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UK Oil & Gas Inv PLC (UKOG)

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Tuesday 04 April, 2017

UK Oil & Gas Inv PLC

OGA Extends Retention Area Periods for Horse Hill

RNS Number : 4581B
UK Oil & Gas Investments PLC
04 April 2017
 

UK Oil & Gas Investments PLC

 

("UKOG" or the "Company")

 

OGA Agrees Work Programme and Extends Retention Area Periods for Horse Hill Licences, Weald Basin, SE UK

 

UK Oil & Gas Investments PLC (London AIM & NEX: UKOG) announces that it has been informed by the operator, Horse Hill Developments Ltd ("HHDL"), that the Oil and Gas Authority ("OGA") has consented to extend the current PEDL137 and PEDL246 Retention Areas ("RAs") until 2021. The PEDL137 and PEDL246 RAs, which cover the entirety of the licences, will now expire on 30th September and 30th June 2021, respectively. The Company holds a 31.2% net interest in the licences via its 48% ownership of the licence's operator HHDL.

The RA work programmes, now agreed with OGA, comprise; the planned Horse Hill-1 ("HH-1") Kimmeridge and Portland production tests, HH-1z Kimmeridge Limestone ("KL") and HH-2 Portland appraisal wells, 50 km² of 3D seismic, 25 km of 2D seismic and a PEDL246 exploration step-out well. The RAs for each licence can be further extended or modified subject to an ongoing minimum work programme agreed by the OGA.

Stephen Sanderson, UKOG's Executive Chairman, commented:

 

"The revised RA expiry dates ensure that the knowledge gained from the Company's forthcoming extensive 2017 Broadford Bridge, Horse Hill and Holmwood drilling and test campaign, can be fully incorporated into future Kimmeridge Limestone step-out wells in PEDL246 and PEDL137. 2017 is set to become a pivotal year for the Company."

 

HH-1 Oil Discovery (UKOG interest 31.2%)

 

The HH-1 Kimmeridge Limestone and Portland oil discovery well is located within onshore exploration Licence PEDL137, on the northern side of the Weald Basin, 3 km north of Gatwick Airport. As previously reported in February and March 2016, two naturally-fractured limestone members within the Kimmeridge section, known as KL3 and KL4, flowed dry, 40-degree API oil, at an aggregate stabilised natural flow rate of 1,365 barrels per day ("bopd") with no clear indication of depletion. The overlying Portland flowed dry, 35-degree API gravity oil at a stable pumped rate of 323 bopd. The Portland oil was produced at the rod-pump's maximum achievable rate and thus flow was constrained by the pump's mechanical capacity.

As previously reported in October 2016 and February 2017, an application for long term production testing and further appraisal drilling was submitted to Surrey County Council in October 2016, and is now scheduled to be decided at the Council's planning committee meeting in July 2017. The Company therefore envisages that these operations will commence in the second half of 2017 upon grant of the necessary remaining regulatory permissions.

Broadford Bridge-1 Exploration well (UKOG interest 100%)

 

The Broadford Bridge-1 ("BB-1"), planned to commence in Q2 2017, will be a deviated or "slant" well, drilled to a true-vertical depth of approximately 1,300 metres. The well is designed to penetrate four naturally-fractured Kimmeridge Limestone reservoirs (KL1-KL4) on the southern flank of the Weald Basin, within a mirror-image of the Horse Hill fault block. The Kimmeridge section is planned to be drilled at an angle of approximately 50 degrees to vertical and approximately orthogonal to the predicted direction of open natural fractures within the Kimmeridge Limestones.

 

Operations will include the acquisition of an extensive coring, electric log and borehole imaging data set to provide further key information on the limestone reservoirs and natural fracturing. All pre-drill tenders have been received and a drilling rig chosen. The civil construction works necessary to commence drilling have been completed. Planning permission to drill the well was granted by West Sussex County Council in 2013 and includes the ability to flow test the well for up to 14 weeks.

 

The well will use safe, tried and tested conventional oil field techniques, approved by the Environment Agency and Health and Safety Directorate, and as used at Horse Hill in Surrey in 2014 and 2016 and by 84 legacy wells. As previously reported in March 2017, BB-1 will be drilled utilising a British manufactured, natural, biodegradable drilling fluid. This zero-hazard drilling fluid (or "mud") will ensure that there can be zero contamination of any groundwater via the drilling process.

The drilling fluid, also used by water well drilling companies in the UK, is registered with the Centre for Environment, Fisheries and Aquaculture Science (CEFAS). It is also the only drilling fluid to be formally approved by the Department for the Environment, Food and Rural Affairs for use in drilling wells for public water supply.

