U.K. Explorer Soars as Oil Flows Near London's Gatwick Airportby
U.K. Oil & Gas Investments shares gain as much as 77%
Oil flows hold out promise of conventional production
British energy explorer U.K. Oil & Gas Investments Plc gained the most in 10 months after reporting that oil flowed “naturally” to the surface from 900 meters (2,953 feet) below London’s commuter belt, near the city’s second-busiest airport.
Following the flow test in the Weald basin, which showed a steady rate in excess of 463 barrels of oil a day, UKOG will start the regulatory permit process “so we can return to the well to seek to demonstrate sustainable commercial production,” Executive Chairman Stephen Sanderson said in a statement Tuesday.
“What this flow test shows is that you don’t need to frack, you can produce it conventionally,” Brendan D’Souza, an analyst at WH Ireland Ltd, the only brokerage covering UKOG. “The key takeaway is that it’s a proof of concept.”
While fracking, or hydraulic fracturing, is allowed in the U.K., it has faced opposition from local authorities and environmental groups who say the process of blasting a mix of water, sand and chemicals into rock to release oil and gas can pollute groundwater and cause earthquakes.
UKOG shares gained as much as 77 percent and were up 39 percent at 1.95 pence as of 12:26 p.m. in London. That valued the company at 39.6 million pounds ($57 million).