Last checked at 23 Mar 2023 07:00
UK Oil & Gas Plc
("UKOG" or the "Company")
Horndean Field Resource Report by D&M
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that a new Competent Person's Report ("CPR") has been completed on the Horndean field (UKOG 10% non-operated interest) by Dallas, Texas based DeGolyer & MacNaughton ("D&M"), a globally recognised oil & gas reserve estimation and valuations consultancy. The CPR's findings are summarised in Tables 1 and 2 below.
Highlights:
· D&M completes CPR illustrating the present value of UKOG's 10% non-operated share of the Horndean oil field, located 10 miles north of Portsmouth, Hampshire.
· 179,300 barrels aggregate net UKOG 2P reserves + 2C contingent resources.
· £287,000 UKOG net share of oil sales revenues in 2022.
· Installation of new power-efficient surface pumps underway, expected to improve production rates and lower operating costs, potentially increasing profitability in 2023.
· The CPR's estimates of reserves and contingent resources are summarised in Tables 1 and 2 below.
Table 1: Horndean CPR Reserves Valuation
Case: D&M forward oil price | Full Field (100%) | UKOG Net (10%) | ||||
PRMS Reserves | 1P | 2P | 3P | 1P | 2P | 3P |
Recoverable oil (million barrels) | 0.86 | 1.00 | 1.17 | 0.09 | 0.10 | 0.12 |
Table 2: Horndean CPR Contingent Resources Valuation
Case: D&M forward oil price | Full Field (100%) | UKOG Net (10%) | ||||
PRMS Contingent Resources | 1C | 2C | 3C | 1C | 2C | 3C |
Recoverable oil (million barrels) | 0.3 | 0.8 | 1.3 | 0.03 | 0.08 | 0.13 |
The CPR was prepared in accordance with the requirements and standards of the Petroleum Resources Management System ("PRMS") of the Society of Petroleum Engineers and the sections of the CPR relevant to Horndean will be available on UKOG's website (www.ukogplc.com).
As of 31 December 2022, UKOG's 10% share of mid case 2P Reserves in the Horndean field is assessed at 99,500 barrels, with its share of mid case 2C Contingent Resources estimated at 79,800 barrels, an aggregate total of 179,300 UKOG net.
In 2022, UKOG's net share of Horndean production revenues was £287,000, with net earnings after costs of £136,000.
Total gross field production in 2022 averaged 101 barrels of oil per day despite significant well servicing work on three of the four production wells. New replacement surface pumps are now being installed and, consequently, it is expected that this will lead to increased production rates, lower electrical power consumption and a corresponding increase in 2023 field earnings. The operator, IGas plc, expects production rates to return to around 108 barrels of oil per day (gross) in 2023 when the new pumps are online.
Stephen Sanderson UKOG's Chief Executive commented:
"Although UKOG has a modest interest in Horndean, the CPR amply demonstrates that it continues to provide valuable earnings for the Company. We concur with the operator that the new pump upgrade should improve production rates, lower operating costs and, if oil prices remain around their current levels, potentially make Horndean more profitable than in 2022."
Qualified Person's Statement
Matt Cartwright, UKOG's Commercial Director, who has 40 years of relevant experience in the global oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.
For further information, please contact:
UK Oil & Gas PLC | ||
Stephen Sanderson / Allen D Howard
| Tel: 01483 941493 | |
WH Ireland Ltd (Nominated Adviser and Broker) | ||
James Joyce / James Bavister / Andrew de Andrade
| Tel: 020 7220 1666
| |
Communications | ||
Brian Alexander | Tel: 01483 941493 | |
Glossary of Terms
1C | the low-case estimate of Contingent Resources. There is estimated to be a 90% probability that the quantities actually recovered could equal or exceed this estimate, i.e., P90 case |
2C | the mid-case or average estimate of Contingent Resources. There is estimated to be a 50% probability that the quantities actually recovered could equal or exceed this estimate, i.e., P50 case |
3C | the high-case of Contingent Resources. There is estimated to be a 10% probability that the quantities actually recovered could equal or exceed this estimate, i.e., P10 case |
CPR | Competent Person's Report, a Petroleum Resources report prepared by an independent Competent Person(s), providing an estimated range of remaining recoverable resources and their potential monetary valuation in accordance with the relevant reporting standard, in this case PRMS. This CPR has not been prepared under the AIM rules for oil & gas companies |
Contingent Resources | 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 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 their economic status |
Field | A discovered and producing petroleum accumulation located within an area consisting of a single petroleum reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature and/or stratigraphic condition. |
1P | the low-case estimate of Reserves. There is estimated to be a 90% probability that the quantities actually recovered could equal or exceed this estimate, i.e., P90 case |
2P | the mid-case or average estimate of Reserves. There is estimated to be a 50% probability that the quantities actually recovered could equal or exceed this estimate, i.e., P50 case |
3P | the high-case estimate of Reserves. There is estimated to be a 10% probability that the quantities actually recovered could equal or exceed this estimate, i.e., P10 case |
PRMS | Petroleum Resources Management System created by the Society of Petroleum Engineers. A global standard of petroleum reserve and resource classification together with guidelines and accepted methodologies for the definition and estimation of petroleum resources and their monetary valuation |
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 satisfy four criteria: discovered, recoverable, commercial and remaining (as of the evaluation's effective 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. |
The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.