“The King is dead, long live The King!” Just as this expression conveyed the notion that royal control is passed onto the next monarch, the same can be said about the current state of the British oil and gas industry.
The North Sea, the reigning power in oil and gas production in the United Kingdom, is in terminal decline. As death draws near for the aging fields offshore, the mantle could be passed onto a younger heir.
The analogy sounds silly, but a small British oil and gas company raised hopes this week that they may be able to revive the floundering fossil fuel sector on the British Islands. UK Oil & Gas (LON: UKOG) announced that it made a “world class” discovery. UKOG says it is sitting on 100 billion barrels of oil located near Gatwick Airport, south of London. The April 9 announcement revealed that a petrophysical analysis of a the Horse Hill-1 well that a consortium drilled last year in the Weald Basin is holding about 158 million barrels of oil per square mile.
Horse Hill-1 is owned by several companies. A special purpose company, the Horse Hill Developments Ltd. (HHDL), owns 65% of the project. Through a subsidiary Magellan Petroleum (NASDAQ: MPET) owns the remaining 35%. UKOG has a 30% stake in HHDL. And another company, Solo Oil (LON: SOLO) has a 10% position in HHDL.
The news rocked the country, and indeed, made global headlines. On April 8, UKOG’s share price was $1.11 per share. The…