive
shares is nil.
11. Intangible assets
Group
Cost & Net Book Value Exploration & Development asset Total
evaluation costs
£'000
£'000
£'000
As at 30 September 2022 32,155 - 32,155
Additions 1,448 - 1,448
Exploration Write offs & Amortisation (402) - (402)
As at 30 September 2023 33,201 - 33,201
Additions 840 - 840
Reclassification to development asset (1,497) 1,497 -
Impairment of E&E assets (32,544) - (32,544)
LXR As at 30 September 2024 - 1,497 1,497
Company Company
Cost & Net Book Value Exploration & Development assets
evaluation costs
£'000 £'000
As at 30 September 2022 841 -
Additions 325 -
Exploration Write offs & Amortisation - -
As at 30 September 2023 1,166 -
Additions 261 -
Exploration Write offs & Amortisation (788) -
Reclassification to development asset (639) 639
As at 30 September 2024 - 639
Exploration and Evaluation assets
In accordance with IFRS 6 - Exploration for and Evaluation of Mineral
Resources, the Group assesses at each reporting date whether there is any
indication that an exploration and evaluation ("E&E") asset may be
impaired. If such indicators exist, the Group performs an impairment test to
determine the recoverable amount of the asset or cash-generating unit ("CGU").
Management has determined that each licence interest held by the Group
constitutes a separate CGU, as this represents the lowest level at which
largely independent cash inflows are expected to be generated.
Indicators considered include the period for which the Group has the right to
explore, the likelihood of licence renewal, availability of funding for
continued exploration, the results of technical evaluations, and whether
further substantive expenditure is planned. Where such indicators exist, the
recoverable amount of the CGU is estimated and compared with its carrying
amount.
Impairment Indicators
During the year, the Group reviewed the carrying value of its E&E assets
for indications of impairment. The following indicators were considered:
· The period for which the Group has the right to explore has
expired or will expire in the near future, and is not expected to be renewed;
· Further exploration or evaluation is not planned or budgeted;
· Sufficient data exists to indicate that the carrying amount is
unlikely to be recovered in full through successful development or sale;
· Adverse changes in regulatory or market conditions.
Impairment assessment
The impairments primarily reflect external regulatory and commercial factors
beyond the Company's direct control, not adverse geological or operational
conditions.
Horse Hill was reviewed in light of the 2024 Supreme Court ruling which found
that Surrey County Council's (SCC) decision to grant planning consent was
unlawful as it had not assessed end use carbon emissions and that planning
consent must be redetermined before production can resume. By agreement with
SCC, oil production has been temporarily shut in until planning approval is
restored, after which the Company will resume production and reassess the
implementation of identified longer-term value opportunities in the field. It
should be noted that the Company's positive view of the field's remaining
recoverable oil and value remains essentially unchanged from the prior
reported values and the impairment is a result of the fact that the field's
consent to produce carries a level of uncertainty, being dependent on SCC's
redetermination post this audit period.
Licence/ Subsidiary Impairment (£m) Reason
Horse Hill (E&E) 20.0 Planning consent uncertainty; economic uncertainty on UK onshore oil and
gas, the capital requirement and planning consent
Turkey 3.4 Exit from licence subsequent to 30 September 2024
PEDL234 9.2 Exit from licence subsequent to 30 September 2024
By recognising the Horse Hill impairment in this audit cycle the Board has
adopted a prudent approach that ensures asset values reflect current
regulatory realities and is also fully consistent with the Company's goal to
transition into clean power via its hydrogen storage and generation
activities. The Board also notes that, should Horse Hill planning consent be
reinstated in 2026 as envisaged, given that the remaining recoverable oil
volumes remain positive and unchanged from the Company's last reporting, there
is a likelihood that a portion of current impairment could be reversed in
future periods .
The recoverable value was assessed based on discounted cash flow techniques,
applying assumptions consistent with market participant expectations.
Exploration costs impaired in the financial year to 30 September 2024 were
32.6 million (2023: 0.4 million).
Development assets
Expenditure of £1.5m hydrogen storage project previously classified as
exploration and evaluation assets has been reclassified to development
intangibles.
