REG - UK Oil & Gas PLC - Turkey operational update

UK Oil & GasAnnouncement

30/06/2022 07:15

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RNS Number : 7334Q  UK Oil & Gas PLC  30 June 2022

UK Oil & Gas PLC

("UKOG" or the "Company")

 

Turkey operational update

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has
been advised by Aladdin Middle East ("AME"), the operator of the Company's 50%
interest in the Resan Licence, that their field crew has discovered a live,
light, 41.7˚API oil seep in an unused seismic drill-hole (drilled during this
year's seismic programme), approximately 4 km north of the recent Basur-3
("B-3") location.

 

The seep's API gravity is close to the 43˚ API gravity of AME's nearby
producing East Sadak oil field and provides evidence of an active light oil
petroleum system in the central area of the licence, lying to the north of the
joint venture's ("JV") focus on appraising the Basur-1 oil discovery. This has
positive implications for future exploration in the licence.

 

The oil was discovered when inspecting unused drilled seismic dynamite shot
holes for potential future use. Oil was initially recovered on successive days
from a sandstone layer at approximately 4m from surface using a bailer on a
cable. Two new drill holes located 8m to the east and west were completed
several days later and also recovered light oil to surface from the same
depth. Videos of the oil recovery will be placed on the Company's website.

 

Oil samples have now gone for analysis in Türkiye and the UK. The JV is also
evaluating the potential acquisition of a new seismic line over the seep to
help determine if the oil could be derived from a deeper subsurface oil
accumulation.

 

Drilling and seismic update:

 

Interpretation of the new 2D seismic programme has now been completed and
demonstrates that the Basur closure, within which in 1964 Basur-1 ("B-1") is
reported to have recovered 500 barrels of light 35˚API oil to surface over a
6-hour period, looks to extend much further to the west than originally
mapped, with a possible culmination up to 200m shallower than at B-1. The new
seismic also clearly demonstrates the presence of a major backthrust fault to
the south of Basur-3 ("B-3"), something not evident on the original legacy
seismic. This interpretation helps explain why the reservoir section was not
encountered in the B-3 well.

 

It was always UKOG's view that, due to the uncertainty of fault placements
near B-3, if a well were not targeted to directly intersect the reservoir in
the vicinity of the B-1 subsurface location, the possibility of coming in
lower than prognosis remained a material risk. This is why the Company
insisted on a B-3S sidetrack contingency as part of the B-3 operation.

 

Consideration is, therefore, being given by the JV to the acquisition of a
small infill phase 2 seismic programme, designed  to define a further Basur
drilling location up-dip and to the northwest of B-1 and B-3. This location
would be designed to offer the ability to test the Garzan and Mardin
reservoirs within the Basur structure via a less complex vertical well, a
potentially lower risk lower cost option than the envisaged B-3 sidetrack
("B-3S").

 

Whilst B-3S still remains a solid and low geological risk option, the new
seismic clearly indicates that it would require a longer and higher angle
trajectory than previously envisaged, involving drilling through the major
backthrust fault at a high angle within potentially heavily fractured
limestone rocks. This situation potentially adds to the risks of losing mud
circulation and becoming stuck in hole. Whilst this can be mitigated against
by detailed operational planning and the correct rig and equipment choices, it
could increase the drilling risk, complexity and cost.

 

Analysis of further geological information obtained from legacy wells in the
Resan area indicated that, whilst oil shows were encountered at similar levels
to B-1, questions arose as to reservoir quality and the increased chance of
fractures acting as conduits for underlying formation water ingress.
Consequently, at this time, plans for a vertical Resan-6 ("R-6") well have
been put on hold and the partnership will focus on the Basur area, where oil
has flowed to surface at reported good rates.

 

Consequently, the JV will carefully consider its next step in the Resan
Licence to ensure it maximises its chances for a successful outcome.

 

The Company's new depth map plus a pre and post drill seismic line through the
B-1 and B-3 location will be made available on its web site.

 

Stephen Sanderson, UKOG's Chief Executive commented:

 

"The discovery of the light oil seep is positive and encouraging as it
confirms the prospectivity of the central area of the licence to the north of
the Basur oil discovery. The new seismic acquisition has also proved its worth
in helping to explain the B-3 drilling result and to demonstrate that the B-1
discovery could extend further west and significantly further updip than
previously recognised. Careful consideration will now be given to further
seismic acquisition combined with plans to drill both B-3S and a new updip B-4
well. "

 

Qualified Person's Statement

 

Matt Cartwright, UKOG's Commercial Director, who has 39 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 / Matt Gormley / Allen D Howard     Tel: 01483 941493

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

 Communications
 Brian Alexander                                       Tel: 01483 941493

 

Glossary of Terms:

 

 °API       A measure of the density of crude oil, as defined by the American Petroleum
            Institute
 bbl        Barrels
 bopd       Barrels of oil per day
 discovery  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
 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.
 prospect   A project associated with a potential accumulation that is sufficiently well
            defined to represent a viable drilling target
 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
 sidetrack  Re-entry of a well from the well's surface location with drilling equipment
            for the purpose of deviating from the existing well bore to achieve production
            or well data from an alternative zone or bottom hole location, or to remedy an
            engineering problem encountered in the existing well bore.

 

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.

 

 

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