Ukog1 Mar 2020 10:17
Tue, 28th Jan 2020 07:00
RNS Number : 0589B
UK Oil & Gas PLC
28 January 2020
UK Oil & Gas PLC
("UKOG" or the "Company")
Horse Hill Oil Field Update, PEDL234 Loxley Update and General Meeting Notice
Horse Hill Oil Field EWT and Field Development Update (UKOG 85.635% interest)
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that as a result of a successful reservoir pressure "interference" testing campaign, undertaken to assess the degree of communication between Horse Hill-1 ("HH-1") and the new HH-2z horizontal, the Company now intends to accelerate the start of up to 25 years of continuous long-term production ("Production") by 6 months. Production is now planned to commence by bringing HH-1 into Production during Spring 2020 and to be followed by HH-2z upon completion of the current extended well test ("EWT").
Following recent discussions with the Oil and Gas Authority ("OGA"), a revised Horse Hill Field Development Plan ("FDP") has been submitted which, subject to OGA's final consent, will see the field's overall Production volumes grow in two initial phases compared to the single phase of the original FDP. It is planned to convert HH-2z from its current EWT status to Production in 3rd quarter 2020.
Necessary additional surface facilities, including generators to produce electric power from associated gas, will be installed prior to Production start. Further possible infill wells, water injection and additional gas utilisation will be addressed via subsequent FDP addenda and submitted to the OGA for consent at the appropriate time.
The establishment of Production at Horse Hill is a significant and key milestone for the Company as it will enable recoverable Reserves to be allocated to the project. This is a key first step to help access debt-based funding, which, if secured, would help meet the cost of current and future projects designed to grow the Company's asset base. Production will also enable oil sales to be booked directly as income, rather than simply netting off the revenues against EWT costs.
Further to the Company's announcement of 23 December 2019, the planned routine intervention to shut-off water ingress into the HH-2z horizontal is now scheduled for February. Whilst the Company wished to act more rapidly, no suitable slim-hole production logging tool ("PLT"), essential to identify the exact source of water ingress into HH-2z, was available within the UK or Europe until this time. It is planned to resume the HH-2z EWT immediately following a successful intervention.
In order to conduct interference testing, HH-1 Portland EWT production was resumed on 16 January 2020, at an initial rate of 435 barrels of oil per day ("bopd") over a 6-hour period. Over the past 24 hours, stable dry-oil EWT production has averaged 293 bopd at a modest drawdown, demonstrating the Portland perforated interval has remained in good condition since the last
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