Sign In
Last checked at 
29 Mar 2018 07:00
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Broadford Bridge-1/1z Oil Discovery and PEDL234 Licence Update
Highlights
· Preliminary post-well analyses demonstrate Broadford Bridge-1/1z ("BB-1/1z") delivered most of its key pre-drill technical exploration goals, namely:
i. Provides further "proof of Kimmeridge Limestone ("KL") geological concept", i.e. existence of a "continuous" oil accumulation at BB-1/1z.
ii. Reservoir geology and oil occurrence at BB-1/1z and Horse Hill-1 ("HH-1") demonstrate that the KL oil deposit has a 30 km north-south extent. UKOG is the largest licence holder within the most prospective area of the KL deposit.
iii. Confirms the existence of a regional scale KL natural fracture network capable of delivering oil to surface without significant reservoir stimulation.
· A further BB-1z sidetrack and/or alternate completion and reservoir stimulation techniques are under consideration to help deliver higher sustainable rates and possible future commerciality at BB-1/1z.
· Two further PEDL234 KL drilling sites finalised, both located within the thickest, most thermally mature and oil generative area of the KL deposit. Planned 2019 drilling campaign scheduled after 2018 Horse Hill testing and drilling programme completion.
UK Oil & Gas Investments PLC (London AIM: UKOG) has been informed by its 100%-owned subsidiary Kimmeridge Oil & Gas Limited ("KOGL") announces that the most important technical goals of the drilling, coring and flow testing programme at its 100% owned BB-1/1z exploration discovery, located in licence PEDL234 were achieved, namely: further proof of the KL "geological concept", the determination of the deposit's lateral extent and the presence of a regional scale open natural-fracture network capable of flowing oil to surface from the KL without reservoir stimulation.
As previously reported on 20 February, the presence of KL5 oil flowing to surface, oil returned to surface from KL1-KL4 flow tests, together with mobile oil in cores and drilling fluids, presents further compelling evidence that the Upper Jurassic Kimmeridge of the central Weald Basin contains an extensive continuous oil accumulation. These live, mobile oil occurrences, together with corresponding rock and electric log data likely demonstrate an oil deposit of up to 1400 ft vertical extent.
Geochemical analyses further support this conclusion, as all oil samples from both BB-1z and HH-1 analysed to date are determined by Geomark Research to come from the same Upper Jurassic shale source, i.e. the oil lies within or immediately adjacent to the Upper Jurassic rocks where it was generated, one of the key aspects of a continuous oil accumulation.
The reservoir geology and geochemistry between HH-1 and BB-1z demonstrates that this continuous oil deposit has around a 30 km north-south extent, with BB-1z likely lying on the deposit's southernmost boundary. UKOG is the largest licence holder within the deposit's most prospective area or "sweet-spot", much of which resides in PEDL234.
Flow test inflows and pressure data, together with electric image log analyses, also demonstrate that the Kimmeridge contains both a local and regionally developed natural-fracture system, key to the future commercial viability of the KL deposit. Prior to testing, formation imaging logs and core showed the key fracture sets to be open.
The ability of these fractures to deliver hydrocarbons to surface at BB-1z without stimulation was demonstrated by both the KL5 test and by high initial instantaneous flow-back rates from the KL4 and KL3 test zones of 466 and 719 barrels of fluid per day respectively.
BB-1z Operational Update
Prior to the completion of testing on 20 March, the KL5 zone (test 7) continued to flow oil to surface at similar rates and oil-cuts as reported on 20 February. Although the continuous flow showed evidence of gradual cleaning and stabilisation over further days, due to planning permission time-constraints, the test was halted to test the deeper KL1 zone.
The KL1 test, over a newly perforated 40 ft naturally-fractured limestone section, showed encouraging initial fluid inflow rates of between 40-50 barrels per day post acidisation. However, no fluids were able to flow to surface due to a series of significant mechanical problems that could not be rectified within the remaining planning consent window. However, after the test halt, upon retrieving the uppermost packer and tubing, live mobile light oil was seen mixed with completion fluids.
As reported above, the testing programme, flowing oil from KL5 and oil to surface from the KL1-4 tests, played a significant part in achieving proof of KL geological concept and a key role in confirming the presence and flow capabilities of the regional KL natural fracture system.
The BB-1z well has been suspended for possible future re-entry and interventions.
Future BB-1/1z Plans
Whilst the KL flow rates observed are likely sub-commercial, given the multiple occurrences of mobile oil observed in the well and their correlation with good calculated oil saturations in electric logs and core analyses, we are exploring new methods and technologies that might enable us to achieve higher sustainable oil rates and commercial viability from the 1400 vertical feet of oil-saturated KL reservoir rock interpreted at BB-1z.
With this in mind, serious consideration is being given to a possible future short sidetrack, BB-1y. The sidetrack's objective would include a selective re-test of the main KL units, likely utilising an alternate completion methodology, new completion fluids, the possible use of small-bore radial drilling and other reservoir stimulation techniques. Any future work at BB-1/1z would likely take place after a successful trial of such alternate methods and technologies in the next PEDL234 exploration well.
Future PEDL234 Exploration Drilling Plans
Due to the significant positive technical learnings and understanding of the wider KL play gained from BB-1/1z, the Company has accelerated its plans to drill further wells within the PEDL234 licence. Two drilling sites have now been finalised, both located firmly within what the Company interprets to be the KL oil deposit's most prospective sweet-spot. UKOG, as the largest licence holder in this KL sweet-spot, is well positioned to exploit this extensive and likely commercially viable oil resource.
