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EXCLUSIVE: Alastair Smith, Avacta Group CEO gives an Operational Update


Uk Oil & Gas Regulatory News (UKOG)



Regulatory News for Uk Oil & Gas (UKOG)


Share Price: 2.025Bid: 2.00Ask: 2.05Change: 0.00 (0.00%)No Movement on Uk Oil & Gas
Spread: 0.05Spread as %: 2.50%Open: 2.05High: 2.075Low: 2.00Yesterday’s Close: 2.025





EWT Updates, Portland & Kimmeridge Oil Discovery

Mon, 10th Sep 2018 12:30

RNS Number : 2898A
UK Oil & Gas PLC
10 September 2018
 

 

UK Oil & Gas PLC

("UKOG" or the "Company")

 

Portland extended well test ("EWT") successfully completed, Kimmeridge EWT to commence

Horse Hill-1 ("HH-1") Portland and Kimmeridge oil discovery, Weald Basin, UK

 

Key Points:

 

·     Final HH-1 Portland flow test sequence successfully completed. all Portland operational objectives achieved.

·     Successful Portland re-perforation programme targeted 114 feet of oil pay, adding 14 feet of new pay. Following re-perforation, well productivity increased by up to 65%.

·     Independent oil consultants Xodus Group's ("Xodus") analysis of flow and pressure data interprets that further HH-1 Portland vertical well optimisation could achieve a forecast sustainable initial 24/7 pumped rate of around 362 barrels of oil per day ("bopd")* when full scale long-term production commences, exceeding original estimates. This analysis is key as it establishes the absolute flow potential of the Portland reservoir for future production wells.

·     Given the knowledge of the Portland's true flow potential, plans are now being formulated to drill either the HH-1z sidetrack or HH-2 new drill as a horizontal Portland appraisal well, with a targeted* sustainable daily production rate of 720 to 1,080 bopd, 2 to 3 times the forecast calculated* HH-1 vertical well rate of 362 bopd. All planning permissions, Environment Agency permits and the HH-2 well cellar are in place for a horizontal well. If successful it is envisaged that all future Portland production will be via horizontal wells.

·     The Company's economic modelling indicates that HH-1 Portland is robustly commercial at even the lowest observed sustainable daily rate of 140 bopd and at oil prices below $60 per barrel. A formal Horse Hill Developments Ltd ("HHDL") declaration of Portland commerciality is therefore expected shortly following receipt of Xodus' final connected oil volume analysis. A planning application for long term production is planned to be submitted to Surrey County Council shortly, prior to the completion of the forthcoming Kimmeridge EWT programme. Full-scale long-term production, targeted for 2019, is subject to co-venturer and regulatory approvals.  

·     All 36° API Brent quality oil produced during the EWT is "dry", containing only 0.02% water.   

·     Preparation for the primary EWT objective, to establish the commerciality of the Kimmeridge Limestone 3 ("KL3") and KL4 oil pools underlying the Portland, has now commenced.

·     Kimmeridge testing will begin in the uppermost KL4 oil pool immediately following the removal of two suspension plugs and installation of a new completion string straddling the two Kimmeridge oil pools.

Note: * There can be no absolute guarantee that forecast, targeted or calculated rates of production will be achieved.

 

UK Oil & Gas PLC (London AIM: UKOG) announces that HHDL, the operator of the HH-1 Kimmeridge and Portland oil discovery, located in licence PEDL137, in which UKOG holds a 46.735% beneficial interest, has informed the Company that the final Portland EWT sequence has been successfully completed and that all Portland operational test objectives were achieved.

 

Following a final long duration pressure build up test, preparations for the primary Kimmeridge EWT are now underway. The Kimmeridge EWT's goal is to establish the commerciality of the underlying KL3 and KL4 oil pools, which in 2016 flowed 40° API crude naturally to surface at an aggregate implied stable dry oil rate of 1,365 bopd. Further updates will be provided as the Kimmeridge EWT progresses. 

 

Stephen Sanderson, UKOG's Chief Executive, commented:

 

"We are delighted that the HH-1 re-perforation and optimisation programme has resulted in the forecast sustainable Portland production rate of 362 bopd, which significantly exceeds our initial test programme expectations.  This high rate, together with our economic modelling, strongly indicates that the HH-1 Portland vertical well is commercially viable and robustly economic at the lowest observed sustainable test rates and the predicted future sustainable production rates. HHDL's internal declaration of Portland commerciality is therefore expected shortly following receipt of Xodus' final connected oil volume analysis.

 

We also look forward to the near-term prospect of a new Portland horizontal appraisal well attaining a sustainable test rate in early 2019. This commercial result would make the Portland a significant asset and would underpin both the Horse Hill oil discovery's and the Company's future.

