Last checked at 17 May 2019 07:00
UK Oil & Gas PLC
("UKOG" or the "Company")
Horse Hill-1 Production Test Update
Portland Oil Production now exceeds 20,500 barrels
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that, following a successful week-long pressure build-up test ("PBU"), the aggregate total Portland oil production at the Horse Hill oil field, in which the Company has a 50.635% majority interest, now exceeds 20,500 barrels ("bbl"). The Portland continues to produce at a stable rate of over 220 barrels of dry oil per day ("bopd") at a modest reservoir pressure draw-down. No formation water has yet been produced to surface.
The latest PBU yielded significantly better than expected results, with little or no apparent pressure depletion compared to the last PBU in early April. The potential positive impact on connected oil in place will therefore be thoroughly evaluated and reported in due course.
The successful Portland and Kimmeridge extended well test ("EWT") programme has now produced an aggregate volume in excess of 45,500 bbl to date, with a landmark target of 50,000 barrels set to be achieved over the coming month and prior to the start of the forthcoming horizontal well campaign. In order that the HH-2 Portland well can be drilled, the current plan envisages that once HH-1 Portland test production exceeds 25,000 bbl, production will be switched back to the Kimmeridge oil pool.
For prudent Portland reservoir management purposes and to ensure there is no detriment to the expected high performance of the HH-2 Portland horizontal well, the average pumped rate from HH-1 continues to be maintained below the previously reported 362 bopd calculated sustainable rate. As previously stated, based upon well-established reservoir engineering metrics, it is expected that HH-2 has the potential to achieve a rate of 2-3 or more times the HH-1's vertical rate of 362 bopd.
Following a successful tender process, the Company is now finalising contracts for the forthcoming drilling campaign and preparations are now well advanced for simultaneous test production and horizontal drilling operations at Horse Hill.
The HH-1 well and surrounding highly prospective PEDL137 and PEDL246 licences are operated by UKOG's subsidiary Horse Hill Developments Ltd in which the Company holds a 77.9% direct interest.
Further details of EWT results to date are summarised below.
Horse Hill 2018-19 EWT Oil Production Milestones:
· Over 45,500 bbl aggregate Kimmeridge and Portland oil production to date.
· Over 25,000 bbl total Kimmeridge oil production.
· Over 20,500 bbl total Portland production to date, flow continues.
· 213 tankers of crude exported primarily to BP's Hamble oil terminal. The Portland's 36° API Brent quality crude, containing zero produced water, continues to be sold to Perenco at prevailing Brent crude oil prices, less a small deduction for handling and marketing.
Stephen Sanderson, UKOG's Chief Executive, commented:
"The Portland test programme continues to exceed our technical expectations with dry oil production now exceeding 20,500 bbl. Our overall testing costs have also been significantly offset by the associated sales revenues. Moving forwards, we now expect to exceed 25,000 bbl Portland test production before the HH-1 test is switched back to the Kimmeridge to facilitate the drilling of HH-2.
The recent extensive pressure build-up also indicates HH-1 is likely connected to a larger oil volume than previously recognised. Further Portland test data will now be collected and analysed before the HH-2 drilling campaign to confirm this important development.
The Horse Hill oil field and its associated significant future cash flow stream is of paramount importance to UKOG and will, therefore, continue to be the Company's prime short-term focus. In this respect, we remain on track to commence drilling HH-2 as previously reported."
Qualified Person's Statement
Rob Wallace, UKOG's principal technical advisor, who has over 40 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Wallace is a Chartered Scientist, Chartered Geologist and Fellow of the Geological Society of London, an active member of the American Association of Petroleum Geologists, a member of the Petroleum Exploration Society of Great Britain and a member of the South African Geophysical Society.
For further information, please contact:
UKOG
Stephen Sanderson / Kiran Morzaria Tel: 01483 900582
WH Ireland (Nominated Adviser and Broker)
James Joyce / James Sinclair-Ford Tel: 020 7220 1666
Cenkos Securities PLC (Joint Broker)
Joe Nally / Neil McDonald Tel: 0207 397 8919
Novum Securities (Joint Broker)
John Bellis Tel: 020 7399 9400
Public Relations
Brian Alexander / David Bick Tel: 01483 900582
Glossary
°API | a measure of the density of crude oil, as defined by the American Petroleum Institute |
draw down | Pressure drawdown (∆P) is defined as the difference between the reservoir pressure and the flowing bottom hole pressure. Drawdown enables fluids to flow from the reservoir into the wellbore. The magnitude of the drawdown is a major controlling factors of a well's production rate. |
extended well test (EWT) or production 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 generally up to 90 days maximum flowing time per productive horizon. The objective being to establish whether a discovery is commercially viable and the best methods of future production and recovery. |
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 follow and remain within a particular geological stratum or reservoir unit having a trajectory that runs approximately parallel to the top and or base of the target horizon |
oil field | an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface. |
UKOG Licence Interests
The Company has interests in the following UK licences:
Asset | Licence | UKOG's Interest | Licence Holder | Operator | Area (km2) | Status |
Avington 1 | PEDL070 | 5% | UKOG (GB) Limited | IGas Energy Plc | 18.3 | Field currently temporarily shut in |
Broadford Bridge 3 | PEDL234 | 100% | UKOG (234) Ltd 4 | UKOG (234) Ltd 4 | 300.0 | BB-1 & 1z oil discovery, planning application approved |
A24 3 | PEDL143 | 67.50% | UKOG | UKOG 7 | 91.8 | Seeking alternate sites to drill A24 and other Kimmeridge prospects |
Horndean 1 | PL211 | 10% | UKOG (GB) Limited | IGas Energy Plc | 27.3 | Field in stable production |
Horse Hill 5 | PEDL137 | 50.635% | Horse Hill Developments Ltd ⁶ | Horse Hill Developments Ltd ⁶ | 99.3 | Production tests ongoing, two further appraisal wells scheduled for 2019 |
Horse Hill 5 | PEDL246 | 50.635% | Horse Hill Developments Ltd⁶ | Horse Hill Developments Ltd ⁶ | 43.6 | As above |
Isle of Wight (Onshore) 2, 3 | PEDL331 | 95% | UKOG | UKOG | 200.0 | Preparing planning submission for Arreton-3 oil appraisal well and Arreton South exploration well |
Markwells Wood | PEDL126 | 100% | UKOG (GB) Limited | UKOG (GB) Limited | 11.2 | MW-1 P&A |
Notes:
1. Oil field currently in stable production.
2. Oil discovery pending development and/or appraisal drilling.
3. Exploration asset with drillable prospects and leads.
4. Contains the Broadford Bridge-1 /1z Kimmeridge oil discovery, the eastern extension of the Godley Bridge Portland gas discovery plus further undrilled Kimmeridge exploration prospects.
5. Oil field with three productive and commercially viable zones, EWT ongoing, two further wells HH-1z and HH-2 scheduled in Q2 2019, development underway subject to grant of planning consent, expected in Q3 2019.
6. UKOG has a direct 77.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.
7. OGA consent received for the transfer of operatorship from Europa to UKOG
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014