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UK Oil & Gas PLC - Acquisition of Interest in Arreton Oil Discovery

Wed, 12th Dec 2018 07:00

RNS Number : 1731K
UK Oil & Gas PLC
12 December 2018
 

UK Oil & Gas PLC

("UKOG" or the "Company")

 

Acquisition of Further 30% Interest in Arreton Oil Discovery and Licence

PEDL331 Licence, Isle of Wight, Onshore, UK

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has entered into a binding heads of terms with Solo Oil Plc ("Solo") to acquire their 30% shareholding in the PEDL331 onshore Isle of Wight licence ("the Licence"). Upon completion the Company will hold an operated 95% direct interest in the Licence.

 

As reported in the Company's July 2018 AIM admission document, the Arreton conventional oil discovery, a geological analogue of the Company's Horse Hill Portland oil field (UKOG net 46.735%), contains three stacked Jurassic oil pools with an aggregate gross P50 oil in place ("OIP") of 127 million barrels ("mmbbl"), over four times larger than Horse Hill's 30 mmbbl P50 OIP Portland oil pool.

 

The acquisition will also correspondingly increase UKOG's share of the Arreton discovery's recoverable Contingent Resource volumes by 46%, from 10.2 mmbbl to a material 14.9 mmbbl UKOG net. As detailed in Xodus's June 2018 Competent Person's Report, a further significant increase in oil recovery factor above the current estimated 12% is likely via adoption of an early stage reservoir pressure support scheme (i.e. water reinjection).

 

Transaction Summary

 

The total consideration of £350,000, with an effective date of 11 December 2018, will be satisfied through the payment of £90,450 in cash and the issue of 17,989,326 new ordinary shares in UKOG ("Consideration Shares"). The Consideration Shares are calculated based upon the 5-day volume weighted average price to market close  on 10 December 2018 of 1.4428 pence.

 

Completion of this acquisition, which will be announced in due course, is conditional upon the usual Oil and Gas Authority consent. 

 

Stephen Sanderson, UKOG's Chief Executive, commented:

 

"We are delighted to acquire this further substantial share of the Arreton oil discovery, giving the Company a material 14.9 million barrels of net attributable discovered PEDL331 recoverable resources.  The first Arreton appraisal well, Arreton-3, is now scheduled to be drilled, cored and tested in the first quarter of 2020, with the drilling of the larger look-alike Arreton South exploration prospect planned to follow after completion of Arreton-3 flow testing. We look forward to starting the journey towards realising the Isle of Wight Licence's considerable conventional oil resource potential."

 

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

 

appraisal well

a well designed to determine the lateral and or vertical extent of a discovered hydrocarbon accumulation

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 categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status

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

extended well 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 up to 90 days per zone

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

oil field

an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface. An oil field consists of a reservoir in a shape that will trap hydrocarbons and that is covered by an impermeable or sealing rock

oil in place ("OIP") or stock tank oil initially in place ("STOIIP")

the quantity of oil or petroleum that is estimated to exist in naturally occurring accumulations in the ground.

P50 or best estimate

a 50% probability that a stated volume will be equalled or exceeded

pressure support or voidage replacement

maintenance of reservoir pressure as close to virgin reservoir pressure as possible and above bubble point via reinjection of saline formation water into the reservoir. The injected water increases oil recovery via maintaining maximum depletion drive energy (see above) and displacing oil from reservoir pores towards the wellbore. The mechanism is also referred to as voidage replacement. Full pressure support or "full voidage replacement" means that the overall volume of saline formation water injected is equal to the volume of oil extracted.

recovery factor

the recoverable volumes of petroleum expressed as a percentage of the oil in place or gas in place

recoverable volumes or resources

those quantities of petroleum (i.e. oil in this case) estimated, as of a given date, to be potentially recoverable to surface from known accumulations

 

UKOG Licence Interests

 

The Company has interests in the following UK licences:

 

Asset

Licence

UKOG's Interest

Licence Holder

Operator

Area (km)

Status

Avington 

PEDL070

5%

UKOG (GB) Limited

IGas Energy Plc

18.3

Field currently temporarily shut in

Broadford Bridge 

PEDL234

100%

UKOG (234) Ltd

UKOG (234) Ltd 

300.0

BB-1 & 1z oil discovery, planning application approved

Holmwood 

PEDL143

40%

UKOG

Europa Oil & Gas (Holdings) plc

91.8

Seeking alternate sites to drill Holmwood and other Kimmeridge prospects

Horndean 

PL211

10%

UKOG (GB) Limited

IGas Energy Plc

27.3

Field in stable production

Horse Hill 

PEDL137

46.735%

Horse Hill Developments Ltd 

Horse Hill Developments Ltd 

99.3

Production tests ongoing, two further appraisal wells scheduled for 2019

Horse Hill 

PEDL246

46.735%

Horse Hill Developments Ltd

Horse Hill Developments Ltd 

43.6

As above

Isle of Wight (Onshore) 

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

 under internal review

               

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 Q2 2019, development underway subject to grant of planning consent, expected Q3 2019.

6.  UKOG has a direct 71.9% 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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