12. Oil & gas properties
Group Oil & gas properties Decommissioning asset Property, plant & equipment Total Total
2024
2024
2024
2024
2023
Cost
As at 1 October 2023 17,481 385 2,241 20,107 19,956
Transfers - - - - -
Additions 61 - 2 63 225
Change in estimate - 288 - 288 (75)
As at 30 September 2024 17,542 673 2,243 20,458 20,106
Depletion & impairment
As at 1 October 2023 (15,531) (59) (801) (16,391) (16,195)
Impairment (1,406) (493) (1,328) (3,227) -
Depletion charge (26) (102) (101) (229) (244)
As at 30 September 2024 (16,963) (654) (2,230) (19,847) (16,391)
Carrying value
As at 30 September 2024 579 19 13 611 3,715
Impairment of Oil and Gas Assets
Year ended 30 September 2024
Cash Generating Units (CGUs) for impairment purposes are defined as individual
fields or groups of fields that generate largely independent cash flows. For
the year ended 30 September 2024, the Group has identified two main producing
CGUs: Horse Hill and Horndean.
Impairment reviews were triggered by increased uncertainty over the Horse Hill
site following the Supreme Court ruling.
· Recoverable amounts have been determined based on value in use
(VIU) calculations, using management's forecasts of future cash flows over the
remaining economic lives of the assets. Key assumptions applied include:
· Discount rate: 16.2% pre-tax WACC, benchmarked to industry
comparables and reflecting the risks specific to the assets.
· Oil price: based on the forward Brent crude curve as at 30
September 2024.
· Production volumes and operating costs: derived from internal
forecasts.
(xii) Outcome of impairment reviews:
· Horse Hill CGU: The carrying value of the HH CGU well was £2.1
million, included within total oil and gas properties. The recoverable amount
was assessed as nil (refer to note 11). As a result, the full impairment was
recognised
· Horndean CGU: The carrying value of the related oil and gas
properties was £1.5 million. Based on current production rates and internal
forecasts, the recoverable amount was assessed at £0.6m. Impairment of £0.9m
was recognised.
As the Horse Hill CGU has been fully impaired, any reasonably possible adverse
changes in assumptions would not give rise to further impairment.
For Horndean, reasonably possible changes in assumptions could reduce the
recoverable amount further, which would result in additional impairment
charges.
Sensitivity analysis:
Management has performed sensitivity analyses on the key assumptions used in
the VIU model for Horndean CGU. The results indicate that:
· A 10% reduction in Brent crude oil prices would reduce
recoverable amounts by approximately £0.2 million.
· A 1% increase in the discount rate would reduce recoverable
amounts by approximately £0.1 million.
· A 10% increase in operating costs would reduce recoverable
amounts by approximately £0.1 million.
Decommissioning asset
The Group reviews annually the estimated costs of decommissioning and
restoring its oil and gas sites. These estimates are inherently uncertain and
depend on the expected timing of abandonment, the scope of work required,
future inflation and the discount rate applied.
During the year ended 30 September 2024, the Group updated its estimates to
reflect changes in market-based assumptions. The nominal risk-free discount
rate applied increased from 10% to 16.2%, reflecting movements in UK
government bond yields and increased risk premium. In addition, the expected
timing of abandonment was revised in line with updated production forecasts.
The combined effect of these changes resulted in an increase of £288K in the
decommissioning provision, with a corresponding adjustment to the related oil
and gas assets. This represents a change in accounting estimate under IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and has been
applied prospectively.
Property, plant & equipment (Company)
Company 2024 2023
£'000
£'000
Cost
As at 1 October 2023 1,829 1,824
Additions 2 5
As at 30 September 2024 1,831 1,829
Depletion & impairment
As at 1 October 2023 (416) (319)
Depletion charge (83) (97)
Impairment (1,328) -
As at 30 September 2024 (1,827) (416)
Carrying value
As at 30 September 2024 5 1,412
13. Investment in subsidiaries
Company 2024 2023
£'000
£'000
Cost and net book amount
At 1 October 26,242 26,242
Impairment (26,045) -
At 30 September 197 26,242
The Directors carried out an impairment review of the Company's Investment in
its subsidiaries as at 30 September 2024 and determined that impairment in
respect of Horse Hill Developments Ltd, UKOG Turkey Ltd, UKOG (234) and UKOG
(GB) Ltd is required.
The Company holds more than 50 per cent of the share capital of the following
companies as at 30 September 2024:
Company Country of Registration Proportion held Functional Currency Nature of business
UKOG (GB) Limited UK 100% GB£ Oil production
UKOG (234) Limited UK 100% GB£ Oil exploration
Horse Hill Developments Ltd UK 77.9% GB£ Oil production
UKOG (137/246) Holdings Ltd UK 100% GB£ Holding Company
UKOG (137/246) Ltd UK 100% GB£ Oil exploration
UKOG (Turkey) Ltd UK 100% GB£ Oil exploration
UK Energy Storage Ltd UK 100% GB£ Energy storage
UK Oil & Gas Investments Limited UK 100% GB£ Dormant
UK Geothermal Limited UK 100% GB£ Dormant
UK Oil & Gas Employee Benefit Trust UK Not owned, GB£ Basis disclosed below
Consolidation explained below
The registered address of each of these subsidiaries can be found on the
Companies House website.
