UK investors can get access to companies that will benefit from the discovery of oil onshore under the South of England through a number of London-listed firms, but The Telegraph suggests that you should proceed with extreme caution as this is about as high-risk as it gets.
UK Oil & Gas Investments said last week that analysis of an oil well drilled at Horse Hill near Gatwick suggests the local area could hold 100bn barrels of oil in total. However, the company added that only about 5 per cent of that total may be recoverable.
The announcement was enough to send shares in UK Oil & Gas Investments up as much as 325.3pc to 4.7p. A host of other small-cap companies have interests in the discovery and enjoyed strong stock market gains. Alba Mineral Resources climbed as much as 191.7pc, Stellar Resources was up 111.8pc and Solo Oil rose 44.8pc.
However, this is far from a one-way bet since there is still a long and high-risk road to any future returns. Knowing how much oil might be underground is a very different thing from actually recovering it at a price that generates a profit.
The experience of the shale gas industry in Poland should come as a warning to would-be investors in the UK. Initial estimates showed the largest reserves in Europe at more than 10 times those thought to be in the UK.
But those estimates have subsequently been slashed as it has proven difficult to recover the reserves.
Image: Oil Field by Shutterstock
