Last checked at 11 May 2015 07:00
11 May 2015
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Upgrade to Horse Hill Conventional Portland Sandstone Oil in Place Volumes
UK Oil & Gas Investments PLC (LSE AIM: UKOG) is pleased to announce an upgrade to the conventional Stock Tank Oil Initially In Place ("STOIIP") volumes estimated for the overall Upper Portland Sandstone conventional reservoir in the Horse Hill-1 ("HH-1") and Collendean Farm-1 ("CF-1")structure ("Horse Hill"), in the PEDL137 licence area (Surrey-West Sussex, Weald Basin). This revised STOIIP is separate to the oil-in-place volumes estimated for the argillaceous limestones and mudstones of the Kimmeridge, Oxford and Lias rock sections of the HH-1 well, as reported on 9 April 2015 and 15 April 2015. The Company has a net attributable interest of 20.358% in PEDL137.
An independent study of the Portland Sandstone reservoir was conducted by Xodus Group ("Xodus"), an international energy consultancy based in the UK (see www.xodusgroup.com). The study is based on new petrophysical evaluations of both the HH-1 discovery and the older Collendean Farm-1 ("CF-1") well plus an updated interpretation of 2D seismic data across the Licence. The study report is available on UKOG's website (see www.ukogplc.com).
The HH-1 and CF-1 discoveries lie within an approximately 100-foot thick, Upper Portland sandstone gross reservoir interval, within a 6km by 3km tilted fault block structure as defined by 2D seismic. The crest of the Upper Portland conventional oil discovery lies at approximately 1,760ft TVDSS, and extends over a mapped maximum areal closure of approximately 2,000 acres. The Upper Portland reservoir is productive at the nearby Brockham field, some 9km NNW, in which the Company has an indirect interest of 3.6%.
Xodus calculate that the Upper Portland Sandstone conventional reservoir contains a "Best Estimate" (P50) gross STOIIP of 21.0 MMbbl, which is slightly more than UKOG's own revised latest estimate of 20.0 MMbbl, and which is entirely within PEDL137 and encompasses both the HH-1 and CF-1 wells. This is an increase of 12.8 MMbbl over the 8.2 MMbbl (P50) gross STOIIP reported on 17 December 2014, which results largely from the new petrophysical evaluation of HH-1 electric logs, calibrated to new XRD and MICP data, and a new interpretation of the CF-1 electric logs, calibrated to core data.
The gross Upper Portland STOIIP ranges estimated by Xodus are as per the table below:
STOIIP (MMbbl) | Low | Best | High | Mean |
Upper Portland Gross 100% | 14.3 | 21.0 | 30.4 | 21.8 |
The oil in place hydrocarbon volumes (STOIIP) estimated should not be construed as recoverable resources or reserves. Meaningful estimates of recoverable oil within the Upper Portland can likely only be made following the proposed HH-1 flow test and a significant proportion will not be recovered during any future production regime.
The Upper Portland is the uppermost, conventional oil-saturated reservoir found in the HH-1 and CF-1 wells. It overlies, and is entirely separate from, the Kimmeridge, Oxford and Lias oil-saturated argillaceous limestone and mudstone rock sections reported on 9 April 2015 and 15 April 2015.
The Xodus study is an independent review, solely of the Upper Portland sandstone trap-constrained conventional oil reservoir. It does not include any assessment of the deeper Kimmeridge, Oxford and Lias oil-saturated argillaceous limestone and mudstone rock sections, which are currently the subject of a separate review by Nutech Ltd.
Reporting Standards:
Xodus' STOIIP volumes have been prepared in accordance with the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE), reviewed, and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE).
Xodus state in their Executive Summary that; "In conducting this review Xodus has utilised information and interpretations supplied by UKOG, comprising operator information, geological, geophysical, petrophysical, well logs and other data along with various technical reports. Xodus has reviewed the information provided and modified assumptions where it considered this to be appropriate. Site visits were not considered necessary for the purposes of this report."
Stephen Sanderson, UKOG's CEO, commented:
"The Xodus Report supports the Company's view that the Horse Hill and Collendean Farm oil pool constitutes a significant conventional Upper Portland Sandstone oil discovery in the Weald basin."