All subsidiary undertakings are included in the consolidated financial
statements. The proportion of the voting rights in the subsidiary undertaking
held directly by the parent company do not differ from the proportion of the
ordinary shares held. The following companies are taking an exception from the
audit of the financial statements as per S479A of the Companies Act; UKOG (GB)
Limited (04050227), UKOG (234) Ltd (07055133), UKOG (137/246) Holdings Ltd
(09010542), UKOG (Turkey) Ltd (10212262), UK Oil & Gas Investments Limited
(11252712), UK Geothermal Limited (13386906), UKOG (137/246) Limited (06807023
), UK Energy Storage Ltd (14108327).
Employee Benefit Trust (EBT)
The UK Oil & Gas Employee Benefit Trust ("EBT") has been consolidated in
these financial statements in accordance with IFRS 10 Consolidated Financial
Statements. Although the Company does not hold a direct equity interest in the
trust, the Group is deemed to control it because:
· the trust operates solely for the benefit of the Company's
employees and directors in connection with the Group's share incentive plans;
· the Group, through the Remuneration Committee, has the ability to
direct the relevant activities of the trust, including decisions over the
distribution of shares; and
· the Group is exposed to variable returns through the use of the
trust to settle share-based payment arrangements.
· Shares in the Company held by the EBT are presented as a
deduction from equity within "own shares held in trust." Transactions between
the EBT and the Group relating to the Company's own equity instruments are
accounted for directly in equity.
· At 30 September 2024, the EBT held 864,485,685 ordinary shares
(2023: 250,000,000).
14. Inventory
Group 2024 2023
£'000
£'000
Inventories - Crude Oil 2 18
Total 2 18
15. Trade and other receivables
Group Company
2024 2023 2024 2023
£'000
£'000
£'000
£'000
Trade receivables 107 187 1 4
Other debtors 189 208 413 64
Loans to subsidiary companies - - 1,018 13,157
Prepayments and accrued income 319 359 204 104
Total 615 754 2,386 13,329
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value. Trade receivables are amounts due from
customers for goods sold in the ordinary course of business. They are
generally due for settlement within 30 days and are therefore all classified
as current.
In 2024, the Directors carried out an impairment review of the loans to
subsidiary companies and determined that an impairment charge of £12.1m is
required in respect of the loan owed by Horse Hill Developments limited, UKOG
Turkey and UKOG 234 Ltd.
16. Cash and cash equivalents
Group Company
2024 2023 2024 2023
£'000
£'000
£'000
£'000
Cash at bank and in hand 1,039 1,868 751 497
Total 1,039 1,868 751 497
17. Trade and other payables
Group Company
2024 2023 2024 2023
£'000
£'000
£'000
£'000
Trade creditors 965 383 469 74
Other creditors 47 64 47 64
Accruals and deferred income 255 188 142 116
Total 1,268 635 658 254
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
18. Borrowings
Group Company
Borrowings 2024 2023 2024 2023
£'000
£'000
£'000
£'000
Convertible Loan notes - 1,540 - 1,540
Loans payable to Non-Controlling Interests 3,310 3,244 - -
Total 3,310 4,784 - 1,540
On 27 June 2023, the Company secured a £2 million committed funding facility
with RiverFort Global Opportunities PCC Ltd and YA II PN Ltd ("Investors").
Facility Summary:
· £2 million
· 0% interest, repayable 18 months after each advance,
· Company retains a right to repay any outstanding amount of the
Loan prior to the expiry of the term, subject to a repayment fee of 10% of the
outstanding balance,
· Company can raise cash via equity as it may see fit during the
Loan's term.
In addition, during 2023, 1,125,895,598 warrants were issued to note
holders. On the drawdown date the note holders were granted warrants to
subscribe for ordinary shares. Each note holder was granted such number of
warrants as is equal to 33% (in aggregate) of the relevant advance divided by
the applicable reference price for that advance. In respect of the first
tranche the note holders were granted 1,125,895,598 warrants. The warrants
were exercisable at a premium of 140% of the 5-day average VWAP prior to the
relevant drawdown for a period of 36 months from the relevant date of grant.
On 30 September 2024, the loan was fully repaid.