Holmwood-1 Exploration Well (UKOG interest 30%)

 

The Holmwood-1 well, scheduled to be drilled in the second half of 2017, is located in PEDL143, approximately 8 km to the west of HH-1. The well is designed to test a further geological look-alike of Horse Hill with reservoir objectives in the Portland, Kimmeridge Limestones and Corallian.

Qualified Person's Statement

 

Stephen Sanderson, UKOG's Executive Chairman, who has over 35 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

Stephen Sanderson / Kiran Morzaria                                                      Tel: 020 7440 0640

 

WH Ireland (Nominated Adviser and Broker)

James Joyce / James Bavister                                                                     Tel: 020 7220 1666

 

Cenkos Securities PLC (Joint Broker)

Nick Tulloch / Neil McDonald                                                                     Tel: 0131 220 6939

 

Square 1 Consulting (Public Relations)

Brian Alexander / David Bick                                                                      Tel: 020 7929 5599

 

Glossary:

degree API

a measure of the density of crude oil, as defined by the American Petroleum Institute

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

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

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. Chalk is a form of fine-grained limestone

Retention Area ("RA")

An area covering all or part of an onshore UK "14th Round New Model" Licence that can be retained until the expiry date without any relinquishment and subject to a work programme agreed by the OGA. Usually, as in the case of PEDL137 and PEDL246, the Retention Area covers the entire Licenced area

seismic

use of reflected and refracted sound waves generated at the surface to ascertain the nature of subsurface geological structure.  2D seismic records a two-dimensional cross-section through the subsurface collected using the two-dimensional common mid-point method. 3D seismic records a three-dimensional image through the subsurface using the common depth-point method.

step-out well

a well designed to determine the lateral extent of a discovered hydrocarbon accumulation or play

 

UKOG Licence Interests

 

The Company has interests in the following UK licences:

Asset

Licence

UKOG's Interest

Licence Holder

Operator

Area (km2)

Status

Avington 1

PEDL070

5%

UKOG (GB) Limited

IGas Energy Plc

18.3

Field in stable production

Baxters Copse 2

PEDL233

50%

UKOG Weald Limited

IGas Energy Plc

89.6

appraisal/development well planned; licence extended to 2018

Broadford Bridge 3

PEDL234

100%

Kimmeridge Oil & Gas Limited 4

Kimmeridge Oil & Gas Limited 4

300.0

BB-1 well permitted, drilling planned in 2017

Brockham

PL235

1.11%

Angus Energy 6

Angus Energy 6

8.9

Well intervention programme ongoing

Holmwood 3

PEDL143

30%

UKOG

Europa Oil & Gas (Holdings) plc

91.8

Holmwood-1 exploration well planned in 2017

Horndean 1

PL211

10%

UKOG (GB) Limited

IGas Energy Plc

27.3

Field in stable production

Horse Hill 5

PEDL137

31.2%

Horse Hill Developments Ltd 7

Horse Hill Developments Ltd 7

99.3

Submitted planning application for long term production tests and drilling of two wells

Horse Hill 5

PEDL246

31.2%

Horse Hill Developments Ltd 7

Horse Hill Developments Ltd 7

43.6

As above

Isle of Wight (Offshore) 3

P1916

100%

UKOG Solent Limited

UKOG Solent Limited

46.7

Preparing drilling planning submission

Isle of Wight (Onshore) 2, 3

PEDL331

65%

UKOG

TBA

200.0

Preparing drilling planning submission

Lidsey

PL241

0.85%

Angus Energy 6

Angus Energy 6

5.3

Drilling of infill well being considered

Markwells Wood 2

PEDL126

100%

UKOG (GB) Limited

UKOG (GB) Limited

11.2

Submitted planning application for appraisal and field development

 

Notes:

1. Oil field currently in production.

2. Oil discovery pending development and/or appraisal drilling.

3. Exploration asset with drillable prospects and leads. Contains the extension of the Godley Bridge Portland gas discovery and the site of the forthcoming Broadford Bridge-1 well.

4. UKOG has a 100% interest in Kimmeridge Oil & Gas Limited, which has a 100% interest in PEDL234.

5. Oil discovery with recently completed flow testing.

6. UKOG has a 1.71% interest in Angus Energy, which has a 50% interest in Lidsey and a 65% interest in Brockham; Angus hold an option to increase their Lidsey interest by a further 10% to 60%.

7. UKOG has a direct 48% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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