UK Oil & Gas Investments PLC

("UKOG" or the "Company")

Corporate Update & Notice of GM

UK Oil & Gas Investments PLC (London AIM: UKOG) is pleased to announce that it has today posted a Circular to shareholders concerning the proposed change of status, from an AIM investing company to an operating company. The Circular and Admission Document will be available on the Company's website at www.ukogplc.com

Highlights

·     General meeting to be held to approve the admission of the company's shares to trading on AIM as an operating company;

·     The appointment of Nicholas Mardon Taylor to the Board upon Admission;

·     Extended Well Test Operations at the Horse Hill-1 site have, to date, included installation of all test-equipment and the commencement of the necessary well clean-up process in preparation for the first flow period of the Portland test sequence.

The letter from the Chairman within the Circular has been extracted and presented below. The full document is available on the Company's website at www.ukogplc.com

For further information, please contact:

UK Oil & Gas Investments PLC

Stephen Sanderson / Kiran Morzaria                                                      Tel: 01483 243450

WH Ireland (Nominated Adviser and Broker)

James Joyce / James Sinclair-Ford                                                           Tel: 020 7220 1666

Cenkos Securities PLC (Joint Broker)

Joe Nally / Neil McDonald                                                                         Tel: 0207 397 8919

Public Relations

Brian Alexander / David Bick                                                                     Tel: 01483 243450

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

RE-ADMISSION TO AIM OF EXISTING SHARE CAPITAL AS AN OPERATING COMPANY AND NOTICE OF GENERAL MEETING

1.          INTRODUCTION

The Board of UK Oil & Gas Investments PLC ("UKOG") announced earlier today that, subject to Shareholder approval, the Board has decided to implement fully a number of changes to the way that UKOG is managed which will have the effect of changing the status of the Company from  an  Investing Company under the AIM Rules to an Operating Company with a material trading activity.

The change to an Operating Company is classified as a fundamental change of the business of the Company under the AIM Rules and therefore is conditional, inter alia, upon the approval of Shareholders at the General Meeting. Accordingly, set out at the end of this Document, is a notice convening the General Meeting to be held at Hill Dickinson LLP,  The Broadgate Tower,  8th Floor,       20 Primrose Street, London EC2A 2EW at 10.00 a.m. BST on 31 July 2018, at which Shareholders will be asked to approve the Proposal for the purposes of the AIM Rules.

Provided that the Resolution is duly passed at the General Meeting, trading in the Existing Ordinary Shares will be cancelled at 4.30 p.m. on 31 July 2018 and it is expected that the Shares will be readmitted to trading on AIM the following day at 8.00 a.m. on 1 August 2018.

It is also proposed that the Company will change its name to UK Oil & Gas Plc with effect from Admission.

The purpose of this Document, which comprises an Admission Document prepared under the AIM Rules, is to provide you with information on the Admission and to explain why the Directors consider the Proposal is in the best interests of the Company and its Shareholders as a whole, and why they unanimously recommend that Shareholders vote in favour of the Resolutions.

2.          BACKGROUND

UKOG is a British oil and gas investment company, seeking to support the drive for increased energy security for this country, while ensuring its assets preserve the natural beauty of the Weald and Wessex region. The Company specialises in investing in new geological ideas, concepts and methodologies to find and produce oil from previously under-explored rock formations within established oil-producing basins.

The Company is admitted to trading on AIM and currently has a portfolio of direct and indirect investments in 8 UK onshore exploration, appraisal, development and production assets. UKOG is the largest acreage holder in the South of England, and the fourth largest in the overall UK onshore, with assets covering 791.5 gross km2. The Company's portfolio includes 4 non-KL oil discoveries and the Directors believe that this area has the potential for significant growth in the future. UKOG is focussed on the KL geological section and its licences cover 591.51 gross km2 of KL reservoir targets. The Directors advise that the Company's Kimmeridge 'sweet spot' licences  were  independently  calculated by Nutech to contain a significant proportion of the play's total OIP which was 9.831BB. Subsequent to this, PEDL233 has expired and as such the Company has calculated the remaining oil as 8.651BB.