In the light of Portland success, we now eagerly anticipate the start of the Kimmeridge test programme, the goal of which is to establish the commerciality of the underlying KL3 and KL4 oil pools which flowed so prolifically in the 2016 short duration test programme."

Additional EWT Information

 

In order to calculate the Portland oil volume connected to, or "seen by" HH-1, steady state flow conditions were required (i.e. stable; oil rate, gas oil ratio, bottom hole and tubing head pressures). Consequently, post perforation, production was restricted to sustainable 24/7 rates of between 140-160 bopd. It should be noted that these rates do not reflect the Portland's full flow potential that could be achieved either via successful further optimisation of the HH-1 vertical well or a new horizontal production well.

 

During these sustained flow periods, intermittent natural flow was evident, with metered rates at the separator exceeding the nominal pumped volume by up to 50 bopd, with the highest rate recorded of 191 bopd. Gas rates at the test separator and through the enclosed flare remained broadly constant at around 15,000 cubic feet per day.

 

Throughout testing, sustained pumped oil rates were recorded with stable bottom hole pressures of around 200 psi below the initial reservoir pressure of around 915 psi. Following shut-in periods, bottom hole pressures recovered rapidly back to initial reservoir pressure, indicating good connectivity within the Portland oil pool. The observed pressure response during the EWT is interpreted to have positive implications for oil recovery efficiency during planned future long-term production.

 

Appointment of Joint Broker

 

The Company is pleased to announce that is has appointed Novum Securities Limited as joint broker to the Company with immediate effect. 

 

About Xodus-

 

Xodus are an international, globally recognised consultancy group providing engineering and advisory services to clients in the oil & gas, LNG, renewables and utilities industries worldwide.  They are certified as Competent Persons for the purposes of oil and gas resource and reserve assessments. More details can be found at www.xodusgroup.com

 

Qualified Person's Statement

 

Rob Wallace, UKOG's principal technical advisor, who has over 40 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Wallace is a Chartered Scientist, Chartered Geologist and Fellow of the Geological Society of London, an active member of the American Association of Petroleum Geologists, a member of the Petroleum Exploration Society of Great Britain and a member of the South African Geophysical Society.

 

For further information, please contact:

 

UK Oil & Gas PLC

Stephen Sanderson / Kiran Morzaria                                                      Tel: 01483 243450

 

WH Ireland (Nominated Adviser and Broker)

James Joyce / James Sinclair-Ford                                                           Tel: 020 7220 1666

 

Cenkos Securities PLC (Joint Broker)

Joe Nally / Neil McDonald                                                                           Tel: 0207 397 8919

 

Public Relations

Brian Alexander / David Bick                                                                      Tel: 01483 243450

 

Glossary

 

discovery

a discovery is a petroleum accumulation for which one or several exploratory wells have established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons

°API

a measure of the density of crude oil, as defined by the American Petroleum Institute

extended flow test

a flow test, as per the permission granted by the Oil and Gas Authority, with an aggregate flow period duration over all zones of greater than 96 hours and up to 90 days maximum

flow test

a flow test or well test involves testing a well by flowing hydrocarbons to surface, typically through a test separator. Key measured parameters are oil and gas flow rates, downhole pressure and surface pressure. The overall objective is to identify the well's capacity to produce hydrocarbons at a commercial flow rate

horizontal well

a well that during drilling is steered so as to be at or close to 90 degrees from the vertical to follow a particular geological stratum or reservoir unit

limestone

a sedimentary rock predominantly composed of calcite (a crystalline mineral form of calcium carbonate) of organic, chemical or detrital origin. Minor amounts of dolomite, chert and clay are common in limestones. Chalk is a form of fine-grained limestone

sandstone

a clastic sedimentary rock whose grains are predominantly sand-sized. The term is commonly used to imply consolidated sand or a rock made of predominantly quartz sand

sidetrack

re-entry of a well from the well's surface location with drilling equipment for the purpose of deviating from the existing well bore to achieve production or well data from an alternative zone or bottom hole location, or to remedy an engineering problem encountered in the original well bore

 

 

UKOG Licence Interests

 

The Company has interests in the following UK licences:

 

Asset

Licence

UKOG Interest

Licence Holder

Operator

Area (km2)

