REG - Enwell Energy PLC - Ukrainian Operations Update

Enwell EnergyAnnouncement

29/11/2021 07:00

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RNS Number : 7990T  Enwell Energy PLC  29 November 2021

29 November 2021

 

Enwell Energy plc
("Enwell" or the "Company")

 

Ukrainian Operations Update

 

Enwell Energy plc (AIM: ENW), the AIM-quoted oil and gas exploration and
production group, provides an update on operations at its
Mekhediviska-Golotvshinska (MEX-GOL) and Svyrydivske (SV) gas and condensate
fields and its Svystunivsko-Chervonolutskyi (SC) exploration licence in
Ukraine.

 

At the SV field, testing operations on the SV-29 development well were delayed
for a period due to local shortages of materials required in the operations,
but supplies have now improved and progress has been made with the initial
testing of the well. The well was spudded in February 2021 and drilled to a
final depth of 5,450 metres. The primary target of the well was the V-22
reservoir within the Visean formation, and to date, one interval within this
reservoir, at a drilled depth of 5,246 - 5,249 metres, has been perforated.
Testing of this interval is underway using a variety of choke sizes, and
initial results are promising, with gas flows and an unexpectedly high, but
somewhat variable, proportion of condensate. The higher than anticipated
condensate rates have required that the testing procedures be modified, such
that a longer period of initial testing of this interval will be required.
 Once completed, it is intended to perforate and test a further interval, at
a drilled depth of 5,228 - 5,232 metres, in the V-22 reservoir. Thereafter,
the well will be run through the gas processing facilities to allow
longer-term production testing to be conducted in order to optimise the
operating parameters of the well. The well was also appraising the V-21 and
V-23 horizons, and within these horizons, there were indications of
hydrocarbons based on well logs which warrant further investigation in due
course.

 

Drilling of the SV-31 well at the SV field is ongoing, with the well having
reached a depth of approximately 4,489 metres. This well was spudded in
September 2021, and has a target depth of 5,250 metres. The well is a
development well, targeting production from the V-21 and V-22 reservoirs in
the Visean formation, which have demonstrated good productivity in an existing
nearby well. Drilling operations are scheduled to be completed by the end of
the first quarter of 2022, and, subject to successful testing, production
hook-up is scheduled during the second quarter of 2022.

 

In addition, the SV-2 well at the SV field has experienced water ingress and
consequently has been taken off production. A workover of this well is being
undertaken to investigate the cause of, and seek to remedy, the water ingress,
which is planned to include the replacement of the production string. However,
the well was drilled in the early 1980s, and so the condition of the equipment
in the well may be poor and require alternative work to remedy the water
ingress. This well is operated under a joint venture agreement with PJSC
Ukrnafta, the majority State-owned oil and gas producer, pursuant to which the
gas and condensate produced is sold under an equal net profit sharing
arrangement between the Company and PJSC Ukrnafta.

 

At the MEX field, the MEX-109 well has also experienced water ingress and as a
result has been taken off production. This well was drilled by the Company and
completed in 2017, and therefore technical information on the well is readily
available to the Company's technical team to assist with the investigation of
the cause of the water ingress. A workover of the well is underway, and
logging will be undertaken shortly to identify the source of the water
ingress, followed by appropriate remedial works.

 

The shut-in of the SV-2 and MEX-109 wells has impacted current production
rates and, depending on the duration of the requisite remedial works, will
potentially have a material impact on the Company's overall production volumes
for Q4 2021. However, continued high hydrocarbons sales prices will help to
offset the anticipated overall lower production volumes and the resultant
impact on revenues in Q4 2021.

 

At the SC licence, drilling of the SC-4 well is continuing, with the well
having reached a depth of approximately 4,613 metres. This well was spudded in
August 2021, and has a target depth of 5,565 metres. The well is primarily an
appraisal well, targeting production from the V-22 horizon, as well as
exploring the V-16 and V-21 horizons, in the Visean formation. Drilling
operations are scheduled to be completed in mid-2022.

 

Also at the SC licence, the acquisition of 150 km(2) of 3D seismic has
commenced, and is expected to be completed early in 2022, with processing and
interpretation of the acquired seismic data scheduled for completion in Q2
2022.

 

Finally, construction work on the upgrades to the gas processing facilities at
the MEX-GOL and SV fields is underway. In total, the upgrade works are
scheduled to take approximately three and a half months to complete. These
works involve an upgrade of the LPG extraction circuit, an increase to the
flow capacity of the facilities, and a significant increase to the liquids
tank storage capacity, which are designed to improve overall plant
efficiencies, improve the quality of liquids produced and boost recoveries of
LPG, while reducing environmental emissions.

 

Further updates on the progress of the abovementioned operational activities
will be made in due course as further information becomes available.

 

Sergii Glazunov, Chief Executive Officer, said: "We are pleased to finally
have some initial results from the SV-29 well, after the delays caused by the
supply constraints in Ukraine, and look forward to making further progress
with the testing of this well. We are also pleased with the good progress we
are making in the drilling of the SV-31 and SC-4 wells, the commencement of
the acquisition of 3D seismic at the SC licence and the initiation of the
construction works at the MEX-GOL and SV gas processing facilities. It is
unfortunate that both the SV-2 and MEX-109 wells have suffered water ingress
around the same time, but we have moved quicky to commence workover operations
on both wells and hope to remedy the issues encountered in the near future."

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, which forms part of United Kingdom domestic law by
virtue of the European Union (Withdrawal) Act 2018, as amended.

 

 

For further information, please contact:

 

 Enwell Energy plc                                 Tel: 020 3427 3550
 Chris Hopkinson, Chairman
 Sergii Glazunov, Chief Executive Officer
 Bruce Burrows, Finance Director

 Strand Hanson Limited                             Tel: 020 7409 3494
 Rory Murphy / Matthew Chandler

 Arden Partners plc                                Tel: 020 7614 5900
 Ruari McGirr / Elliot Mustoe (Corporate Finance)
 Simon Johnson (Corporate Broking)

 Citigate Dewe Rogerson                            Tel: 020 7638 9571
 Ellen Wilton

 

 

Dmitry Sazonenko, MSc Geology, MSc Petroleum Engineering, Member of AAPG, SPE
and EAGE, Director of the Company, has reviewed and approved the technical
information contained within this announcement in his capacity as a qualified
person, as required under the AIM Rules.

 

 

 Definitions

 km(2)  square kilometre
 LPG    liquefied petroleum gas

 

 

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