The Company is generating cash from its interests in the Horndean oil field, as well as developing the Horse Hill project. UKOG is also working to advance its Markwells Wood, Holmwood and the Arreton (onshore Isle of Wight) licences, which are set out in further detail in this Document.

By making use of some of the world's latest oil and gas technologies, UKOG is endeavouring to turn  its discoveries into commercially viable producing assets.

UKOG is currently categorised as an Investing Company under the AIM Rules and  is therefore subject to the requirements of the AIM Note for Investing Companies. The Company substantially implemented its current investing policy on 19 September 2014. The Company is seeking to re-admit its shares to trading on AIM as an Operating Company subject to approval by Shareholders.  Following this change in status, the Company will no longer have an investing policy.

In the course of its investment strategy, UKOG has taken indirect and direct non-controlling stakes in oil and gas asset in the Weald Basin. It is now seeking to become more active in the development of these investments and in other assets it may identify. Following approval for and the change of status to an Operating Company, UKOG's investing policy will cease and UKOG will be able to take direct controlling interests in oil and gas assets without restriction and under the AIM Rules become the operator of such assets.

3.          OUTLINE OF INTERESTS

An overview of UKOG's wholly-owned assets and assets in which UKOG owns an  interest  are outlined in the below table (Figure 1) and their geographic spread is presented in Figure 3.

1.    Oil field currently in production.

2.    Oil discovery pending development and/or appraisal drilling.

3.    Exploration asset with drillable prospects and leads. PEDL234 contains the Broadford Bridge-1 and 1z discovery well, the extension of the Godley Bridge Portland gas discovery plus further exploration prospects.

4.    UKOG has a 100% interest in Kimmeridge Oil & Gas Limited, which has a 100% interest in PEDL234.

5.    Oil discovery with successful flow test in 3 zones, further long-term testing scheduled in 2018

6.    UKOG has a direct 49.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.

Figure 1, KOG, Table of Interest in Assets

UKOG CORPORATE STRUCTURE

The below (Figure 2) outlines the corporate structure of UKOG, its assets and economic interests in each.

http://www.rns-pdf.londonstockexchange.com/rns/6115U_1-2018-7-13.pdf

4.          SUMMARY OF THE ASSETS

Xodus Group have completed a Competent Persons Report as commissioned by UKOG. The report has covered UKOG's 8 licences in the south of England, 7 of which are located in the Weald Basin  and 1 in the Wessex Basin. One of those licences contains a currently producing oil field, another contains a shut-in oil field that is not economically viable and a number of others contain existing discoveries. The following is a summary of UKOG's assets. Further details can be found within the CPR section in Part III of this Document.

OIP projections for the KL, Kimmeridge Clay Formation and other tight Jurassic reservoirs have been made by Nutech. These reports have been made public and OIP volumes reported by UKOG in its regulatory press releases, most recently in December 2016 where Nutech calculated a P50 estimate of the Company's net interest over its licence interests in the Weald Basin of 9.831 BB of OIP in the Kimmeridge clay formation. These estimates have not been updated since the drilling and testing of the BB-1/BB-1z discovery well. Subsequent to this PEDL233 expired and as such the OIP reduced by

1.180 BB to 8.651 BB OIP.

It should be noted that to date insufficient data exists in regards to the KL and other Jurassic continuous oil deposits to make an assessment of any resources or reserves under SPE standards. Accordingly these OIP numbers should not be construed as either resources or reserves and for the avoidance of doubt the Competent Person has not audited these OIP estimates of Nutech.

The Company will update the market in the event of any material change or change in status of the following assets.

Broadford Bridge

UKOG acquired exploration licence PEDL234 (interest 100%) in 2016, significantly increasing its acreage holding within the KL's prime prospective area. The licence is operated by Kimmeridge Oil    & Gas Limited ("KOGL"), a wholly-owned subsidiary of UKOG. The onshore licence, PEDL234, covers 300 km². The licence acquisition included the existing Broadford Bridge well pad, along with planning permission and Environmental Agency ("EA") consent to drill the exploratory well ("BB-1").