Loan discharge terms:
As part of the package the Company issued to the note holders ordinary shares
("Equity Shares"), which represent between approximately 37% and 51% of the
value of the First Tranche, or 1.3 billion new ordinary shares, dependent on
whether the shares are valued at the Variable Price or Fixed Price,
definitions of which are stated below. The Loan may, at the sole discretion of
the note holders, be repaid by first applying the Equity Shares or, provided
all Equity Shares have been applied, by converting the Loan into new ordinary
shares in the Company. The price at which the Loan may be discharged either by
applying the Equity Shares or converting the Loan is the lower of:
· the Variable Price, being equivalent to 100% (i.e., zero
discount) of the Company's lowest daily volume weighted average price ("VWAP")
in the 15 trading days preceding the conversion date or the date the Equity
Shares are applied to discharge the Loan; or
· the Fixed Price, being the lower of either a 35% premium to a
Reference Price being the average of the 5 daily VWAPs prior to the date of
the relevant Loan drawdown (i.e., 135% of the Reference Price) or the lowest
price at which the Company has issued equity in a fundraising whilst the loan
is outstanding.
The Company retains a right to repay any outstanding amount of the Loan prior
to the expiry of the term, subject to a repayment fee of 10% of the
outstanding balance.
Any Equity Shares unsold at the end of the loan term or on early repayment
shall be sold by the Investors and the net proceeds repaid to the Company.
All Investor share transactions are subject to:
· an orderly market provision that provides that the maximum number
of shares which can be traded by the Investors or any of their affiliates in
any calendar month shall be such number of shares which is equal to twenty
(20) per cent of the number of shares of the Company that have traded during
the previous calendar month (as confirmed by the reports available by
Bloomberg or their equivalent);
· neither the Investors nor any of their affiliates shall hold any
net short position with respect to the equity of UKOG during the Loan term;
and
· Investors will exercise any share voting rights in support of any
resolutions proposed by the Company.
The principal amount of each Advance is deemed to have been established with
an accrued premium of 4.5% on the relevant drawdown date (i.e., a fee of 4.5%
is incurred on each drawdown which will be added to the principal sum to be
repaid).
The loan was fully repaid as at 30 September 2024 (2023: £1.5 million
outstanding).
Reconciliation of liabilities arising from financing activities
The table below provides a reconciliation between the opening and closing
balances of liabilities arising from financing activities
£'000 Convertible loan
At 1 October 2023 1,500
Cash flows
- Repayment of borrowings (300)
- Interest paid (30)
Non-cash changes
- Conversion of loan to equity (1,170)
At 30 September 2024 -
At 30 September 2024, the outstanding loan balances owed to HHDL's
shareholders were; Alba Mineral Resources PLC (Alba) £2.6 million (2023:
£2.1 million), Doriemus PLC (Doremius) £0.6 million (2023: £0.57 million)
and UK Oil & Gas Plc £17.8 million (2023: £17.43million). The loans are
payable on determination by the Board of HHDL. The loans currently attract an
interest rate equivalent to the Bank of England base rate.
19. Provisions - decommissioning
Group 2024 2023
£'000
£'000
As at 1 October 1,451 1,442
Change of estimate (754) (119)
Unwind discount 62 128
As at 30 September 759 1,451
The amount provided for at 30 September 2024 represents the Group's share of
decommissioning liabilities in respect of the Horndean and Avington fields,
the producing site at Horse Hill and the Broadford Bridge drilling site.
The Company makes full provision for the future cost of decommissioning oil
production facilities and pipelines on a discounted basis upon the
installation of those facilities. The decommissioning provision represents the
present value of decommissioning costs relating to oil & gas properties.
These provisions have been created based on the Company's internal estimates.
The Group has recognised provisions for the estimated future costs of
decommissioning oil and gas production and exploration facilities. These costs
are expected to be incurred over the productive lives of the assets, which
range from 4 to 10 years.
Key assumptions used in the calculation are:
· Discount rate: 16.2% pre-tax, reflecting management's assessment
of risks not adjusted in the cash flows.
· Inflation rate: 3%
· Timing of outflows: based on current licence expiry dates and
expected cessation of production.
· Site-specific provision amounts are as follows:
£'000 Horse Hill Horndean Avington Broadford Bridge Total
Undiscounted liability 1,043 178 190 214 1,625
Discounted provision at 30 September 2024 (16.2%) 492 37 40 190 759
Sensitivity analysis:
· A 1% reduction in the discount rate (to 15.2%) would increase the
total provision by approximately £29k.
