19 Jul 2016 07:00
Regency Mines Plc
("Regency" or the "Company")
Horse Hill Update - Upgrade to Portland Oil in Place
19 July 2016
Regency Mines Plc ("Regency" or the "Company"), the natural resource development and investment company with interests in oil and mineral exploration, announces an update on its investment at Horse Hill in the Weald Basin, UK.
Highlights
o Petrophysical Analysis Increases Total Portland Horizon Oil in Place from 7.7 to 22.9 million barrels ("MMbbl") per square mile
o Petrophysical Model Revised Including Dry Oil Test Observations and Measurements
o Portland Flow Rates Expected to Increase Using Higher Capacity Pump
o Barton Wilmore to be Commissioned to Prepare and Submit Planning Application for Appraisal Program at Horse Hill
o Program will Seek to Test 3 Kimmeridge Limestone Zones Plus Portland for up to 360 Days, Drill Two Additional Appraisal Wells, and Acquire Additional 3D Seismic Data
Andrew Bell, Regency Chairman, comments: "The revised Nutech analysis has encouraging implications for potential recovery percentages and commercial viability. The economic potential of the Portland sandstone horizon appears much greater than previously thought.
The Company anticipates that significant volumes of oil lying in the different horizons within the licence may be capable of production at commercial rates.
We look forward to the planned long term flow testing."
Portland Oil in Place Upgrade
A new petrophysical analysis by Nutech incorporating the findings of the successful Horse Hill-1 ("HH-1") flow test, demonstrates a threefold increase in calculated total oil in place (OIP) per square mile at the HH-I well within the Upper Portland pay zone. As reported in May 2015 a total Horse Hill Portland P50 OIP of 21 MMbbl was calculated utilising Nutech's petrophysical analyses. Nutech's May 2015 evaluation assigned a Portland OIP value of 7.7 MMbbl per square mile at the HH-1 well. Nutech's current evaluation upgrades the Portland OIP at HH-1 to 22.9 MMbbl per square mile, a 200% increase.
As previously announced in March, the final HH-1 Portland test flowed at a constrained stable dry oil rate of 323 barrels of oil per day ('bopd'). The Portland was produced at maximum pump capacity and showed no clear indication of depletion. It is likely that the rate can be further increased using a higher capacity downhole pump during the next planned test.
As previously stated, the calculated OIP per square mile should not be construed as recoverable resources, contingent or prospective resources or reserves.
HH-1 Discovery Well Location and Company Interest
The HH-1 well is located within onshore exploration Licence PEDL137, on the northern side of the Weald Basin near Gatwick Airport. PEDL246 lies adjacent to and immediately to the east of PEDL137 ("the Licenses"). RGM owns a 3.25% interest in the Licences through its 5% ownership of the Operator, Horse Hill Developments Ltd.
Background
Nutech's Report ("Report") details that the production of dry oil from the Portland, with little or no observed water production, required a rethink of the pre-flow test petrophysical model. Prior to the flow test, interpretations suggested that water would likely be produced along with oil, as is seen in Portland reservoirs in nearby producing oil fields. The revised model fully incorporates well test observations and measurements.
From a similar review of the petrophysical response within the Kimmeridge Limestones, the Report concludes that the well test results reinforce Nutech's and the Company's expectations regarding the significant volumes of OIP seen at the HH-1 well. As previously reported in April and June 2015, the overall Kimmeridge and Jurassic shale and limestone sequence is calculated to contain an OIP of 158 MMbbl per square mile at the HH-1 well and 9,245 MMbbl over the 55 square miles of the Licences.
Horse Hill Future Development Plans
The revised petrophysical model will be used to update Xodus' 2015 estimates of the total OIP contained within the mapped Horse Hill Portland oil accumulation. This will include an estimate of Contingent Resources net to the Company and will be reported in due course.
The Operator has also informed the Company that the flow test data analysis undertaken by Nutech and Xodus provides the necessary technical encouragement to engage Barton Wilmore Ltd, one of the UK's leading planning and environmental assessment practitioners, to prepare and submit a planning application to Surrey County Council ("SCC"), and to assist with obtaining necessary permissions from the Environment Agency ("EA"), for a significant appraisal programme at Horse Hill.
The applications will seek permission to conduct a programme consisting of the production flow testing of 3 Kimmeridge Limestone zones plus the overlying Portland over a total flow period of up to 360 days, plus two further appraisal/development wells and the acquisition of 3D seismic data.
A public consultation and engagement process related to the planning application is scheduled to take place, leading to an application to SCC and the EA. Engineering studies to examine the range of possible flow rates from a planned horizontal sidetrack well are ongoing. Data to further calibrate these studies will be acquired during the further planned extended flow tests.
Qualified Person's Statement:
The technical information contained in this announcement has, for the purposes of the AIM Guidance Note for Mining, Oil and Gas companies has been reviewed and approved by Michael Nott, who has over 45 years relevant experience in the geological, mining, minerals, waste disposal, industrial minerals, oil, drilling, mineral planning and quarrying industries and has approved the information in this announcement. He holds a BSc. degree in Geology from Queen Mary, University of London, a MSc. Degree in Mineral Production Management from the Royal School of Mines, Imperial College, University of London, The Diploma of Imperial College in Mineral Production Management and is a Chartered Engineer. He is a Fellow of the Institute of Materials, Minerals and Mining, a Fellow of the Minerals Engineering Society, a Fellow of the Institute of Quarrying and an Associate of the Royal School of Mines Association.
For further information contact:
Andrew Bell 0207 747 9960 Chairman Regency Mines Plc
Scott Kaintz 0207 747 9960 Executive Director Regency Mines Plc
Roland Cornish/Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited
Jason Robertson 0129 351 7744 Broker Dowgate Capital Stockbrokers Ltd.
Glossary:
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 |
contingent resources | contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status |
flow test | A flow test or well test involves testing a well by flowing hydrocarbons to the 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 | the study of physical and chemical rock properties and their interactions with fluids utilizing electric logs, physical rock and fluid measurements |
limestone | A sedimentary rock predominantly composed of calcite (a crystalline mineral form of calcium carbonate) of organic, chemical or detrital origin. Minor amounts of dolomite, chert and clay are common in limestones. Chalk is a form of fine-grained limestone. The Kimmeridge Limestones are effectively chalks being comprised of the remains of calcareous planktonic algae |
oil field | an accumulation, pool or group of pools of oil in the subsurface. An oil field consists of a reservoir in a shape that will trap hydrocarbons and that is covered by an impermeable or sealing rock |
oil in place | the quantity of oil or petroleum that is estimated to exist originally in naturally occurring accumulations before any extraction or production |
pay | the zone within a reservoir that contains economically recoverable hydrocarbons |
petrophysics | the study of physical and chemical rock properties and their interactions with fluids utilizing electric logs, physical rock and fluid measurements |
P50 | a 50% probability that a stated volume will be equalled or exceeded |
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 categorized 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 |