Kimmeridge Potential - Broadford Bridge

UKOG, as disclosed within the analysis in section 10.2.2 of the CPR, has previously conducted analysis of PEDL234 and suggests that KL oil potential is also prevalent in a similar way to that at Horse Hill. BB-1 drilling commenced in May 2017 and was designed to penetrate the KL units at an inclination and orientation to test the open natural fractures within the KLs. Mobile light oil was recovered from open fractures in the KL5 cores within the Kimmeridge section. BB-1 was sidetracked to Broadford Bridge-1z ("BB-1z") in August 2017 due to difficult hole conditions to seek to maximise the Kimmeridge flow test potential.

BB-1z was completed as a potential oil producer with a multizone completion and over 1000ft of perforations The well was tested over multiple zones within the KL0-KL5 sections with the well free flowing light oil for short periods during the clean-up operations. Oil was also recovered to surface via pumping from multiple zones. The oil flowed to the surface during this testing programme, although   at likely sub commercial rates. This has led the company to explore new completion methods that might achieve higher sustainable flow rates.

The BB-1z oil discovery within PEDL234 licence area is reported in section 10.2.2 of the CPR with no resource associated with it. The CPR details that Godley Bridge, a discovery, which is combined with PEDL235 and adjoins PEDL234, may extend into PEDL234, in which UKOG has a 100% interest. At Godley Bridge, wells GB-2/2Z and Alfold-1 failed to find hydrocarbons unlike Godley Bridge-1. See section 10.1 of the CPR, page 106 for further information. The report also notes that the previous competent persons reports for IGas, the operator of PEDL235, have calculated estimated of Contingent Resource of between 5 and 10 bcf.

The CPR states that after workover operations had been completed, testing continued and recovered 38 degree API oil. UKOG's analysis suggests that the Upper Jurassic Kimmeridge potential covers most of PEDL234, north of BB-1. To further prove the potential of  the Kimmeridge reservoirs, UKOG  is working to acquire 2 further drilling sites in PEDL234. If  this is successful, planning applications   are expected to be submitted for the first site (which neighbours Godley Bridge) later this year.

The well results from the UKOG operated wells at Horse Hill and Broadford Bridge, which have tested the KL, as well as the reported results of Brockham-X4Z, show a consistent picture of Kimmeridge prospectivity across these licence areas. The Kimmeridge oil potential appears to be regionally extensive with thick sections of high total organic carbon ("TOC") shale with limestone beds; all of which are naturally fractured. To date, oil has also flowed from all three exploration wells that has tested the KL. At present, significant additional work is required to determine the development potential of these reservoirs.

Horse Hill

UKOG has an indirect 32.435% interest in each of  its 2 Horse Hill area licences operated by Horse  Hill Developments Ltd (HHDL): PEDL137 and PEDL246. UKOG holds a 49.9% interest in HHDL which, in turn, has a 65% interest in PEDL137 and PEDL246.

The Horse Hill discovery comprises several prospective intervals; with only the Upper Portland Sandstone being considered as Contingent Resource. HHDL flow tested the Portland Sandstone and KL intervals of the Horse Hill-1 (HH-1) oil discovery well in 2016. The Company notes that the three reservoirs tested in 2016 demonstrated an initial aggregate stabilised natural flow rate of 1,688  barrels of oil per day.

Horse Hill is the first in a series of planned near-continuous appraisal drilling and testing operations designed to convert the company's recoverable resources into permanent production and reserves. The Directors believe that if the current Horse Hill testing programme is successful then it could  deliver stable oil production in 2019, subject to obtaining the necessary regulatory consents and capital financing. The anticipation is that, should the Horse Hill testing programme produce oil in sufficient quantities and of the right quality it will be sold to offset the costs of the well test.