· A 1% increase in the inflation assumption would increase the
provision by approximately £20k.
Assumptions used include an average group-wide discount rate of 16.2% and an
annual inflation rate of 3.0% applied to future decommissioning costs.
Assumptions based on the current economic environment have been made, which
management believes are a reasonable basis upon which to estimate the future
liability. These estimates are reviewed regularly to take into account any
material changes to the assumptions. However, actual decommissioning costs
will ultimately depend upon future market prices for the necessary
decommissioning works required which will reflect market conditions at the
relevant time. Furthermore, the timing of decommissioning is likely to depend
on when the fields cease to produce at economically viable rates. This, in
turn, will depend upon future oil & gas prices, which are inherently
uncertain.
20. Share capital
Ordinary Shares Number of Nominal Value Total Value
ordinary shares
£
£'000
Issued at 30 September 2022 21,096,376,104 0.0000001 2,109
On 28 June 2023, for conversion 1,145,535,523 0.0000001 115
Issued at 30 September 2023 22,241,911,627 0.0000001 2,224
Share placings 3,750,000,000 0.0000001 375
Loan Conversion 3,543,014,469 0.0000001 354
EBT subscription 3,005,000,000 0.0000001 301
Reclassification to Deferred B (3,250)
Share capital post share consolidation 3,253,992,610 3
Share issue, July 2024 3,333,333,333 0.000001 3
Share issue, August 2024 2,496,408,000 0.000001 2
EBT subscription 538,985,685 0.000001 1
Loan Conversion 1,518,042,206 0.000001 1.5
Issued at 30 September 2024 11,140,761,833 0.000001 11
In March 2024, further to the General Meeting, where all the resolutions
successfully passed, the Company completed the share reorganisation to
consolidate the 32,539,926,104 ordinary shares of £0.0000001 each in the
capital of the Company on a 10:1 ratio into 3,253,992,610 ordinary shares of
£0.000001 each.
Deferred shares
At 30 September 2024, the Company had 4,409,123,970,019deferred shares in
existence (2023: 1,158,385,352,229). These deferred shares do not carry voting
rights.
Total Ordinary and Deferred shares
The issued share capital as at 30 September 2024 is as follows:
Number of Nominal Value Total Value
shares
£
£'000
Ordinary shares 11,140,761,833 0.000001 11
Deferred shares A 1,158,385,352,229 0.00001 11,584
Deferred shares B 3,250,738,617,790 0.000001 3,25
Total 14,846
21. Share based payments
Share options
No options were granted during the year (2023: nil).
As at 30 September 2024 options in issue were nil.
Exercise price Expiry date Options in issue
30 September 2024
1.13p 26 September 2024 -
Total -
No options were exercised, and no options were cancelled during the year
(2023: none exercised, none cancelled). 121,500,000 options lapsed during 2024
(2023:117,000,000).
Warrants
24.2 million warrants were in issue as of 30 September 2024 (2023: 1,505
million).
During the year ended 30 September 2023, a total of 1,125,895,598 warrants
were issued to note holders in connection with the Group's convertible loan
facility, as disclosed in Note 18. The warrants were granted at the time of
drawdown and entitled the holders to subscribe for ordinary shares at a price
equal to 140% of the 5-day average VWAP prior to the relevant drawdown. The
number of warrants granted represented 33% of the advance amount divided by
the reference price.
The fair value of these warrants was determined to be £294,597, which was
recognised as a finance cost in 2023.
Employee Benefit Trust
The Company established the UK Oil & Gas Employee Benefit Trust ("EBT") on
29 September 2014 to facilitate the operation of the Company's existing share
incentive plan over up to 10% of the Company's issued share capital from time
to time, in a tax-efficient manner for the beneficiaries of that plan. The EBT
is a discretionary trust for the benefit of directors, employees and
consultants of the Company. Shares held in the EBT are intended to be used to
satisfy future awards made by the Company's Remuneration Committee under the
share incentive scheme.
At 30 September 2024, the EBT held 864,485,685 ordinary shares in the Company
(2023: 250,000,000). Awards of ordinary shares to beneficiaries will be
subject to vesting and other performance conditions determined by the
Remuneration Committee, in line with prevailing market practice.
In accordance with IFRS, the EBT is consolidated into the Group's financial
statements as the Company is considered to have control over the trust. As a
result, the ordinary shares held by the EBT are presented as a deduction from
equity within the consolidated statement of financial position, rather than as
an investment. The cost of shares acquired by the EBT is recorded in equity,
and no gain or loss is recognised on the purchase, sale, issue or cancellation
of the Company's own shares.