Status

Avington 1

PEDL070

5%

UKOG (GB) Limited

IGas Energy Plc

18.3

Field currently shut in

Broadford Bridge 3

PEDL234

100%

UKOG (234) Ltd 4

UKOG (234) Ltd 4

300.0

BB-1 & 1z oil discovery, planning application submitted

Holmwood 3

PEDL143

40%

UKOG

Europa Oil & Gas (Holdings) plc

91.8

Seeking alternate sites to drill Holmwood and other Kimmeridge prospects

Horndean 1

PL211

10%

UKOG (GB) Limited

IGas Energy Plc

27.3

Field in stable production

Horse Hill 5

PEDL137

46.735%

Horse Hill Developments Ltd 6

Horse Hill Developments Ltd 6

99.3

Production tests ongoing, 2 further appraisal wells scheduled for 2018/19

Horse Hill 5

PEDL246

46.735%

Horse Hill Developments Ltd6

Horse Hill Developments Ltd 6

43.6

As above

Isle of Wight (Onshore) 2, 3

PEDL331

65%

UKOG

UKOG

200.0

Preparing planning submission  for Arreton-3 oil appraisal well & Arreton S. exploration well 

Markwells Wood 2

PEDL126

100%

UKOG (GB) Limited

UKOG (GB) Limited

11.2

Revised drilling and testing planning application underway

               

Notes:

1.  Oil field currently in production.

2.  Oil discovery pending development and/or appraisal drilling.

3. Exploration asset with drillable prospects and leads. PEDL234 contains the Broadford Bridge-1 and 1z
    oil discovery well, the extension of the Godley Bridge Portland gas discovery plus further exploration
     prospects.

4.  UKOG has a 100% interest in UKOG (234) Ltd, which has a 100% interest in PEDL234.

5.  Oil discovery in 3 zones, EWT ongoing, two further wells HH-1z and HH-2 planned  end 2018/early 2019

6.  UKOG has a direct 71.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.

 

 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
DRLLLFSIAEIILIT






DateSourceHeadlineCategory
11-Sep-18 16:24RNS18-month Planning Extension ApprovedCompany Announcement - General
10-Sep-18 12:30RNSEWT Updates, Portland & Kimmeridge Oil DiscoveryResults and Trading Reports
06-Sep-18 18:03RNSExercise of WarrantsCompany Announcement - General
04-Sep-18 11:22RNSUpdate - Holmwood Licence (PEDL 143)Company Announcement - General
03-Sep-18 12:24RNSHigh Court Grants Interim InjunctionCompany Announcement - General
30-Aug-18 07:00RNSAcquisition of Further Interest in Horse HillMergers, Acquisitions and Disposals
29-Aug-18 09:05RNSSecond Price Monitoring ExtnCompany Announcement - General
29-Aug-18 09:00RNSPrice Monitoring ExtensionCompany Announcement - General
24-Aug-18 16:40RNSSecond Price Monitoring ExtnCompany Announcement - General
24-Aug-18 16:35RNSPrice Monitoring ExtensionCompany Announcement - General
20-Aug-18 07:00RNSAcquisition of Further Interest in HHDLMergers, Acquisitions and Disposals
13-Aug-18 14:00RNSExercise of WarrantsCompany Announcement - General
03-Aug-18 11:30RNSPortland high-rate flow test successfully completeCompany Announcement - General
31-Jul-18 14:00RNSSchedule 1 Update - UK Oil & Gas PlcCompany Announcement - General
31-Jul-18 12:34RNSResult of General MeetingResults and Trading Reports
18-Jul-18 14:00RNSPortland Extended Flow Test ("EWT")Company Announcement - General
13-Jul-18 12:36RNSCorporate Update & Notice of GMCompany Announcement - General
12-Jul-18 16:00RNSSchedule 1 - UK Oil & Gas PlcCompany Announcement - General
09-Jul-18 14:05RNSSecond Price Monitoring ExtnCompany Announcement - General
09-Jul-18 14:00RNSPrice Monitoring ExtensionCompany Announcement - General
09-Jul-18 11:05RNSSecond Price Monitoring ExtnCompany Announcement - General
09-Jul-18 11:00RNSPrice Monitoring ExtensionCompany Announcement - General
09-Jul-18 07:00RNSCorporate Update: Change of AIM Trading StatusCompany Announcement - General
04-Jul-18 07:00RNSSuccessful Placing to Raise £2mResults and Trading Reports
03-Jul-18 14:00RNSPrice Monitoring ExtensionCompany Announcement - General
02-Jul-18 16:40RNSSecond Price Monitoring ExtnCompany Announcement - General
02-Jul-18 16:35RNSPrice Monitoring ExtensionCompany Announcement - General
02-Jul-18 16:18RNSCompletion of £5 million Institutional PlacingCompany Announcement - General
02-Jul-18 15:41RNSConversion of Outstanding Loan NotesCompany Announcement - General
02-Jul-18 14:05RNSSecond Price Monitoring ExtnCompany Announcement - General


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