Last checked at 15 Mar 2019 07:10
UK Oil & Gas PLC
("UKOG" or the "Company")
Oil Production Update
Landmark 10,000 barrels of Portland oil reached at Horse Hill
UK Oil & Gas PLC (London AIM: UKOG), is pleased to announce that aggregate test production from the Portland reservoir at the Horse Hill oil field, in which the Company has a 50.635% majority interest, now exceeds 10,000 barrels ("bbl"). The continuous Portland dry oil flow (i.e. oil with zero water content), at a stable daily average rate of over 220 barrels per day ("bopd"), forms a key part of the schedule of works required to finalise the Portland field development plan and to the targeted establishment of permanent long-term Portland production by end 2019.
The Horse Hill-1 ("HH-1") well and surrounding highly prospective licences PEDL137 and PEDL246 are operated by UKOG's subsidiary Horse Hill Developments Ltd.
For prudent reservoir management purposes, the average test production rate from the Portland section has been maintained below the previously reported 362 bopd calculated optimised sustainable rate.
Rig tender documents have also been issued to contractors for the drilling of the HH-2 Portland and HH-1z Kimmeridge horizontal appraisal/production wells and for which planning and environmental permits are in place. Drilling is targeted to start in spring 2019.
HH-1 test production is planned to continue until the completion and testing of the new HH-2 Portland well.
Further details of extended well test ("EWT")results to date are summarised below.
Horse Hill 2018-19 EWT Oil Production Milestones:
· Over 35,000 barrels ("bbl") aggregate Kimmeridge and Portland oil production to date.
· Over 25,000 bbl total Kimmeridge oil production.
· Over 10,000 bbl total Portland production to date, flow continues.
· 165 tankers of crude exported primarily to Perenco's Hamble oil terminal. The Portland's 36° API Brent quality crude containing zero produced water, continues to be sold at prevailing Brent crude oil prices, less a small deduction for handling and marketing.
Stephen Sanderson, UKOG's Chief Executive, commented:
"The Portland's continued excellent production performance, particularly from a non-optimised vertical well, provides building confidence that the previously reported 720-1,080 bopd horizontal well production targets are increasingly attainable. The recent rig-tender exercise also means we remain fully on track to begin the first horizontals in Spring, with long term production testing of both wells planned to follow directly afterwards. This programme puts UKOG in a strong position to deliver real growth and positive cash flow in the near future."
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 |
oil field | an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface. |
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 |
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 |
Holmwood 3 | PEDL143 | 40% | UKOG | Europa Oil & Gas (Holdings) plc7 | 91.8 | Seeking alternate sites to drill Holmwood 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 | 50.35% | 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. Awaiting approval from the OGA to transfer 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