Details of share options granted during the year to Directors, consultants
& employees over the ordinary shares are as follows:
Share options* At 1 October 2023 Issued during Lapsed / exercised during the year At 30 September 2024 Exercise price Date from which exercisable Expiry date
No. Million
the year
No. Million
No. Million
£
No. Million
Allen Howard 0.5 - (0.5) - 0.0113 27/09/2019 25/09/2024
Kiran Morzaria 0.65 - (0.65) - 0.0113 27/09/2019 25/09/2024
Stephen Sanderson 2.5 - (2.5) - 0.0113 27/09/2019 25/09/2024
Nicholas Mardon Taylor 0.4 - (0.4) - 0.0113 27/09/2019 25/09/2024
4.05 - (4.05) -
Consultants & employees 8.1 - (8.1) - 0.0113 27/09/2019 25/09/2024
Total 12.15 - (12.15) -
*restated due to share consolidation
Share options* At 1 October 2022 Issued during Lapsed / exercised during the year At 30 September 2023 Exercise price Date from which exercisable Expiry date
No. Million
the year
No. Million
No. Million
£
No. Million
Allen Howard 0.5 - - 0.5 0.0113 27/09/2019 25/09/2024
Kiran Morzaria 0.65 - - 0.65 0.0113 27/09/2019 25/09/2024
Stephen Sanderson 2.5 - - 2.5 0.0113 27/09/2019 25/09/2024
Nicholas Mardon Taylor 0.4 - - 0.4 0.0113 27/09/2019 25/09/2024
4.05 - - 4.05
Consultants & employees 1.75 - (1.75) - 0.0160 13/04/2018 12/04/2023
Consultants & employees 8.1 - - 8.1 0.0113 27/09/2019 25/09/2024
Total 13.9 - (1.75) 12.15
*restated due to share consolidation
The disclosure of Weighted Average Exercise Prices and a Weighted Average
Contractual Life analysis is not viewed as informative because of the minimal
variation of options currently in issue, and therefore, it has not been
disclosed.
For those options granted where IFRS 2 "Share-Based Payment" is applicable,
the fair values were calculated using the Black-Scholes model. The inputs into
the model were as follows:
Risk free rate Share price volatility Expected life Share price at date of grant
13 April 2018 (0.4p) 0.8% 128.9% 1.72 years £0.015
13 April 2018 (1.6p) 0.9% 128.9% 5 years £0.015
27 September 2019 (1.13p) 0.4% 63.13% 5 years £0.011
Expected volatility was determined by calculating the historical volatility of
the Company's share price for 12 months prior to the date of grant. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The Company recognised total expenses of £nil
(2023: £nil) relating to equity-settled share-based payment transactions
during the year, and £1,958,000 (2023: £954,000) was transferred via equity
to retained earnings on the exercising or lapse of options during the year.
Details of warrants are as follows:
Warrants At 1 October 2023 Issued during Lapsed / exercised during the year At 30 September 2024 Exercise price Date from which exercisable Expiry date
No. Million
the year
No. Million
No. Million
£
No. Million
Note holders 1,125 (1,125)-- - 0.0105 28/06/2023 28/06/2024
Consultants 138 - (138) - 0.0016 02/07/2021 01/07/2024
Consultants 71 - - 7.1* 0.0009 01/08/2022 01/08/2025
Consultants 171 - - 17.1* 0.0009 09/09/2022 09/09/2025
Total 1,505 - (1,263) 24.2*
*Restated due to share consolidation
22. Financial instruments and risk analysis
Financial assets by category
The categories of financial asset, all included initially measured at fair
value and subsequently carried at amortised cost in the balance sheet and the
headings in which they are included are as follows:
Current assets - Group 2024 2023
£'000
£'000
Inventory 2 18
Trade and other receivables 614 754
Cash and cash equivalents 1,039 1,868
Total 1,655 2,640
Current assets - Company 2024 2023
£'000
£'000
Trade and other receivables 617 172
Intercompany balances 1,018 13,157
Cash and cash equivalents 751 497
Total 2,386 13,826
Financial liabilities by category
The categories of financial liability all included at fair value and
subsequently carried at amortised cost in the balance sheet and the headings
in which they are included are as follows:
Current liabilities - Group 2024 2023
£'000
£'000
Trade and other payables 1,268 635
Borrowings 3,310 4,784
Total 4,578 5,419
Current liabilities - Company 2024 2023
£'000
£'000
Trade and other payables 657 258
Borrowings - 1,540
Total 657 1,798
The group is exposed to market risk through its use of financial instruments
and specifically to credit risk, and liquidity risk which result from both its
operating and investing activities. The group's risk management is coordinated
at its head office, in close co-operation with the board of Directors, and
focuses on actively securing the group's short to medium term cash flows by
minimising the exposure to financial markets.
