UK Oil & Gas LON:UKOG has secured £3m in fresh funding through a heavily discounted share placing, as the AIM-quoted company looks to accelerate its strategic pivot away from hydrocarbons towards hydrogen storage and generation.
The London-listed group said it had raised the proceeds by issuing 10bn new shares at 0.03p each, a 35 per cent discount to its closing price of 0.046p on October 1. The funds will be used to progress engineering studies and partnership work essential to advancing its salt-cavern hydrogen storage projects in Dorset and Yorkshire.
The placing, arranged by CMC Markets UK, is expected to admit to trading on AIM on October 8. Following admission, UKOG’s total voting rights will rise to more than 28.2bn shares.
Shift in focus for UK Oil & Gas
The fundraising comes as UKOG attempts to redefine its future around clean energy after years focused on conventional oil and gas exploration. In its most recent annual report, published last month, the company underscored its intent to transition away from petroleum and identified hydrogen storage as its “future core focus”.
Stephen Sanderson, UKOG’s chief executive, said: “This material funding will help move our hydrogen projects towards fruition, permit us to deliver on our collaboration with National Gas and strengthen our intended submission of applications for government revenue support in the coming year.”
The company is aiming to capitalise on the government’s new Hydrogen Transport and Hydrogen Storage Business Model (HSBM), a scheme intended to provide revenue support for projects underpinning the UK’s emerging hydrogen economy.
UKOG’s wholly owned subsidiary UK Energy Storage has been working with National Gas on joint applications, following guidance from ministers that storage and pipeline operators must now submit bids together.
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Funding from the placing will cover concept and design work needed to underpin that collaboration. UKOG said it had held meetings with the government’s HSBM team in late September and regarded the support mechanism as a crucial pathway to commercial viability.
The capital raise will also allow the company to pursue a planned integrated project in central Dorset, combining local salt-cavern hydrogen storage with electrolytic hydrogen generation. Early talks with Dorset Council and a large industrial hydrogen user in the region have taken place, with technical studies set to determine feasibility.
Joint venture sought for hydrogen storage portfolio
Alongside its development activity, UKOG plans to use part of the proceeds to complete economic modelling aimed at attracting a strategic joint venture partner to co-develop its hydrogen storage portfolio. Management believes that securing an infrastructure or sector specialist will be critical in scaling and financing long-term projects.
The pivot to hydrogen marks a significant departure for UKOG, once known for its high-profile onshore oil ventures in southern England. Its decision to diversify follows mounting regulatory, financial and public pressure on small-cap fossil fuel explorers, many of which have struggled to attract capital in recent years. By contrast, hydrogen storage has been identified by policymakers as a vital enabler for decarbonisation, providing balancing capacity for renewables and underpinning industrial use.
UKOG acknowledged, however, that the placing came at a steep discount. The issue price represents a cut of more than a third to its previous close, underscoring the challenge faced by AIM-traded energy juniors in raising equity capital.
Despite that, the board argued that the fundraise was essential to keep its energy transition plans on track. The shares, which have lost significant value over the past five years, remain highly volatile, reflecting both the risks of early-stage project development and investor uncertainty over hydrogen economics.
For UKOG, the £3mn injection provides a crucial bridge to government-backed revenue rounds scheduled for the first half of 2026. Whether that will be enough to secure investor confidence in its reinvention as a hydrogen company remains to be seen.