Both new locations lie within geological features in the central area of the 300 km² licence where the thickest, deepest buried and the most thermally mature (i.e. oil generative) KL section resides.
Lease terms on the first location have been agreed and a preliminary meeting with the Local Planning Authority is scheduled for this week. It is expected that a formal planning application will be submitted in Q3 2018, with drilling and testing in 2019 subject to obtaining necessary regulatory consents.
About BB-1/1z
BB-1/1z, a KL exploration step-out, lies in the extreme south-eastern corner of the 300 km² PEDL234 licence, 100% owned and operated by KOGL, a wholly owned UKOG subsidiary.
Stephen Sanderson, UKOG's Executive Chairman, commented:
"Armed with the knowledge gained from BB-1/1z that the KL oil deposit's prime sweet-spot straddles the central sector of our extensive PEDL234 licence, the Company has accelerated its future KL drilling plans to include two new firm drilling sites. These will see the KL tested in the thickest, deepest and most oil generative areas of the play in PEDL234. We plan to submit a new planning application by Q3 this year and, subject to obtaining the necessary consent, our next PEDL234 well will be drilled in 2019, following the forthcoming testing and drilling campaign at our Horse Hill discovery.
As our understanding of the KL deposit progresses, we are exploring new methods and technologies that might enable us to achieve higher sustainable oil rates and commercial viability from the 1400 vertical feet of oil-saturated KL reservoir rock interpreted at BB-1z and our future KL wells. Consequently, BB-1/1z has been "suspended" to permit a future re-entry and/or sidetrack.
Our 2018 KL focus will now move firmly upon our Horse Hill Portland and KL discoveries where the forthcoming series of long term extended well tests and appraisal drilling will occupy the remainder of this year."
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
casing | heavy-gauge steel pipe that is lowered into position in the open hole of a well and cemented into place. Casing is run to isolate rock formations with different pressure gradients from the well bore and to ensure that any fluids within the well are isolated from the surrounding rock and surface groundwater zone |
completion, well completion, or test completion | the process of making a well ready for production. This principally involves preparing the bottom of the hole to the required specifications, running in the production tubing and its associated downhole tools as well as perforating as required, together with the appropriate completion fluid contained in the well. The process of running in and cementing the casing can also be included in this category |
continuous oil deposit, continuous oil accumulation, or resource deposit | a petroleum accumulation that is pervasive throughout a large area, which is not significantly affected by hydrodynamic influences (i.e. the buoyancy of oil in water) and is not trapped by structural or stratigraphic geological conditions. The deposit, in contrast to conventional accumulations, has therefore not accumulated by the migration of petroleum over medium to long distances. The petroleum in such deposits is found within, or immediately adjacent or close to, the pore spaces where the petroleum is generated, i.e. those pore spaces lying within petroleum source rocks containing organic rich compounds (kerogen) that, when heated over geological time, transform into petroleum. These accumulations are generally associated with organic-rich shales such as the Kimmeridge Clay Formation. Such accumulations do not generally contain significant volumes of free, mobile formation water and therefore have no observable hydrocarbon-water contacts. The extent of the accumulation is generally defined by the limit of where burial depths have been sufficient to transform organic matter within the petroleum source rock unit into petroleum |
core or coring | a drilling technique that involves using a doughnut-shaped drilling bit to capture or "cut" a continuous cylinder-shaped core of undamaged in-situ rock. The core is captured in a steel pipe or "core barrel" above the bit. Core is normally cut in 30 feet lengths, or multiples of 30 feet, and normally with a diameter of 3.5 or 4 inches. Core is taken in petroleum reservoir rocks for detailed laboratory analyses of petrophysical and geomechanical parameters |
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 |
electric log | measurements of the electrical properties of the rock and fluids in and surrounding the wellbore to determine the petrophysical and geological properties of the rock in its in-situ state. The electric logs in BB-1z include 3-dimensional images of the electrical resistivity of the rock which when processed are designed to map and characterise natural fractures, these are known as " image logs" |
extended flow test or production test | a flow test, or extended well test, designed to test the longer term production performance of a discovery with a view to declaring commercial viability and the establishment of permanent production. |
flow test | a test period where hydrocarbons are flowed to surface 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 oil at a commercial flow rate and to recover oil in commercial quantities or volumes |
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, being made of the remains of calcareous planktonic algae called coccoliths. The Kimmeridge Limestones are comprised of fine grained coccoliths, fine grained calcium carbonate mud, clay minerals, together with dark grey organic matter |
naturally fractured reservoir / fractures | a fractured reservoir contains open and usually connected cracks or fissures within the rock matrix; fractures can enhance permeability of rocks greatly by connecting pore-spaces together; naturally fractured reservoirs have been created over geological time by nature, not man-made via hydraulic fracturing |
perforating, perforation | the use of tubing (typically) to convey perforating "guns" to the required well depth. Perforating guns are devices used to prepare wells for production, containing shaped explosive charges in a range of sizes and configurations to optimise the depth of penetration through the steel well casing and surrounding cement and into the adjacent reservoir rock |
play | a set of known or postulated oil and or gas accumulations sharing similar geological, geographical, and temporal properties, such as source rock, migration pathways, timing, trapping mechanism, and hydrocarbon type |
sidetrack | re-entry of a well from the well's surface location with drilling equipment for deviating from the existing well bore to achieve production or well data from an alternative zone or bottom hole location |
thermally mature | a term applied to source rocks which have received sufficient temperature and pressure over geological time to generate hydrocarbons. |
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 in stable production |
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 drilling and testing of multiple zones completed |
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. Contains the Broadford Bridge-1&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
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.
Follow the stocks