Long term financial investments are managed to generate lasting returns. The
group does not actively engage in the trading of financial assets for
speculative purposes, nor does it write options. The most significant
financial risks to which the group is exposed to are described below.
Interest rate sensitivity
The group is not substantially exposed to interest rate sensitivity, other
than in relation to interest bearing bank accounts.
Credit risk analysis
The group's exposure to credit risk is limited to the carrying amount of trade
receivables and cash at bank. The group continuously monitors defaults of
customers and other counterparties, identified either individually or by
Company, and incorporates this information into its credit risk controls.
Where available at reasonable cost, external credit ratings and/or reports on
customers and other counterparties are obtained and used.
The group's policy is to deal only with creditworthy counterparties. Group
management considers that trade receivables that are not impaired for each of
the reporting dates under review are of good credit quality, including those
that are past due. None of the group's financial assets are secured by
collateral or other credit enhancements. The credit risk for liquid funds and
other short-term financial assets is considered negligible since the
counterparties are reputable banks with high-quality external credit ratings.
Liquidity risk analysis
The majority of the Group's liabilities are contractually due within one year.
The loan due from Horse Hill Developments Limited to Alba and Doriemus is
payable on determination by the Board of Horse Hill Developments Limited.
The convertible loan at 30 September 2024 was fully repaid (2023: £1.5m)
through a conversion mechanism.
The group's continued future operations depend on its ability to raise
sufficient working capital through the issue of equity share capital or debt
financing. The Directors are confident that adequate funding will be
forthcoming to finance operations. Controls over expenditure are carefully
managed.
Capital management policies
The group's capital management objectives are to:
· Ensure the group's ability to continue as a going concern;
· Provide a return to shareholders; and
· To provide capital for the purpose of strengthening the Group's
risk management capability.
The Group actively and regularly reviews and manages its capital structure, to
ensure an optimal capital structure, and equity holder returns, taking into
consideration the future capital requirements of the Group and capital
efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment
opportunities. Management regards total equity as capital and reserves, for
capital management purposes.
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market
commodity prices on the mix of oil & gas products it produces. The Group's
policy is to manage these risks through the use of contract-based prices with
customers.
Commodity Price Sensitivity
The table below summarises the impact of changes in commodity prices on profit
before tax. The analysis assumes that the crude oil price moves 10%, resulting
in a change of US$7.18/bbl (2023: US$7.80/bbl), with all other variables held
constant. Reasonably possible movements in commodity prices were determined
based on a review of the last two years' historical prices and economic
forecasters' expectations.
Increase/decrease in crude oil prices Effect on profit before tax for the year ended Effect on profit before tax for the year ended
30 September 2024 Increase/(Decrease)
30 September 2024 Increase/(Decrease)
£'000
£'000
Increase US$ 7.18 /bbl (2023: US$ 7.80/bbl) 78 98
Decrease US$ 7.18 /bbl (2023: US$ 7.80/bbl) (78) (98)
Currency risk
The Group has no significant monetary assets or liabilities denominated in a
foreign currency. However, the group is exposed to currency risk, with the
price of Brent Crude Oil being denominated in US$. The current exposure is not
seen as material, given the current level of revenue generated from it. The
Board will continue to monitor this risk as the operations and/or revenues
increase.
23. Commitments & contingent liabilities
Ongoing exploration expenditures are required to maintain title to the Group's
exploration permits. No provision has been made in the financial statements
for these amounts as the expenditure is expected to be fulfilled in the normal
course of the Group's operations. As of 30 September 2024, the Group had no
further material commitments (2023: none).
24. Events after the reporting date
On 19 November 2024, the Company successfully raised gross proceeds of £0.5
million by means of a placing at a price of 0.025 pence per share. The
Placing's proceeds were employed to enable the acquisition of the Company's
first salt cavern hydrogen storage site in the East Yorkshire salt basin.
On 21 February 2025, the Company successfully raised gross proceeds of
£0.4million by means of a private placing to a small number of professional
investors at a price of 0.0102 pence per share.
On 1 April 2025, the Company's ordinary shares were suspended from trading on
AIM pending publication of the Group's annual report and accounts for the year
ended 30 September 2024, in accordance with AIM Rule 19. The suspension
remains in place until the audited financial statements are published.