Subject to approval by the relevant authorities, the Company intends to flow test this conventional sandstone zone as part of a wider test programme of the HH-1 well later in 2015. A successful test would be followed by a full technical resource assessment, and the identification of potentially recoverable resource volumes.
Subject to these results, the Company is informed that the operator, Horse Hill Developments Ltd, intends to engage with the Oil and Gas Authority ("OGA") and other regulators, and seek to move the PEDL137 licence into the Production Period as soon as practicable, via submission of a Field Development Plan to the OGA. The PEDL137 licence is currently in the exploration phase and expires on 30 September 2015. HHDL has applied for a one-year extension of the exploration phase to 30 September 2016.
UKOG's interest in Horse Hill:
The Horse Hill-1 well is located within onshore exploration License PEDL137, on the northern side of the Weald Basin near Gatwick Airport. UKOG owns a 30% direct interest in Horse Hill Developments Ltd ("HHDL") and a 1.32% interest in HHDL via its 6% interest in Angus Energy Limited. HHDL is a special purpose company that owns 65% participating interests and is the operator of licence PEDL137 and the adjacent licence PEDL246 in the UK Weald Basin. The remaining 35% participating interests in the PEDL137 and PEDL246 licenses are held by Magellan Petroleum Corporation.
Qualified Person's Statement:
Stephen Sanderson, UKOG's CEO, who has over 30 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
David Lenigas / Donald Strang Tel: 020 7440 0640
WH Ireland (Nominated Adviser and Broker)
James Joyce / Mark Leonard Tel: 020 7220 1666
Square 1 Consulting (Public Relations)
David Bick / Mark Longson Tel: 020 7929 5599
Glossary:
argillaceous limestone | a limestone containing a significant proportion of clay minerals |
clastic | rocks composed of broken pieces of older rocks |
core | a cylindrical sample of rock, obtained during drilling of wells and removed for inspection at surface |
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 logs | tools used within the wellbore to measure the rock and fluid properties of surrounding rock formations |
fault block | a very large subsurface block of rock, created by tectonic and localised stresses |
limestone | a carbonate sedimentary rock predominantly composed of calcite 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 |
MICP | mercury injection capillary pressure, a measure of rock porosity and permeability, from rock cores or cuttings, and a calibration of porosity logs |
MMbbl | Million barrels |
mudstone | an extremely fine-grained sedimentary rock consisting of a mixture of clay and silt-sized particles |
oil in place or oil initially-in-place | the quantity of oil or petroleum that is estimated to exist originally in naturally occurring accumulations before any extraction or production |
petrophysical evaluation | the study of physical and chemical rock properties and their interactions with fluids; studies typically use well logs, well cores and seismic data |
P10 | a 10% probability that a stated volume will be equalled or exceeded |
P50 | a 50% probability that a stated volume will be equalled or exceeded |
P90 | a 90% probability that a stated volume will be equalled or exceeded |
recovery or recoverable | the quantity or portion of petroleum, here oil and gas, initially-in-place that can be extracted by a well or wells to the surface |
resources | the Society of Petroleum engineers ("SPE") defines as all quantities of petroleum, here oil and gas, which are estimated to be initially-in-place; however, some users consider only the estimated recoverable portion to constitute a resource. |
reserves | reserves are defined by the SPE as those quantities of petroleum, here oil and gas, which are anticipated to be commercially recovered from known accumulations from a given date forward. |
reservoir | a subsurface rock formation containing an individual natural accumulation of moveable petroleum that is confined by impermeable rock/formations |
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 |
seismic | use of reflected and refracted sound waves generated at the surface to ascertain the nature of the subsurface geological structures. 2D seismic records a two dimensional cross-section through the subsurface collected using the two-dimensional common depth point method |
STOIIP | stock tank oil initially in place |
TVDSS | true vertical depth below a subsea datum |
XRD | x-ray diffraction; scattering of x-rays by the atoms of a rock or crystal that gives information on the structure, composition and identity of the rock or crystal |