UK Oil & Gas PLC

("UKOG" or the "Company")

UKOG net share of Horse Hill oil field increases to 86% via purchase of Tellurian's 35% interest

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has signed a binding heads of terms with Tellurian Investments LLC ("Tellurian") to acquire the entire share capital of its subsidiary Magellan Petroleum (UK) Investment Holdings Limited ("Magellan") for a total consideration of £12 million in cash and shares. Magellan holds a 35% direct interest in the Horse Hill oil field and surrounding highly prospective PEDL137 and PEDL246 licences, UKOG's flagship asset.

Upon completion of a share purchase agreement ("SPA"), this key acquisition will see UKOG's Horse Hill net oil sales revenues, net reserves and recoverable resources increase by over 69% from our current 50.635% interest to a material  85.635% net share. Crucially, the acquisition will also give the Company full control over the forward Horse Hill drilling programme and production schedule, together with sole ownership of the Horse Hill oil field site lease.

As a consequence of this transaction, drilling of the much-anticipated HH-2/2z Portland horizontal well will follow very shortly after completion of the SPA.

This acquisition is in accordance with UKOG's stated business plan to further consolidate its position in key assets with near term cash generation potential. The acquisition is fully funded primarily by current cash reserves and partly by a convertible loan, which the company has entered into today, but has not yet drawn down.

It should be noted that the cash consideration will not impact UKOG's ability to fund the forthcoming Horse Hill 2/2z drilling and extended testing campaign, as cash funds for its full 85.635% share were set aside and ringfenced internally in Spring of this year. The convertible loan detailed below also ensures full funding for UKOG's increased share of future production facilities costs and other near-term surface, subsurface and regulatory costs necessary to bring the field into long-term production.

Transaction details:

The £12 million total consideration payable to Tellurian comprises:

·    An £8 million initial payment on SPA Completion (£5 million in cash and £3 million in UKOG shares).

·    A £3 million deferred payment, on or before 31 December 2019, in UKOG shares.

·    A £1 million second deferred payment, on or before 31 March 2020, in UKOG shares.

·    The number of consideration shares issued will be calculated by the payment amount divided by the 10-day volume weighted average price ("VWAP") prior to the respective payment due date. At its sole discretion, UKOG can also elect to pay all or part of the deferred and second deferred payments in cash.

·    Tellurian's dealing in UKOG consideration shares is to be subject to a 6-month orderly market provision.

Whilst this corporate transaction does not strictly require formal Oil and Gas Authority ("OGA") consent, OGA has informed the Company that they have no objections to the acquisition and that they will provide the customary "comfort letter" to this effect regarding the change in control of a licensee.

Stephen Sanderson, UKOG's Chief Executive, commented:

"This transformational acquisition, the largest in UKOG's 6 year history as an oil and gas company, boosts UKOG's net share of its flagship Horse Hill asset by a significant 69% from a 50.635% to an 85.635% net interest, providing the Company with the lion's share of future production revenues and reserves, together with absolute control over the field's future development and progress.

Importantly, the acquisition forms a key part of UKOG's stated near term strategy to grow the company via organic appraisal drilling and by targeted acquisitions in key assets with near term cash flow potential.

The funding of UKOG's increased 85.635% share of the new HH-2/2z horizontal drilling and testing campaign, scheduled to commence later this year following transaction completion, will not be impacted by this acquisition, as existing cash funds were set aside and ringfenced for this purpose in Spring 2019. The Loan ensures we also remain fully funded for further capital expenditures necessary to get the field into long-term production once necessary regulatory permits are in place this Autumn.

We now look forward to the transaction's completion and the start of what promises to be an exciting new drilling and testing campaign at Horse Hill, designed to bring the field into long term oil production by year-end.

We thank Tellurian and its subsidiary Magellan for their significant contribution over many years to the success of Horse Hill and wish them good fortune in developing their global LNG business."

Acquisition Financing

To fund this acquisition, UKOG will primarily use cash from the £3.5 million placing raised in March 2019, together with funds from an initial £5.5 million loan agreement ("Loan") with Riverfort Global Opportunities PCC Limited and YA II PN Ltd ("Investors") that UKOG has entered into. The Company will receive the full £5.5 million Loan in cash from the Investors upon draw down, which is expected to be triggered towards the completion date of the acquisition.

The portion of the Loan not utilised in the acquisition will be utilised for the construction of production facilities, and other surface, subsurface and regulatory activities necessary to bring Horse Hill into long-term production following the expected grant of production-related regulatory permissions.

The Loan attracts 0% interest and may, at the sole discretion of the Investors, be converted into new ordinary shares in the Company. The conversion price is the lower of either a share price of 130% of the Company's average VWAP prior to the Loan drawdown ('Fixed Conversion Price'), or 90% of the Company's lowest VWAP during the five days prior to the conversion date. The Loan is convertible by the Investors in tranches of not less than £150,000, with a limit of £3 million per quarter, unless otherwise agreed by the Company.

The Loan is subject to customary conditions precedent and events of default and is repayable 24 months after drawdown. The Company retains the right to prepay any outstanding amount so long as the 5 day VWAP prior to prepayment is less than the Fixed Conversion Price and subject to a 10 percent prepayment premium

The Loan includes a provision that, for as long as any portion of the Loan is outstanding, neither the Investors nor any of their affiliates shall hold any net short position with respect to the equity of UKOG.

This Loan agreement also provides for further funding on the same terms of between £3.6 million and £4.5 million dependent on the operational performance of the Horse Hill asset.

Qualified Person's Statement

Matt Cartwright, UKOG's Commercial Director, who has over 35 years of relevant experience in the global oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.

For further information, please contact:

UK Oil & Gas PLC

Stephen Sanderson / Kiran Morzaria                                                      Tel: 01483 900582

WH Ireland Ltd (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

Novum Securities (Joint Broker)                                                                                                              

John Bellis                                                                                                     Tel: 020 7399 9400

Public Relations

Brian Alexander                                                                                               Tel: 01483 900582

Glossary

UKOG Licence Interests

The Company has interests in the following UK licences:

Notes:

1.  Oil field currently in stable production.

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

3.  Exploration asset with drillable prospects and leads.

4.  Contains the Broadford Bridge-1/1z Kimmeridge oil discovery, the eastern extension of the Godley Bridge Portland gas discovery plus further undrilled Kimmeridge exploration prospects.

5.  Oil field with three productive and commercially viable zones, EWT ongoing, further drilling campaign scheduled, development underway subject to grant of planning consent expected in Q3 2019.

6.  UKOG has a direct 77.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.

7.  OGA consent received for the transfer of operatorship from Europa to UKOG

8.  Gas discovery pending appraisal drilling and development with underlying Kimmeridge potential

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