In June 2025, due to the refusal of the Broadford Bridge extension and the
absence of a successful farmout amid challenging market conditions for UK
onshore oil and gas, UKOG elected to relinquish licence PEDL234.
In July 2025, the Company agreed the sale of its 100%-owned subsidiary UKOG
(GB) Limited to Servatec Holdings Limited for a cash consideration of
£400,000. Completion is subject to the normal sector regulatory consents.
UKOG (GB) holds minority non-operated interests in two UK onshore petroleum
licences, a 10% interest in PL211 and a 5% interest in PEDL070, containing the
Horndean and Avington oil fields, respectively.
In September 2025, the Group signed a term sheet with Riverfort in respect of
a financing facility of up to £1,000,000. The facility, once executed, and
should the Company draw down on the facility, is expected to provide
additional working capital to support the Group's ongoing activities and to
finance projects.
25. Related party transactions
Transactions with related parties
UK Oil & Gas Plc paid a subscription fee for membership with United
Kingdom Onshore Oil & Gas (UKOOG) during the year. UKOOG represents the
onshore oil and gas industry and wider supply chain and provides the Company
with general industry advice and representation. Stephen Sanderson, UKOG's
Chief Executive, is a Director of UKOOG and, as a result, the subscription fee
for membership is considered a related party transaction. During the year, the
Company paid £4,500 for its membership with UKOOG (2023: £30,000).
Remuneration of key management personnel
The remuneration of the company's directors and other key management personnel
is set out below in aggregate for each of the categories specified in IAS24
Related Party Disclosures. The Directors Remuneration Report provides further
details.
2024 2023
£'000
£'000
Short-term employee benefits 457 508
Total 457 508
26. Ultimate controlling party
In the opinion of the Directors there is no controlling party.
Company Information
Company registration number 05299925
Registered office The Broadgate Tower 8th Floor
20 Primrose Street
London EC2A 2EW
Directors Nicholas Mardon Taylor
Stephen Sanderson
Kris Bone
Allen Howard
Auditors PKF Littlejohn LLP
15 Westferry Circus
London
E14 4HD
Nominated Adviser Zeus Capital Limited
125 Old Broad Street
London EC2N 1AR
Solicitors Hill Dickinson
The Broadgate Tower 8th Floor
20 Primrose Street
London EC2A 2EW
Registrars Share Registrars Limited
The Courtyard
17 West Street Farnham
Surrey GU9 7DR
Forward-looking Statement
This annual report contains 'forward-looking information', which may include,
but is not limited to, statements with respect to the future financial and
operating performance of UK Oil & Gas Plc, its subsidiaries, investment
assets and affiliated companies, the estimation of oil reserves or resources,
the realisation of resource estimates, costs of production, capital and
exploration expenditures, costs and timing of the development of new assets,
requirements for additional capital, governmental regulation of operations and
exploration operations, timing and receipt of approvals, licenses,
environmental risks, title disputes or claims.
Often, but not always, forward-looking statements can be identified by the use
of words such as 'plans', 'expects', 'is expected', 'budget', 'scheduled',
'estimates', 'forecasts', 'intends', 'anticipates' or 'believes', or
variations (including negative variations) of such words and phrases, or state
that certain actions, events or results 'may', 'could', 'would', 'might' or
'will' be taken, occur or be achieved. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of UK Oil & Gas Plc and/or its
subsidiaries, investment assets and/or its affiliated companies to be
materially different from any future results, performance, or achievements
expressed or implied by the forward-looking statements.
Such factors include, among others, general business, economic, competitive,
political and social uncertainties; the actual results of current exploration
activities; conclusions of economic evaluations and studies; fluctuations in
the value of UK Pounds Sterling relative to the United States Dollar, and
other foreign currencies; changes in project parameters as plans continue to
be refined; future prices of products; possible variations in recovery rates;
failure of plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the oil & gas industry; political
instability, adverse weather conditions, insurrection or war; delays in
obtaining governmental approvals or financing or in the completion of
development or construction activities.
Although UK Oil & Gas Plc has attempted to identify important factors that
could cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may well be other factors that
cause actions, events or results to differ from those currently anticipated,
estimated or intended. Forward-looking statements contained herein are made as
of the date of this annual report, and UK Oil & Gas Plc disclaims any
obligation to update any forward looking statements, whether as a result of
new information, future events or results or otherwise. There can be no
assurance that forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue reliance on
forward-looking statements due to the inherent uncertainty therein. Nothing in
this annual report should be construed as a profit forecast.
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