Last checked at 18 Oct 2018 07:00
Alba Mineral Resources plc
("Alba" or the "Company")
Horse Hill Portland Oil Field Declared Commercially Viable
Horse Hill-1 ("HH-1") Portland and Kimmeridge Oil Discovery, Weald Basin, UK
Alba (AIM: ALBA), the diversified mineral exploration and development company, is pleased to announce that it has been informed by Horse Hill Developments Ltd ("HHDL" or the "Operator"), the operator of the Horse Hill-1 ("HH-1") Kimmeridge and Portland oil discovery located in licence PEDL137, that, following the successful Portland Extended Well Test ("EWT") programme, it now considers the Portland oil field to be commercially viable.
Alba holds an 11.765% beneficial interest in licence PEDL137 and adjoining licence PEDL246.
Alba is advised by the Operator that it is now targeting the start-up of long term Portland oil production during 2019, subject to the grant of necessary regulatory consents. The first future horizontal production well, HH-2, for which planning and Environment Agency consents are in place, is planned to be drilled in early 2019.
Alba is further advised by the Operator as follows:
• Following analysis of EWT results and economic modelling of HHDL's and Xodus Group's ("Xodus") forecast oil production profiles, HHDL now considers the Portland oil field to be commercially viable. Work is now underway towards a targeted long-term production start-up in 2019.
• HHDL currently envisages the Portland field development plan to consist of up to 3 production wells and up to 2 pressure support wells.
• A planning application for Portland and Kimmeridge field development is nearing completion and is targeted for submission to Surrey County Council ("SCC") before year-end.
• Xodus' calculated future Portland oil production profiles, based upon observed pressure and volumetric data from the EWT, show that oil recoveries of up to 45% of connected Oil in Place could be attained if a successful full voidage replacement pressure support scheme is incorporated into the field's development.*
• The Portland field's first new horizontal production well, HH-2, which has SCC planning and Environment Agency consents, is planned to spud in early 2019 following completion of the Kimmeridge Limestone 4 EWT.
• As reported on 10 September, the HH-2 horizontal well has a targeted* sustainable daily Portland production rate of two to three times the forecast potential HH-1 vertical well rate of 362 barrels of oil ("bopd")*.
• Following submission of the planning application, Xodus' 2018 Portland Competent Persons Report will be updated to include recoverable reserves and net present values of cash flows associated with the envisaged Portland oil field development.
Note: * There can be no guarantee that forecast, targeted or calculated rates of production or oil recoveries will be achieved. The ultimate recoveries will depend upon actual reservoir performance over time and the actual efficiency of voidage replacement.
George Frangeskides, Alba's Executive Chairman, commented:
"The Operator's confidence in the viability of the Portland sandstone at Horse Hill is demonstrated by its stated objective to submit a planning application for Portland and Kimmeridge field development by the end of the year. We look forward to providing our continued support as HHDL seeks to rapidly progress the Horse Hill Project out of the exploration phase and into the development and production phases in the coming year."
Qualified Person's Statement
The technical information contained in this announcement has been reviewed and approved by Feroz Sultan (B.Sc (Hons) Geology, M.Sc, Petroleum and Structural Geology, Karachi and M.Sc Petroleum Geology, Imperial College London), a petroleum geologist with over 45 years' experience in the management, exploration, development and production of oil and gas.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.
For further information please contact:
Alba Mineral Resources plc
George Frangeskides, Executive Chairman +44 20 7264 4366
Cairn Financial Advisers LLP (Nomad)
James Caithie / Liam Murray +44 20 7213 0880
First Equity Limited (Broker)
Jason Robertson +44 20 7374 2212
Yellow Jersey PR (Financial PR/ IR) |
|
Tim Thompson / Harriet Jackson alba@yellowjerseypr.com | +44 77 1071 8649 |
Glossary
depletion-drive | a natural mechanism whereby the differential pressure between the wellbore and reservoir permits dissolved solution gas to expand and become an energy support to create oil flow into a well. It is also known as solution gas drive or dissolved gas drive. |
connected oil in place | a volume of OIP that is demonstrated by collected pressure and flow data to be directly accessed and drained by a well during production. Only part (or a fraction) of the volume, known as the recoverable volume, will normally be recovered to surface during oil production. The percentage of the recoverable volume compared to the total connected OIP is known as the recovery factor. |
discovery | a discovery is a petroleum accumulation for which one or several exploratory wells have established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons |
extended well test | a well test, as per the permission granted by the Oil and Gas Authority, with an aggregate flow period duration over all zones of greater than 96 hours and up to 90 days maximum |
flow test | a flow test or well test involves testing a well by flowing hydrocarbons to surface, typically through a test separator. Key measured parameters are oil and gas flow rates, downhole pressure and surface pressure. The overall objective is to identify the well's capacity to produce hydrocarbons at a commercial flow rate |
horizontal well | a well that during drilling is steered so as to be at or close to 90 degrees from the vertical to follow a particular geological stratum or reservoir unit |
oil in place ("OIP") | the quantity of oil or petroleum that is estimated to exist in naturally occurring accumulations. |
pressure support or voidage replacement | maintenance of reservoir pressure as close to virgin reservoir pressure as possible and above bubble point via injection of saline formation water into the reservoir. The injected water increases oil recovery via maintaining maximum depletion drive energy (see above) and displacing oil from reservoir pores towards the wellbore. The mechanism is also referred to as voidage replacement. Full pressure support or "full voidage replacement" means that the overall volume of saline formation water injected is equal to the volume of oil extracted. |
recoverable volumes or resources | those quantities of petroleum (oil in this case) estimated, as of a given date, to be potentially recoverable from known accumulations |
reserves | those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by development and production status |
Alba's Project & Investment Portfolio
Mining
Amitsoq (Graphite, Greenland): Alba owns a 90 per cent interest in the Amitsoq Graphite Project in Southern Greenland and has an option over the remaining 10 per cent.
Clogau (Gold, Wales): Alba owns a 90 per cent interest in Gold Mines of Wales Limited ("GMOW"), the ultimate owner of the Clogau Gold project situated in the Dolgellau Gold Belt in Wales.
Inglefield Land (Copper, Cobalt, Gold): Alba owns 100 per cent of mineral exploration licence 2017/40 in north-west Greenland.
Limerick (Base Metals, Ireland): Alba owns 100 per cent of the Limerick base metal project in the Republic of Ireland.
Melville Bay (Iron Ore, Greenland): Alba is entitled to a 51 per cent interest in mineral exploration licence 2017/41 in Melville Bay, north-west Greenland. The licence area benefits from an existing inferred JORC resource of 67 Mt @ 31.4% Fe.
Thule Black Sands (Ilmenite, Greenland): Alba owns 100 per cent of mineral exploration licences 2017/29 and 2017/39 in the Thule region, north-west Greenland.
Oil & Gas
Brockham (Oil & Gas, UK): Alba has a direct 5 per cent interest in Production Licence 235, which comprises the previously producing onshore Brockham Oil Field.
Horse Hill (Oil & Gas, UK): Alba holds a 18.1 per cent interest in Horse Hill Developments Limited, the company which has a 65 per cent participating interest and operatorship of the Horse Hill oil and gas project (licences PEDL 137 and PEDL 246 covering a total area of 142.9 km²) in the UK Weald Basin.
Web: www.albamineralresources.com