The extended well test is specifically designed to determine the presence of a commercial value of OIP. Consequently, the Company expects that HHDL will be able to determine the commerciality for  the Kimmeridge and Portland following these test results. This is further explained in paragraph 5 of this Part I which outlines the future plans in respect of Horse Hill.

As reported on 27 June 2018, EWT operations at the Horse Hill site have commenced. As of the date of this Document operations to date have included equipment set-up and the  necessary  well  clean-up process in preparation for the first sequence of the planned Portland flow test programme.

Horse Hill - Kimmeridge Potential

Within section 10.2.1 of the CPR, it is noted that the Kimmeridge shows good evidence of natural fracturing and that this is consistent with recent results from Brockham-X4z well where image log interpretation shows that both the Kimmeridge shale and the limestone beds are naturally fractured   as at Horse Hill.The HH-1 KL3 and KL4 reservoirs were flow tested in 2016. The upper 2 limestones were tested and flowed an aggregate stable dry oil flow of 1,365 bopd under natural flow with no  water produced. Interpretation of the tests suggest that there is a dual porosity system which  exhibited no observed depletion.

Figure 4 outlines the report's estimate for Contingent Resources of PEDL137, Portland Reservoir.

Figure 4. CPR, Contingent Resources for PEDL137 Portland Reservoir.

Avington

The Avington oil field (onshore licence PEDL070) in which UKOG holds a 5% interest is located in Hampshire, close to the Stockbridge oil field, and is operated by IGas Energy PLC. It was discovered in 1960 and commenced production in 2007. UKOG acquired its indirect 5% interest from Northern Petroleum plc in 2014.

As outlined in section 5 of  the CPR, Avington is a conventional field producing from the Jurassic  Great Oolite limestone reservoir. Average Avington production in 2017 was approximately 35 bopd. Due to high operating costs and issues with one of the production wells, Avington production was temporarily shut down in early 2018. Three wells were drilled at Avington between 1987 and 2006   and the site has been in production since August 2007, with initial production rates over 500 bopd.  The field has produced continuously from 2009 with low oil rates and high water cut (>90%).

The field is temporarily shut as the low oil production rate and costs linked to the high water cut have resulted in the field being uneconomic at the current cost and oil price.

Historically there has been Contingent Resource reported alongside Reserves. These resources were based on a further phase of development, However, given the current status of the field, further development appears unlikely.

Baxters Copse

UKOG held a 50% interest in the Baxters Copse (onshore licence PEDL233) oil discovery located in Hampshire, close to the Singleton oil field and which was operated by IGas Energy PLC. The initial term of the licence expired on 30 June 2018 and, due to the operator not having carried out the relevant exploration work commitment, the OGA served notice of determination of the licence on 5 July 2018.

IGas Energy Plc (as licence operator) must formalise an expiry of the licence by providing a relinquishment report to the OGA. This is due within 3 months of notification of the expiry of the licence. The Company expects to be responsible for 50% of the operator's costs associated in preparing the relinquishment report, but does not expect there to be any material costs associated  with the relinquishment of the licence as no substantive works have been carried out to date.

Holmwood Well

Onshore licence PEDL143 in which UKOG holds a 40% interest and is operated by Europa Oil & Gas Limited contains the Holmwood prospect. It is located to the west of the Horse Hill licence, in the northern part of the Weald Basin. Planning permission is in place to drill the Holmwood-1 well to test the Portland and the Kimmeridge in 2018. This is further explained in paragraph 5 of this Part I which outlines future plans.

Two reservoirs are considered, in section 8.2 of the CPR, at the Holmwood Prospect - the Portland and Corllian Sandstones. The Portland reservoir is known to be oil bearing in the Horse Hill discovery in the adjacent block and the Brockham field to the north. However, despite the presence or Corrilian Sandstones at both, neither are considered as oil bearing reservoirs in these fields. There are no  wells on the licence, with the closest well on the adjacent Brockham field which lies in a "cut-out" in  the northern portion of the PEDL143 licence. The CPR further notes that given the proximity to Horse Hill, the KLs are also highly prospective at Holmwood, but they are not included within the report.

