LONDON (Alliance News) - The string of AIM-listed companies involved in the Horse Hill project in southern England on Monday said operations have started at the site to conduct the eagerly-awaited flow test at the Horse Hill-1 well.
The extended flow test will be conducted over three separate intervals in the Horse Hill-1 well after the UK Oil & Gas Authority gave the green light for the test last month, building on a similar approval from the Environment Agency in late November.
Horse Hill Developments Ltd owns a 65% stake in the Horse Hill prospect and the remaining 35% of the prospect is held by Magellan Petroleum Corp.
UK Oil and Gas Investments holds a 30% stake in Horse Hill Developments, whilst Doriemus PLC, Stellar Resources PLC, Solo Oil PLC and Alba Mineral Resources PLC each hold 10% stakes in Horse Hill Developments, with Evocutis PLC holding a 2% stake and the balance is owned by Angus Energy, in which UK Oil & Gas has a 6% stake.
All of the AIM-listed companies involved released separate statements on Monday confirming the flow test operations have commenced, which will take around 30 days.
The flow test is designed to test three separate zones in the well: the oil bearing Upper Portland sandstone and two Kimmeridge limestones that lie beneath the Portland sandstone.
During 2015, there was some controversy over the amount of oil that might be in the well, with the upcoming flowtest set to definitely outline how much oil the project potentially has.
"Collecting flow rate and reservoir engineering data is a key step in establishing commerciality and designing a development programme. We therefore look forward with great interest to reviewing the data with the Horse Hill partners as those results become available," said Neil Ritson, chairman of Solo Oil.
The latest figure provided by the companies suggested there could be up to 10.99 billion barrels of oil in place, but the big question is how much of that oil can actually be extracted. Currently, it is thought only around 3% to 15% of the oil in place could ever be recovered from the well.
The current estimates cover a 55 square mile area over the PEDL137 and PEDL246 Horse Hill licenses. Of the estimate, 8.26 billion barrels is thought to lie in the Kimmeridge Clay formation, 1.71 billion barrels in the Lias formation, and 1.01 billion barrels in the Oxford Clay. The estimates exclude the underlying Jurassic tight oil plays which lingers beneath the Kimmeridge, Lias and Oxford Clay formations.
UK Oil & Gas shares were up 1.9% on Monday morning, having spiked 9% at the open. Solo Oil shares were down 0.9% and Alba Mineral shares were trading up 5.6%, both also reversing initial gains. Shares in Evocutis were down 4.0%. Stellar Resources and Doriemus were untraded early Monday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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