LONDON (Alliance News) - The oil companies behind the Horse Hill project in the Weald Basin in the UK saw significant falls in their share prices early Friday, despite announcing they have made a conventional oil discovery at the Horse Hill-1 well.
There are seven companies with a stake in Horse Hill Developments Ltd, a special-purpose vehicle which owns a 65% participating interest in the Horse Hill licence. The remaining 35% is held by Magellan Petroleum (UK) Ltd, a subsidiary of Magellan Petroleum Corp of the US.
UK Oil & Gas Investments PLC owns a 20% stake in the vehicle, with Doriemus PLC, Stellar Resources PLC and Solo Oil PLC each holding 10% stakes and Regency Mines PLC and Alba Mineral Resources PLC each owning 5% stakes. Angus Energy Ltd, a company in which UK Oil & Gas Investments has a 6% stake, holds the remaining 40% of Horse Hill Developments.
All of the companies were trading down Friday morning. UK Oil and Gas shares were down 26% to 1.16 pence per share whilst Alba shares dropped 20% to 0.918 pence per share. Doriemus shares were down 16% to 0.190 pence per share and Stellar were also down 16% to 0.895 pence per share. Solo Oil shares were down 7.8% to 1.00 pence per share and Regency Mines were down 8.1% to 0.400 pence per share Friday morning.
All of the companies released separate statements regarding the discovery.
The oil was discovered at depth of 1,791 feet true vertical depth and a preliminary estimate suggests there is 3.1 million barrels with the possibility of a further 16.8 million barrels of oil in a separate sand lower down in the Portland basin, yet this has not been tested yet. Further analysis is underway to establish the recoverable volume of oil that has been discovered, the companies said.
"The presence of a larger, unappraised, Portland feature creates considerable further upside," said UK Oil and Gas, Solo Oil and Stellar Resources Chairman David Lenigas.
On October 16, the project discovered oil shows in cuttings and elevated gas readings in the Portland Sandstone which the Horse-Hill-1 is drilling. These indications have now been confirmed.
The well is now being drilled deeper as the project continues to aim for a Triassic formation believed to have potential gas reserves. The project expects to reach the formation within the next two weeks, said the companies in a separate statements.
"We are now looking forward to drilling the Triassic, which is a new and untested exploration target in the area and which, if successful, may contain appreciable volumes of gas," said the chairman of Doriemus and Stellar, Donald Strang.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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