Xodus have calculated the following STOIIP estimates for the Holmwood Well.

Figure 5, CPR, Estimate of Holmwood Prospective Resource.

Horndean

Onshore licence PL211, in which UKOG holds a 10% interest is located in Hampshire, UK and is operated by IGas Energy PLC. Section 4 of the CPR states that 7 wells including horizontal sidetracks have been drilled into the Great Oolite Reservoir. Currently, the Directors believe that production is very stable at a rate of approximately 150 bbl/d (15 bbl/d net to UKOG). Historically, Horndean oil production has been above  forecast due to improved well performance and this has been reflected    in increases in Reserves estimates in the past, including from 2014 to 2016.

Figure 6, CPR, Reserves Estimates for Horndean.

Isle of Wight

The onshore licence PEDL331, in which UKOG holds a 65% interest, contains the Arreton oil discovery and two geologically similar prospects. The Directors see this as an important element of  the Company's portfolio with a focus upon the Portland fracture-enhanced conventional reservoirs in Arreton and look-alike exploration prospects which other operators have missed. Recoverable gross 2C Contingent Resources were calculated as 15.7 MMbbl, with 10.2 MMbbl net to UKOG  according  to the CPR. Arreton site selection and regulatory permitting activities are now underway to permit a planned appraisal drilling campaign targeted for 2019.

The PEDL331 licence was formally granted to UKOG by the OGA in September 2016. Angus Energy Holdings UK Limited assigned its 5% licence interest to Doriemus Plc and UKOG was formally appointed by the OGA as the licence operator. The PEDL331 JOA was entered into by the Company with Doriemus plc and 30% partner Solo Oil Plc. UKOG is finalising the selection of the well site and preparing a planning application to drill the Arreton-3 appraisal well, with a view to achieving oil production in the event of success, as detailed in section 5 of the CPR.

Two wells have previously been drilled on the Arreton structure. The discovery was made by the Arreton-2 well which was a twin of the 1952 Arreton-1 drilled by BP as noted within section 7 of the CPR. This further outlines that as the Arreton North Portland Limestone reservoir is separated from the Arreton Main reservoir by a fault, the recoverable volumes in the prospect are classified as Prospective Resources. The estimated STOIIP volumes from the Xodus report are shown in Figures 7, 8 and 9, below.

Markwells Wood

The onshore licence PEDL126, in which UKOG holds a 100% interest through its subsidiary UKOG (GB) Limited, contains the Markwells Wood-1 oil discovery. In September 2016, UKOG submitted a planning application to the South Downs National Park Authority ("SDNPA") to further appraise and develop the Markwells Wood-1 oil discovery. The planned 2-phase programme would see 4 horizontal wells drilled within the conventional Great Oolite limestone reservoir.

Section 9 of the CPR states that currently, a single well has been drilled on the field, Markwells Wood-1. The surface location of the well lies approximately 75m away from the nearest seismic control (line CV85-369). As the well deviates to the south, the well track and seismic line navigation cross, with the effect that at reservoir level they are just 5m apart. The reservoir of the Markwells  Wood discovery is of Great Oolite Limestone formation which is a common reservoir unit in the Weald Basin. This well encountered 318 ft of the Great Oolite reservoirs from the top of the Cornbrash to the base of the Lower Massive Oolite/top of the Fullers Earth which was logged and cored. There are

5 zones in this reservoir named as follows and more detail on each can be found in the CPR  contained within Part III of this Document:

·      The Cornbrash

·      Interbedded Oolite

·      Upper Massive Oolite

·      Oncolites

·      Lower Massive Oolite

A geological summary of the Great Oolite was available to Xodus and demonstrates the lateral continuity and thickness variations in the different zones along strike in the analogue fields of Horndean to the west and Chilgrove to the east. Markwells Wood-1 well tests were conducted from December 2011 to May 2012 and produced 3931 bbl in total during that period. The CPR further notes, in section 9, that UKOG plans for a horizontal well in the crest of the structure a production forecast has been generated for a side track to Markswell Wood-1 1,200m length horizontal well with an east-west azimuth. The well is positioned high in the structure and targets the layers with the highest permeability.

