(Sharecast News) - UK Oil & Gas announced on Wednesday that the Resan joint venture, in which it has a 50% non-operated interest, had secured a suitable small rig to drill the Pinarova-1 shallow oil exploration well, with site construction expected to start within the next seven-to-10 days.
The AIM-traded company said the drilling campaign was expected to start towards the end of March to early April, subject to weather-related delays, and would take up to 28 days to deliver a well completed for future oil production.
Pinarova-1, located six kilometres north of the Basur-1 oil discovery, was aiming to test a working hypothesis, supported by well and seismic data, that the active 41.7-degree API light oil seep found last summer in a seismic shot hole above the Pinarova structure, was directly fed by and connected to an underlying light oil accumulation of around nine kilometres square within Eocene Hoya group limestones, 300 to 645 metres below surface.
The presence of movable oil within Pinarova was also indicated by the results of the 2018 Kezer-1 shallow geothermal well, located near the apex of the Pinarova geological feature.
UKOG and its joint venture partner Aladdin Middle East considered Pinarova to offer similar potential success case outcomes to the Basur-4 appraisal well, but at much lower drilling and development costs and with a shorter time to execution and delivery.
Estimated gross Pinarova-1 drilling costs ranged from $0.4m dry hole to $0.63m tested and completed as a pumped oil producer, with the firm having "ample funds" to cover its share of the planned drilling and testing campaign.
"Pinarova's prospectivity, potential success case oil volumes and modest drilling costs make it an attractive stand-alone project that could, in the success case, deliver oil production in the first half of 2023," said chief executive officer Stephen Sanderson.
"Given the positive shallow oil seep evidence plus the good light oil shows encountered within Pinarova by the Kezer-1 geothermal well, the new well will seek to establish if that oil is present in commercially viable saturations and volumes that can be pumped to surface.
"We look forward to the impending start of site construction and subsequent drilling directly upon its completion."
At 1400 GMT, shares in UK Oil & Gas were up 6.56% at 0.07p.
Reporting by Josh White for Sharecast.com.
Uk Oil & Gas (UKOG)