UK Oil & Gas Regulatory News (UKOG)

UK Oil & Gas PLC

("UKOG" or the "Company")

Turkey: Basur-Resan seismic processing completed

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that seismic processing of the 55 km of new Basur-Resan 2D seismic has been completed and has been received from Abu Dhabi based BGP. Following an initial review, the Company believes the new data is an improvement on the prior 1982-92 seismic data, further confirming the prospectivity of the Basur-Resan hydrocarbon accumulation. As originally planned, the new data will help facilitate the correct placement and design of the future Basur-3 sidetrack ("B-3S") and Resan-6 ("R-6") appraisal wells.

The new seismic was pre-stack depth migrated ("PSDM"), a significant technical step forwards from the original seismic data used to locate the Company's 2021 Basur-3 ("B-3") appraisal well. PSDM is a key modern process which correctly images and positions faults and geological structures in the depth domain along the plane of the 2D seismic line.

Implications for Basur-Resan hydrocarbon pool

New seismic line AME-21-8, the first seismic line running northwest to southeast along the 'strike' or geological axis of the Basur-Resan anticline and passing through key Basur and Resan wells, indicates, in the Company's view, that both Basur and Resan are part of the same 60 km² anticline and could thus potentially contain one common hydrocarbon pool. Both the B-1 discovery and Resan-5 wells which fall on the new seismic line, some 9 km apart, are reported to have recovered oil to surface from similar depths within the Garzan to Mardin target section, albeit historic 1950s-60s data quality and documentation is poor. The proposed B-3S and R-6 wells will test whether this interpretation is correct.

Implications for B-3 well

UKOG's preliminary interpretation of new line AME-21-3, which runs northeast-southwest directly over the original Basur-1 ("B-1") discovery well and the B-3/B-3S well trajectories, reveals that the Company's B-3 well, designed to test an area interpreted to be updip of the B-1 discovery on the upthrown side of a bounding fault, actually penetrated the deeper, downthrown area to the north of the bounding fault. PSDM demonstrates the bounding fault to lie around 0.6 km further southwest of the position seen on the original pre-drill 1982-92 seismic data. The integrity of the updip B-1 pool however remains intact, albeit with a minor reduction in overall gross rock volume due to the more southerly position of the bounding fault.

The new PSDM thus explains why B-3 did not reach the objective Garzan to Mardin sections, as these are now shown to lie below the base of the well, deeper than originally prognosed utilising the old 1982-92 seismic and lying below the lowest known hydrocarbons in B-1. As previously reported on 31st July 2021, deteriorating hole conditions following fishing operations for a stuck downhole assembly prevented further B-3 operations. Consequently, as no electric logs were obtained, B-3's precise geological position within the Lower Germav formation overlying the Garzan remains uncertain.

The Company's position at the time was to drill a mechanical sidetrack, B-3S, to intersect the Top Garzan as close to the B-1 discovery location as soon as possible; however, a time out was requested by the operator to complete seismic acquisition and processing before any drilling resumption.

Implications for future B-3S well

With the new seismic giving a more precise location of the bounding fault north of B-1, it is now apparent that to successfully enter the upthrown side of the fault containing the B-1 oil discovery, B-3S will require a steeper angle and longer lateral deviation than previously envisaged. In this respect and to reduce B-3S drilling uncertainty, the current technical plan is to drill B-3S to intersect the known subsurface positions of the target objectives at or immediately adjacent to those penetrated by the B-1 discovery, proven to lie within the Basur hydrocarbon pool's upthrown fault-block. This was originally UKOG's preferred position prior to the B-3 well.

Next steps

Geological mapping utilising the new PSDM data is well advanced and revised drilling prognoses are in preparation. These will be used to fine tune operational planning for B-3S and for a simple vertical R-6 well, designed to test the culmination of the Basur-Resan anticline (i.e., where the objective section is closest to the surface). A rig contractor has been identified. Given the new seismic indicates B-3S requires a longer and higher angle trajectory than previously envisaged, the joint venture is considering the merits and potential cost savings of drilling the simpler R-6 before the more complex B-3S. The Company awaits the operator's drilling cost comparisons, expected timings and final recommendations in this respect before confirming its position.

The Basur-Resan anticline containing the Basur-1 oil discovery is located within the surrounding 305 km² Resan M47-b1, b2 licence, in which UKOG's wholly owned subsidiary, UKOG Turkey Ltd, holds a 50% non-operated interest.

Stephen Sanderson, UKOG's Chief Executive commented:

"The new seismic is an improvement on the prior 1982-92 data and for the first time links the original Basur-1 discovery with the Resan wells at the southeastern culmination of the anticline, providing encouragement that a single hydrocarbon accumulation could be present over the entire 60 km² Basur-Resan anticline. As originally envisaged, the new data will also help facilitate the correct placement and design of the future planned B-3S and R-6 appraisal wells, designed to determine the future commercial viability of Basur-Resan."

Qualified Person's Statement:

Matt Cartwright, UKOG's Commercial Director, who has 39 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.

Glossary

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The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014