Figure 10 below shows the STOIIP estimates calculated by Xodus in their report broken down into each of the reservoir's 5 zones, extracted from section 9 of the CPR. Likewise, Figure 12 outlines the CPR estimation of Markwells Wood Gross and Net Contingent Resources in '000 bbl, below.

Figure 11, CPR, Xodus estimation of Markwells Wood Contingent Resources.

Summary of Resources

The Competent person has estimated gross and net recoverable volumes for undeveloped  discoveries and are classified as Contingent Resources. A commercial risk factor has been estimated for each discovery and shown in the following Figure 12.

Oil Contingent                                         W.I.                          Gross Volumes                                                Net to UKOG          Risk Factor₁            Operator Resources                                                                                                                                           

(MMbbl)                                                 1C2         2C         3C          1C                           2C         3C                 %

Figure 12, Gross and Net Contingent Resources (in MMbl).

1      "Risk Factor" for Contingent Resources means the estimated chance, or probability, that the volumes will be commercially extracted.

2      1C, 2C and 3C denote the low, best and high estimate scenario of  Contingent Resources respectively as defined under  the PRMS.

The Onshore Isle of Wight and Holmwood licences both include Prospective Resources. The Prospective Resources for UKOG's assets are shown in the following figure 13. "Risk Factor" for Prospective Resources means the estimated chance, or probability, of geological success.

Figure 13, Gross and Net Prospective Resources (in MMbl).

5.          PROPOSED UKOG WORK PROGRAMME

In relation to Horse Hill, the OGA has granted its consent for the HH-1 Extended Well Test ("EWT") programme. All other necessary regulatory consents from Surrey County Council ("SCC"), the Environment Agency ("EA") and the Health and Safety Executive are in place. The Company has previously announced that it has funded its full share of operational EWT costs. The EWT will comprise a series of three separate test sequences commencing in the Portland followed by the KL4 and finally, the deeper KL3. If  time permits a test combining the KL4 and KL3 (a commingled test)  may be undertaken. Each test will utilise existing perforated zones as per the 2016 test programme. The expected duration of the full flow programme is around 150 days. The 2018 long-term testing programme's goal is to determine commerciality by confirming that HH-1's reservoirs are each connected to a commercially viable oil volume. It is expected that, should the minimum commercial volume threshold be met or exceeded, a declaration of  commerciality for each horizon could be   made in a timely manner after the completion of each testing sequence.

The Directors are targeting an assessment of Portland commerciality in Q3 2018 subject to a successful outcome of tests. In a similar manner to the 2016 test, which flowed oil from the Portland  at a stable metered rate of  323 bopd over  an 8.5 hour period, a linear rod-pump will be utilised to  flow Portland oil from around 35 metres of existing perforations located at around 615 metres below surface. As the 2016 test rates were constrained by the pump's capacity,  the new test will use a  larger pump with a capacity of around 475 bopd.

Subject to a successful testing outcome in the Kimmeridge and Portland, the HH-2 appraisal well is planned to immediately follow the EWT in late 2018 / early 2019. The well will be drilled as a future Portland production well. Drilling plans include optionality to deepen HH-2 into the Kimmeridge to gather core and image log data, together with a possible northwards deviation to  access  the  adjacent oil bearing Collendean Farm fault block's significant Portland oil resources.

Similarly, contingent upon EWT success, an HH-1z Kimmeridge sidetrack spud is planned in 2019 following integration of HH-1 Kimmeridge production data into a reservoir model and data from any future HH-2 Kimmeridge core. Necessary Planning and EA permits for HH-2 and HH-1z are in place. To achieve its goal of stable, long-term Horse Hill oil production during 2019, HHDL now plans to submit a further production planning application to SCC in Q3 2018. This application  will  seek consent to produce oil initially from HH-1 & 1z, and HH-2, together with further production wells in a second contingent drilling phase.

