REG - UK Oil & Gas PLC - EWT Update: Horse Hill-1

UK Oil & GasAnnouncement

10/10/2018 14:00

RNS Number : 6284D
UK Oil & Gas PLC
10 October 2018
 


UK Oil & Gas PLC
("UKOG" or the "Company")
 
Extended Well Test ("EWT") Update: Kimmeridge oil flows continuously to surface
Horse Hill-1 ("HH-1") Portland and Kimmeridge Oil Discovery, Weald Basin, UK
 
UK Oil & Gas PLC (London AIM: UKOG) announces that Horse Hill Developments Ltd ("HHDL"), a UKOG subsidiary company and the operator of the HH-1 Kimmeridge Limestone and conventional Portland Sandstone oil discovery, has informed the Company that the Kimmeridge Limestone 3 ("KL3") EWT programme has recorded sustained light, sweet, 40-41° API crude oil flow continuously and naturally to surface over the past 50 hours at sustained rates significantly exceeding those recorded during the KL3 short flow test programme in 2016. HH-1 is located in licence PEDL137 in which UKOG holds a 46.735% beneficial interest. Key EWT results to date are summarised below:
 
Key Points:
 
·     KL3 EWT flow sequence commenced ahead of planned KL4 test.
·     KL3 flowed 40-41° API continuously and naturally to surface (i.e. without any pump) over a 50  hour initial planned oil flow period. Oil flow initiated instantaneously with minimal pressure "draw-down". First planned 24-hour shut-in and pressure build-up test ("PBU") now underway.
·     Sustained continuous oil rates of between 563 and 771 barrels of oil per day ("bopd")  on 36/64 and  38/64 inch choke, respectively, recorded over last 24 hours through test separator. Gas rates up to 186,000 cu ft per day measured through enclosed flare. Flow sustained at constant stable bottom hole pressure.
·     Recorded sustained rates significantly exceed the 464 bopd over a short 7.5-hour total flow period reported in 2016.
·     Initial well productivity index of between 1.4 to 2.5 bpd/psi is around twice that seen in 2016 KL3 test.
·     To date four tankers of KL3 crude have been exported to Fawley refinery.
·     Zero  formation water produced. Metered associated water rates of 52 barrels per day ("bpd") decreasing to 14 bpd (i.e. 9% decreasing to 2%) in the past 24 hours. Produced water consists wholly of returned heavy completion brine. Well continues to "clean-up" with decreasing water content. 
·     Simultaneous pressure data recorded in overlying KL4 is indicative that KL3 and KL4 are one single connected oil pool with an implied minimum vertical extent of 358 ft.
·     Further updates to be provided in due course following completion of the ongoing PBU test, further well clean-up, flow stabilisation, downhole oil sampling and further pressure build up tests.
·     The KL4, which flowed at a reported rate of 901 bopd over a 4-hour period in 2016, will be flow tested after completion of the current KL3 EWT.
 
Stephen Sanderson, UKOG's Chief Executive, commented:
 
"I am delighted to have witnessed first-hand the resumption of significant continuous and sustained oil flow from the Kimmeridge at Horse Hill. Whilst it has been a long wait since the successful 2016 flow tests, it has been made more momentous by the Kimmeridge's significantly increased performance and productivity.
 
Whilst these are early days in the planned KL3 EWT sequence, with the well still "cleaning-up", the continuous and sustained high oil rates can only be seen as highly encouraging for the overall EWT objective of establishing the commerciality of the Kimmeridge. The Directors consider that these positive KL3 test results now make it increasingly likely that both the Kimmeridge and Portland oil pools are set to make Horse Hill one of the UK's leading onshore producing oil fields. Permanent production at Horse Hill is targeted in 2019. I look forward to the continuing news flow from the remainder of the KL3 test and the final KL4 EWT."
 
Qualified Person's Statement
 
Matt Cartwright, UKOG's Chief Operating Officer, who has over 35 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.
 
For further information, please contact:
 
UK Oil & Gas 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
 
Novum Securities (Joint Broker)                                                                                                              
John Bellis                                                                                                      Tel: 020 7399 9400
 
Public Relations
Brian Alexander / David Bick                                                                      Tel: 01483 243450
 
Glossary
 




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




draw down


the difference between the average static reservoir pressure and the flowing bottomhole pressure




extended well test


a flow test or 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 maximum




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




Productivity Index


A mathematical means of expressing the ability of a reservoir to deliver fluids to the wellbore. The PI is usually stated as the volume delivered per psi of drawdown at the sandface (bbl/d/psi).




 
UKOG Licence Interests
 
The Company has interests in the following UK licences:
 




Asset


Licence


UKOG Interest


Licence Holder


Operator


Area (km2)


Status




Avington 1


PEDL070


5%


UKOG (GB) Limited


IGas Energy Plc


18.3


Field currently shut in




Broadford Bridge 4


PEDL234


100%


UKOG (234) Ltd 4


UKOG (234) Ltd 4


300.0


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




Holmwood 3


PEDL143


40%


UKOG


Europa Oil & Gas (Holdings) plc


91.8


Seeking alternate sites to drill Holmwood and other Kimmeridge prospects




Horndean 1


PL211


10%


UKOG (GB) Limited


IGas Energy Plc


27.3


Field in stable production




Horse Hill 5


PEDL137


46.735%


Horse Hill Developments Ltd ⁶


Horse Hill Developments Ltd ⁶


99.3


Production tests ongoing, 2 further appraisal wells scheduled for 2018/19




Horse Hill 5


PEDL246


46.735%


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 planning submission  for Arreton-3 oil appraisal well and Arreton South exploration well 




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. PEDL234 contains the Broadford Bridge-1 and 1z

    oil discovery well, the extension of the Godley Bridge Portland gas discovery plus further exploration

     prospects.
4.  UKOG has a 100% interest in UKOG (234) Ltd, which has a 100% interest in PEDL234.
5.  Oil discovery in 3 zones, EWT ongoing, two further wells HH-1z and HH-2 planned in early 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




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