The company is acquiring the entire share capital of Tellurian Investments' subsidiary Magellan Petroleum (UK) Investment Holdings for a total consideration of £12mln in cash and shares.
Magellan holds a 35% direct interest in the Horse Hill oil field and the surrounding PEDL137 and PEDL246 licences.
Once the acquisition is completed, UK Oil's Horse Hill net oil sales revenues, net reserves and recoverable resources will increase from 50.635% to an 85.635% net share.
Crucially, the company noted, the acquisition will also give UK Oil & Gas full control over the Horse Hill drilling programme and production schedule in future, together with sole ownership of the Horse Hill oil field site lease.
UK Oil & Gas said that following the transaction, drilling of the much-anticipated HH-2/2z Portland horizontal well will follow very shortly after completion of the share purchase agreement.
The AIM-listed company stressed that the acquisition of the stake will have no impact on its ability to fund the forthcoming Horse Hill 2/2z drilling and extended testing campaign.