UKOG was awarded an extension of the licence term at its 100% owned PEDL234 from 30 June 2018 until 31 December 2023. The Licence has been converted into the 14th Licence Round Master Clauses Agreement which permits a Retention Area ("RA") covering the entirety of  the  300km2  licence area to be created.

UKOG intends to progress leases and regulatory approvals for two further well sites and exploration wells in the north of PEDL234 and potentially for a BB-1y sidetrack. An application  was  made recently to the West Sussex County Council to extend the existing planning consent on the BB-1 site for a further 18 months to the end of 2019.
On PEDL331: UKOG intends to secure a site lease and regulatory steps necessary to drill  an appraisal well on the Arreton Main oil discovery and look-alike Arreton South prospect in PEDL331. PEDL331 currently has an estimate of 10.2 million barrels UKOG Net P50 Contingent (recoverable) Resources.

UKOG intends to participate in the share of the planned Portland and Kimmeridge Holmwood exploration well which currently has an estimated 0.92 million barrels UKOG Net P50 Prospective Resources. Europa plans to drill the Holmwood-1 exploration well.

On Markwells Wood: UKOG  intends to submit a revised planning application for further flow testing   to include the Kimmeridge section of the well. UKOG  will seek necessary consents from EA to test  this area.

UKOG plans to continue to consolidate and expand its licence position in the  UK  onshore,  particularly in its core Weald Basin Kimmeridge oil play, with additional exploration, development and production.

6.          OIL & GAS REGULATORY BACKGROUND

This paragraph is intended as background information in relation to the oil and gas regulatory framework in place in the UK. As such, it is only a summary of the more pertinent provisions of the Petroleum Act 1998 ("Petroleum Act"). The Petroleum Act is the principal legislation regulating the grant of rights to bore for and obtain petroleum in the United Kingdom. The Petroleum Act was enacted on 11 June 1998 and repealed the Petroleum Production Act 1934.

The Petroleum Act provides that petroleum deposits (which includes shale gas) below land in Great Britain are the property of  the Crown but permits the OGA to grant licences to search and bore for  and get petroleum to such persons as he thinks fit. The Petroleum Act is supplemented by various environmental and health and safety legislative provisions. All regulatory powers for the oil and gas industry, apart from those concerned with the environment, have been transferred from the Secretary of State to the OGA.

A PEDL (Production Exploration and Development Licence) is an onshore production licence which allows a company to pursue a range of oil and gas exploration activities, subject to necessary drilling/development consents and planning permission. All PEDLs run for the following 3 successive terms:

l  The initial term is associated with an exploration work programme that the licensee will have  agreed with the OGA during the competitive application process. The licence will expire at the end of its initial term unless the licensee has completed the work programme and surrendered  a fixed amount of acreage (usually 50%). While the initial term is associated with a work programme of exploration work that must be completed if the licence is to continue into a second term, the licensee has the right to start production during the initial term, if the licensee can move quickly enough, subject to normal regulatory controls.

l The second term is associated with appraisal and development. There is no agreed work programme; instead the licence will expire at the end of its second term unless the OGA has approved a development plan.

l The third term is intended for production (production period). The OGA has the discretion to extend the term if production is continuing, but reserves the right to reconsider the provisions of the licence before doing so, especially the acreage and rentals. While the initial term is associated with a work programme of exploration work that must be completed if the licence is to continue into a second term, the licensee has the right to start production during the initial term, if the licensee can move quickly enough, subject to normal regulatory controls.

The length of each of the terms of a PEDL is agreed between the OGA and the licensees prior to the licence being issued, but may be subject to any subsequent amendments being agreed  in  the manner set out in this paragraph 6.

A  PL  (Production  Licence)  is  an  older  form  of   onshore  production  licence  issued  by  the      UK government which grants exclusive rights to explore, drill and produce petroleum within  a  specified area for a specified time. An operator is approved for each petroleum licence and is responsible for managing all activities that take place in relation to that licence.