Last checked at 27 Jun 2018 07:00
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Production Flow Test Operations Commence
Horse Hill-1 Kimmeridge Limestone and Portland Oil Discovery, PEDL137, Weald Basin, UK
UK Oil & Gas Investments PLC (London AIM: UKOG) is pleased to announce that it has been informed by Horse Hill Developments Ltd ("HHDL"), the operator of the Horse Hill-1 ("HH-1") Kimmeridge Limestone 3 ("KL3"), KL4 and Portland oil discovery, that planned flow testing operations of HH-1 have commenced. All key equipment necessary to carry out a 150-day long-term extended flow test campaign at HH-1 is now on site. The Company holds a 32.435% beneficial interest in licence PEDL137 containing the HH-1 oil discovery.
Following final equipment set-up and the subsequent removal of three temporary suspension plugs in the wellbore, flow will first be re-established from the Portland sandstone oil pool. Testing of each of the KL4 and KL3 oil pools will follow completion of the Portland test sequence.
Stephen Sanderson, UKOG's Executive Chairman commented:
"UKOG remains confident that the comprehensive long-term production testing campaign will provide the necessary data to fully assess Horse Hill's Portland and Kimmeridge commerciality and help move the project towards timely production and positive cash flow. Horse Hill remains a fundamental and exciting part of the Company's core portfolio and we look forward to a safe and positive test campaign."
Extended Well Test ("EWT") Overview
As the 2016 short flow test campaign established commercially viable initial flow rates for each of the Portland, KL4 and KL3 zones, the 2018 EWT's prime goal is to confirm that the wellbore is connected to a commercially viable oil volume within one or more of the three zones.
The long term reservoir performance data is also expected to provide the necessary data to enable, for the first time, Petroleum Resources Management System compliant Kimmeridge and Portland reserve figures to be estimated at Horse Hill.
Each test sequence will include a short, optimised rate test, together with a sequence of "choked back"(i.e. reduced) steady-state flow periods necessary to obtain the data required to determine the connected oil volume within each zone. A series of associated long pressure build up tests are also planned. Oil produced from the EWT will be sold on the "spot" oil market and any revenues will be utilised to offset overall testing costs.
In a move to further minimise environmental impact, the EWT will utilise a new type of clean-burning enclosed flare, a UK onshore industry first. The flare utilises technology employed at UK landfill sites and was developed collaboratively by Landfill Systems, PW Well Test and UKOG. The use of an enclosed flare is regarded as the "best available practice" by the Environment Agency.
Qualified Person's Statement
Stephen Sanderson, UKOG's Executive Chairman, who has over 35 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Sanderson is a Fellow of the Geological Society of London and is an active member of the American Association of Petroleum Geologists.
For further information, please contact:
UK Oil & Gas Investments PLC
Stephen Sanderson / Kiran Morzaria Tel: 01483 243450
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
Public Relations
Brian Alexander / David Bick Tel: 01483 243450
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 |
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 |
oil field | an accumulation, pool or group of pools of oil in the subsurface. A conventional oil field consists of a reservoir or reservoirs in a shape or configuration that will trap hydrocarbons and that is covered by an impermeable or sealing rock |
oil pool | a discrete single oil accumulation within a oil field, see definition above |
sandstone | a clastic sedimentary rock whose grains are predominantly sand-sized. The term is commonly used to imply consolidated sand or a rock made of predominantly quartz sand. |
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 shut in |
Baxters Copse 2 | PEDL233 | 50% | UKOG Weald Limited | IGas Energy Plc | 89.6 | Appraisal/development well planned; licence extended to 2018 |
Broadford Bridge 3 | PEDL234 | 100% | Kimmeridge Oil & Gas Limited 4 | Kimmeridge Oil & Gas Limited 4 | 300.0 | BB-1 & 1z completed, preparing two further planning applications |
Holmwood 3 | PEDL143 | 40% | UKOG | Europa Oil & Gas (Holdings) plc | 91.8 | Holmwood-1 exploration well planned in 2018 |
Horndean 1 | PL211 | 10% | UKOG (GB) Limited | IGas Energy Plc | 27.3 | Field in stable production |
Horse Hill 5 | PEDL137 | 32.435% | Horse Hill Developments Ltd ⁶ | Horse Hill Developments Ltd ⁶ | 99.3 | Production tests and further appraisal well(s) scheduled for 2018 |
Horse Hill 5 | PEDL246 | 32.435% | Horse Hill Developments Ltd⁶ | Horse Hill Developments Ltd ⁶ | 43.6 | As above |
Isle of Wight (Onshore) 2, 3 | PEDL331 | 65% | UKOG | UKOG | 200.0 | Preparing Arreton-3 oil discovery appraisal well planning submission |
Markwells Wood 2 | PEDL126 | 100% | UKOG (GB) Limited | UKOG (GB) Limited | 11.2 | Revised drilling and testing planning application underway |
Notes:
1. Oil field currently in production.
2. Oil discovery pending development and/or appraisal drilling.
3. Exploration asset with drillable prospects and leads. PEDL234 contains the Broadford Bridge-1 and 1z discovery well, the extension of the Godley Bridge Portland gas discovery plus further exploration prospects.
4. UKOG has a 100% interest in Kimmeridge Oil & Gas Limited, which has a 100% interest in PEDL234.
5. Oil discovery with successful flow test in 3 zones, further long-term testing scheduled in 2018
6. UKOG has a direct 49.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.