REG - UK Oil & Gas PLC - Horndean Field Resource Report by D&M

UK Oil & GasAnnouncement

23/03/2023 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230323:nRSW9344Ta&default-theme=true

RNS Number : 9344T  UK Oil & Gas PLC  23 March 2023

UK Oil & Gas Plc

("UKOG" or the "Company")

 

 Horndean Field Resource Report by D&M

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that a new
Competent Person's Report ("CPR") has been completed on the Horndean field
(UKOG 10% non-operated interest) by Dallas, Texas based DeGolyer &
MacNaughton ("D&M"), a globally recognised oil & gas reserve
estimation and valuations consultancy. The CPR's findings are summarised in
Tables 1 and 2 below.

Highlights:

·    D&M completes CPR illustrating the present value of UKOG's 10%
non-operated share of the Horndean oil field, located 10 miles north of
Portsmouth, Hampshire.

 

·    179,300 barrels aggregate net UKOG 2P reserves + 2C contingent
resources.

 

·    £287,000 UKOG net share of oil sales revenues in 2022.

 

·    Installation of new power-efficient surface pumps underway, expected
to improve production rates and lower operating costs, potentially increasing
profitability in 2023.

 

·    The CPR's estimates of reserves and contingent resources are
summarised in Tables 1 and 2 below.

 

Table 1: Horndean CPR Reserves Valuation

 Case: D&M forward oil price        Full Field (100%)       UKOG Net (10%)
 PRMS Reserves                      1P      2P      3P      1P     2P     3P
 Recoverable oil (million barrels)  0.86    1.00    1.17    0.09   0.10   0.12

 

Table 2: Horndean CPR Contingent Resources Valuation

 Case: D&M forward oil price        Full Field (100%)       UKOG Net (10%)
 PRMS Contingent Resources          1C      2C      3C      1C     2C     3C
 Recoverable oil (million barrels)  0.3     0.8     1.3     0.03   0.08   0.13

 

The CPR was prepared in accordance with the requirements and standards of the
Petroleum Resources Management System ("PRMS") of the Society of Petroleum
Engineers and the sections of the CPR relevant to Horndean will be available
on UKOG's website (www.ukogplc.com (http://www.ukogplc.com) ).

As of 31 December 2022, UKOG's 10% share of mid case 2P Reserves in the
Horndean field is assessed at 99,500 barrels, with its share of mid case 2C
Contingent Resources estimated at 79,800 barrels, an aggregate total of
179,300 UKOG net.

In 2022, UKOG's net share of Horndean production revenues was £287,000, with
net earnings after costs of £136,000.

Total gross field production in 2022 averaged 101 barrels of oil per day
despite significant well servicing work on three of the four production wells.
New replacement surface pumps are now being installed and, consequently, it is
expected that this will lead to increased production rates, lower electrical
power consumption and a corresponding increase in 2023 field earnings. The
operator, IGas plc, expects production rates to return to around 108 barrels
of oil per day (gross) in 2023 when the new pumps are online.

Stephen Sanderson UKOG's Chief Executive commented:

 

"Although UKOG has a modest interest in Horndean, the CPR amply demonstrates
that it continues to provide valuable earnings for the Company. We concur with
the operator that the new pump upgrade should improve production rates, lower
operating costs and, if oil prices remain around their current levels,
potentially make Horndean more profitable than in 2022."

 

Qualified Person's Statement

 

Matt Cartwright, UKOG's Commercial Director, who has 40 years of relevant
experience in the global 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 / Allen D Howard                          Tel: 01483 941493

        WH Ireland Ltd (Nominated Adviser and Broker)
        James Joyce / James Bavister / Andrew de Andrade            Tel: 020 7220 1666

        Communications
        Brian Alexander                                             Tel: 01483 941493

 

Glossary of Terms

 1C          the low-case estimate of Contingent Resources. There is estimated to be a 90%
             probability that the quantities actually recovered could equal or exceed this
             estimate, i.e., P90 case
 2C          the mid-case or average estimate of Contingent Resources. There is estimated
             to be a 50% probability that the quantities actually recovered could equal or
             exceed this estimate, i.e., P50 case
 3C          the high-case of Contingent Resources. There is estimated to be a 10%
             probability that the quantities actually recovered could equal or exceed this
             estimate, i.e., P10 case
 CPR         Competent Person's Report, a Petroleum Resources report prepared by an
             independent Competent Person(s), providing an estimated range of remaining
             recoverable resources and their potential monetary valuation in accordance
             with the relevant reporting standard, in this case PRMS. This CPR has not been
             prepared under the AIM rules for oil & gas companies
 Contingent  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
 Resources   considered mature enough for commercial development due to one or more
             contingencies. Contingent Resources are further categorised in accordance with
             the level of certainty associated with the estimates and may be sub-classified
             based on project maturity and/or characterised by their economic status
 Field       A discovered and producing petroleum accumulation located within an area
             consisting of a single petroleum reservoir or multiple reservoirs all grouped
             on, or related to, the same individual geological structural feature and/or
             stratigraphic condition.
 1P          the low-case estimate of Reserves. There is estimated to be a 90% probability
             that the quantities actually recovered could equal or exceed this estimate,
             i.e., P90 case
 2P          the mid-case or average estimate of Reserves. There is estimated to be a 50%
             probability that the quantities actually recovered could equal or exceed this
             estimate, i.e., P50 case
 3P          the high-case estimate of Reserves. There is estimated to be a 10% probability
             that the quantities actually recovered could equal or exceed this estimate,
             i.e., P10 case
 PRMS        Petroleum Resources Management System created by the Society of Petroleum
             Engineers. A global standard of petroleum reserve and resource classification
             together with guidelines and accepted methodologies for the definition and
             estimation of petroleum resources and their monetary valuation
 Reserves    those quantities of petroleum anticipated to be commercially recoverable by
             application of development projects to known accumulations from a given date
             forward under defined conditions. Reserves must satisfy four criteria:
             discovered, recoverable, commercial and remaining (as of the evaluation's
             effective date) based on the development project(s) applied. Reserves are
             further categorised in accordance with the level of certainty associated with
             the estimates and may be sub-classified based on project maturity and/or
             characterised by development and production status.

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

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 (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCSEIEEEEDSEID