Proactive Report4 Mar 2015 22:22
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Wressle and Horse Hill have revitalised interest in UK onshore; but which is better?
By Jamie Ashcroft March 04 2015, 3:25pm The new discoveries have revitalised interest in Britain’s onshore oil business, a sector that is often overlookedThe new discoveries have revitalised interest in Britain’s onshore oil business, a sector that is often overlooked
Investors like Wressle, and investors like Horse Hill; but which is better?
Without TV-burping comedian Harry Hill or a pair of fighting oil execs, the only way to find out is to take a closer look at the merits of each project.
Together the new discoveries have revitalised interest in Britain’s onshore oil business, a sector that is often overlooked.
A total of nine AIM quoted companies are staked between the two separate projects, and as such the discoveries have caught the imaginations of many small cap investors.
Europa (LON:EOG), Egdon (LON:EDR) and Union Jack Oil (LON:UJO) unearthed the Wressle discovery in Lincolnshire; meanwhile, after a false start or two, UK Oil and Gas Investments (LON:UKOG) and its partners have got to grips with discoveries in the Horse Hill well.
Both promise near-term production …
Tax perks and comparatively cheap operating costs mean production from either discovery is likely to be commercial, even at currently depressed oil prices.
Wressle is part of a tried and tested exploration approach.
Although it is deemed to be smaller than Horse Hill on paper, tests thus far point to potentially impressive production rates of nearly 500 barrels of oil per day (bopd), and possibly higher.
Horse Hill has its own tried and tested discovery, but a significant portion of its appeal is tied to a new and emerging exploration concept for UK onshore.
If investors had to choose only one - they don’t - it would likely be a choice between Wressle’s more significant near-term production and Horse Hill’s more speculative upside.
Grappling with the value of Wressle’s production potential …
Britain’s onshore oil sector is not famed for the size of its discoveries, and as is typical, Wressle is fairly modest.
Pre-drill estimates put the Wressle target at 2.1mln barrels, though a new CPR will revaluate the discovery’s resources later this year.
Whatever the resource tally, Wressle’s production potential is beginning to raise eyebrows for investors.
Totting up on the flow test results on the back of an envelope, Wressle is shaping up to be very productive by onshore by UK standards.
Most recent results indicate the Penistone Flags zone flowed gas at a rate of at 1.7mln cubic feet per day, as well as 12 barrels of oil. That equates to just over 300 barrels oil equivalent per day (boepd).
Significantly, Penistone’s flow was capped due to gas flaring regulations, and it has been suggested that the natural flow could potentially be twice as high.
Before that, the Wingfield Flag
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