Key facts
- UK Oil and Gas (UKOG) sold the Horse Hill oilfield site in Surrey for £1 million.
- The company, now rebranded as UK Energy Group, previously spent over £25 million on the site.
- A 2024 supreme court ruling mandated consideration of downstream greenhouse gas emissions in environmental impact assessments.
- UKOG's Horse Hill interests were written down to £55,360 on its balance sheet prior to the sale.
- New owner Horse Hill Developments Ltd has submitted a renewed planning application for four production wells.
- The application estimates the development would result in about 2.3 million tonnes of greenhouse gas emissions over its lifetime.
UK Oil and Gas (UKOG) has sold its Horse Hill oilfield site in Surrey for £1 million, a significant loss compared to its previous valuations and investments, following a landmark supreme court ruling that impacted the project's viability. The company, now rebranded as UK Energy Group, is pivoting towards clean energy solutions.
The supreme court's decision in 2024, known as the Finch Ruling, stipulated that planning authorities must consider the downstream greenhouse gas emissions of oil and gas projects in their environmental impact assessments. This ruling overturned a previous council decision that would have allowed expansion at Horse Hill.
UKOG had invested over £25 million in the site and at one point estimated about 100 billion barrels of oil could be present. However, prior to the sale, the company had written down the value of its interests to just £55,360. The implied value of the Horse Hill licence area had peaked at £46 million in September 2018.
Stephen Sanderson, chief executive of the newly named UK Energy Group, stated that while potential resources remain at Horse Hill, the divestment represented a "timely and attractive opportunity to complete UKOG’s exit from the UK onshore oil and gas sector." The company has reportedly raised funds for hydrogen storage projects in Dorset and Yorkshire.
Guy Prince, from energy transition thinktank Carbon Tracker, described Horse Hill as an example of "regulatory stranding," where climate litigation and regulatory shifts diminish the value of fossil fuel assets. He noted that such risks can have "radical financial consequences," particularly for smaller companies concentrated on single projects.
The new owner, Energy B, which controls Horse Hill Developments Ltd, has submitted a renewed planning application to Surrey county council for four production wells and associated facilities, estimating the extraction of nearly 700,000 tonnes of oil over 20 years. This application estimates about 2.3 million tonnes of greenhouse gas emissions, which it deems "insignificant." Campaigner Sarah Finch, who led the legal challenge, disputes this, arguing that any emissions are significant and that the application fails to adequately consider cumulative impacts as required by new guidance.