LONDON (Alliance News) - UK Oil and Gas Investments PLC Wednesday said it has received an estimate from US-based Nutech which defines how much oil there is over the company's eight licence areas in the Weald basin in southern England, suggesting it has around 3.90 billion barrels of oil.
The report states the gross best estimate oil-in-place over the eight licence areas is 15.70 billion barrels of oil, contained in three Jurassic shale and interbedded limestone tight oil plays. Within that estimate, 3.90 billion barrels is considered attributable to UK Oil and Gas based on its interests in those eight licence areas.
Importantly, the three Jurassic tight oil plays in the Weald basin are considered to have around 124.0 billion barrels of oil in place across the entire Weald basin, but UK Oil and Gas stressed that it has no licences covering those areas apart from the eight reported on Wednesday.
Once again, the company urged investors not to consider the estimates as recoverable resources following on from confusion over the amount of oil in place at its Horse Hill project on the Weald basin earlier this year.
"Until further work is done there can be no current estimate of the recovery rate for the Weald Basin or assurance that oil can be recoverable at all," it said.
Those eight licences reported on Wednesday comprise of the Avington, Baxters Copse, Brockham, Holmwood, Horndean, two Horse Hill licenses and the Markswell Woods. UK Oil and Gas's stake in those licences varies between only 5% and up to 100%.
Some of the licence areas, including Horse Hill, are joint ventures with other London-listed stocks. The Avington, Baxters Copse and Horndean licences are in partnership with IGas Energy PLC whilst the Holmwood prospect is a venture with Europa Oil and Gas (Holdings) PLC.
UK Oil and Gas did not breakdown that 15.70 billion barrel figure into each licence area.
However, in August, UK Oil and Gas said an independent report from Schlumberger estimated the Horse Hill licence area alone had 10.99 billion barrels of oil in place and in September it reported the Markswell Woods licence had 1.2 million barrels - suggesting the Horse Hill licence area is the most prominent of the company's portfolio.
However, investors will be wary of an oil-in-place figures from the company following confusion over the Horse Hill area earlier this year. When an initial estimate from Nutech of 158.0 million barrels per square mile was released to the market, media picked up the figure and calculated a 100.0 billion barrels of oil in place - far from the actual amount of oil that will ever be recovered from the area as it is likely it will only be able to extract between 3% to 15% of that latest 10.99 billion barrel estimate.
None of the companies ever confirmed that 100.0 billion barrel figure, but UK Oil and Gas Chairman David Lenigas was quoted in the London Evening Standard newspaper backing the 100.0 billion barrel figure, causing the company to release a second statement that said more work needed to be completed on the project before any official figures could be calculated.
"We said we believed there were 158 million barrels per square mile and we own 55 square miles. We think we can recover 3%-15% ? that's 100 billion barrels," Lenigas told the Evening Standard, according to a report in May.
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 and Solo Oil PLC each hold 10% stakes in Horse Hill Developments, with Alba Mineral Resources PLC holding a 15% stake and Evocutis PLC holding a 2% stake. The balance is owned by Angus Energy, in which UK Oil & Gas has a 6% stake.
Moving forward, UK Oil and Gas said Horse Hill is its primary focus with a flow test booked in for later this year which will determine the amount of oil that could be produced from the area, but also said it will looked at additional areas on the Horse Hill licences where more oil could potentially be found.
That all-important and eagerly watched Horse Hill flow test will be carried out "in the next few months", according to UK Oil and Gas.
UK Oil and Gas shares were down 5.1% to 1.21 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
