Horse Hill changes hands after UKOG suffers massive losses

Horse Hill enters a new stage after the sale of UK Oil and Gas’s (UKOG) interests in the Surrey oil project by£1 million after the company invested over £25 million in developing the site over more than a decade, the transaction marks UKOG’s exit from the onshore oil and gas business in the UK, as the company refocuses its strategy on energy storage activities. However, hydrocarbon exploration in the area could still continue under a new owner.

Energy B acquired the asset and now controls Horse Hill Developments Ltd, the latter has submitted a new planning application to Surrey County Council to develop four production wells and various facilities related to crude oil handling. Thus, a project that seemed to have been virtually abandoned after a landmark decision by the UK Supreme Court has once again taken center stage in the energy and environmental debate.

Horse Hill changes ownership after UKOG loses millions

For years, Horse Hill was one of UKOG’s main assets, the company spent over a decade trying to develop the oil resources located in this area of ​​southeast England. The initial interest was driven by large-scale estimates of the volume of hydrocarbons present underground. UKOG even claimed to have found around100 billion barrels of oil in the area.

However, other assessments used to evaluate licenses offered considerably lower figures, industry estimates pointed to around 9.24 billion barrels within the low-permeability Jurassic shale formations and conventional reservoirs included in the licenses, these prospects considerably increased the value attributed to the field, in September 2018, the implied value of the licensed area reached approximately £46 million, after UKOG agreed to acquire a 14.3% economic stake for £6.6 million.

From that moment on, however, the financial evolution took a very different turn; public records cited by The Guardian indicate that the company allocated more than 25 million pounds before finalizing the £1 million divestment, their financial accounts had already reduced the book value of their interests in Horse Hill to just £55.360 the difference shows the sharp deterioration suffered by an asset that years ago had generated great expectations within the British onshore oil sector.

The Finch ruling changed the conditions of the project

One of the most important events occurred in 2024, when the UK Supreme Court ruled on an appeal brought by activist Sarah Finch concerning the authorization to expand operations at Horse Hill, the decision became known as Finch verdict and it became relevant for the environmental assessment of oil and gas projects.

The court ruled that the planning authority must consider indirect greenhouse gas emissions associated with the end use of the hydrocarbon in the environmental impact assessment. In practice, this meant that the analysis could not be limited solely to emissions generated during extraction, it also had to take into account those resulting from the subsequent combustion of the produced oil.

As a result, the decision that had allowed the expansion of the site to proceed was overturned, the ruling introduced a consideration that is especially relevant for future fossil fuel developments in the UK, due to the greater weight that downstream emissions acquire within environmental assessment processes.

Horse Hill as an example of regulatory risk

The asset’s depreciation also sparked a discussion about the financial exposure oil projects may face from regulatory changes and climate-related litigation. Guy Prince, head of energy supply at Carbon Tracker, described Horse Hill as a case of “regulatory stranding”, a concept used when regulatory changes or legal processes end up affecting the economic viability of an asset linked to fossil fuels.

This type of risk can have very different consequences depending on the size of the company and the degree of concentration of its investments. A large company with a diversified portfolio can more easily absorb the decline of a single project. For a small organization whose strategy depends heavily on a single operation, the loss of value can profoundly alter its business model. UKOG’s performance illustrates precisely this type of exposure.

UK Oil and Gas se transforma en UK Energy Group

Following the divestiture of Horse Hill, UKOG is also changing its corporate identity, the company adopted the name UK Energy Group and intends to concentrate its resources on energy storage projects using salt caverns and other initiatives linked to cleaner energy.

Stephen Sanderson, the company’s chief executive, noted that he still believes Horse Hill contains potentially significant resources, yet presented the sale as an opportunity to complete the organization’s exit from the UK onshore oil and gas segment; the new direction had already begun to take shape before the transaction was finalized.

During 2025, the company raised £1 million intended for the development of hydrogen storage projects in South Dorset and Yorkshire, it also obtained other £500.000 to acquire land related to a proposed salt cavern project in East Yorkshire, the move places the former oil operator in a different market, one focused on underground energy storage infrastructure.

Energy B is once again betting on oil extraction

The withdrawal of UK Energy Group does not necessarily mean the end of oil activity in Surrey, Energy B the new owner of the site took the initiative to obtain the necessary permits again, Horse Hill Developments Ltd, now under its control, submitted a renewed application to Surrey County Council in May.

The plan includes the construction of four production wells a new oil processing area and equipment for loading tanker trucks also includes a fluid reinjection well. According to the proposal, the facilities could extract approximately 700,000 tons of oil over a period of 20 years this new stage places development in a different regulatory scenario than the one that existed when UKOG began to promote its original plans.

Emissions return to the center of environmental assessment

Climate change now occupies a central place in the new application, the documents estimate that the development could generate approximately 2.3 million tons of greenhouse gases during its lifetime the calculation includes emissions linked to the potential combustion of the extracted oil. Despite this volume, the documentation presented concludes that the impact would be “insignificant.”

The argument is based on the idea that Horse Hill would represent approximately 0.05 % of the UK’s projected carbon budget Sarah Finch questioned this assessment, arguing that there are significant shortcomings in the new environmental analysis because, according to her interpretation of government guidelines, emissions should be assessed within the cumulative context of existing and already authorized fossil fuel projects. Therefore, the current debate no longer revolves solely around how much crude oil can be extracted from Surrey’s subsoil; it also includes how the climate effects of its subsequent consumption should be measured.

The future of the project once again depends on the planning process.

Now, the request to Horse Hill Developments the proposal will have to go through the corresponding procedure again before the Surrey authorities. It comes after years of investment, legal disputes, and corporate restructuring. At the same time, it faces a framework in which emissions linked to the end use of oil carry greater weight in the environmental assessment due to a court precedent established in 2024.

For UK Energy Group, the sale represents the closure of its stake in British onshore oil and gas as it redirects capital towards energy storage projects; for Energy B, on the other hand, it means taking on an asset with potential oil resources, but also with the regulatory requirements associated with its possible exploitation.

Horse Hill thus finds itself in a unique situation with its former developer leaving the sector after registering a heavy financial loss, while its new owner is trying to bring the field back into production, the decision on drilling will determine whether the site can begin a new extraction cycle or whether environmental and planning restrictions continue to condition the exploitation of its reserves.

Source: The Guardian

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