TIDMUKOG
RNS Number : 0573V
UK Oil & Gas Investments PLC
18 July 2018
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Portland Extended Flow Test ("EWT"): Well Clean-Up Phase
Complete, Dry Oil Flows to Surface,
Horse Hill-1 Oil Discovery, PEDL137, Weald Basin, UK
Highlights:
-- Initial Portland well "clean-up" phase completed successfully
-- Light sweet crude oil (36 API) and associated solution gas
flowed sustainably via pump and natural flow to surface over a
4-day period to date. Oil contains no metered water content (i.e.
"dry oil")
-- Metered daily oil rates to date equal to or exceed 2016
values. Highest observed hourly rate equivalent to an implied daily
rate of 352 barrels of oil per day ("bopd"). Corresponding metered
solution gas volumes are up to an implied rate of 30,000 cu ft per
day.
-- Flow has not yet been optimised for maximum sustainable flow rates
-- First tanker containing 214 barrels of dry oil exported to BP's Hamble oil terminal
-- Initial analysis indicates well productivity unaffected by 2 year shut-in period since 2016
-- Following a planned 24-hour shut in (i.e. pressure build-up
test) the first of three planned Portland test sequences will
commence
UK Oil & Gas Investments PLC (London AIM: UKOG) is pleased
to announce that it has been informed by Horse Hill Developments
Ltd ("HHDL"), the operator of the Horse Hill-1 ("HH-1") Kimmeridge
and Portland oil discovery, in which UKOG holds a 32.435%
beneficial interest along with licence PEDL137, that the initial
well "clean-up" phase of the Portland extended well test ("EWT")
programme has been completed according to plan. Over the past four
days, the well has delivered a sustained dry oil and solution gas
flow to surface via pump and natural flow.
Observed metered Portland flow rates to date are broadly
equivalent to, or exceed, those recorded during the short duration
2016 test. The highest recorded hourly metered rate to date,
equates to an implied daily rate of 352 bopd and was achieved using
a 20/64" choke, a notably more restricted setting than the 64/64"
choke used in 2016. Corresponding solution gas flows have been
measured up to an implied rate of 30,000 cubic feet per day. Note
that, to date, flow has not yet been optimised for maximum
sustainable production rates, this will follow in the subsequent
test sequences.
Several periods of sustained natural flow (i.e. flow to surface
without pumping) have also been observed over the past few days,
with the most productive period producing an implied daily dry oil
rate of 228 bopd over a two-hour period.
Initial reservoir parameter analysis indicates that the Portland
is performing very well compared to the productivity measured in
2016 prior to temporarily shutting in and suspending the well.
To date a total of 463 barrels of light sweet 36 API crude have
been recovered to surface during the clean-up period, together with
all 141 barrels of completion and kill fluids (i.e. saline water)
used to suspend the well after the 2016 well test.
Forward EWT Plans
The well will now be shut in for a planned 24-hour pressure
build-up test. Operations will then include further flow parameter
optimisation, followed by the first of three planned flow sequences
designed to assess whether the Portland oil pool contains a
commercially viable volume of oil. The first test sequence will
likely include an optimised maximum rate test, prior to choking
back the well to provide the steady state flow conditions necessary
to determine the Portland oil pool's connected oil volume. Note
that in order to collect the required data during these steady
state flow periods, rates will likely be below any future optimised
production rates.
Testing of each of the Kimmeridge Limestone 4 ("KL4") and KL3
oil pools will follow completion of the Portland test sequence.
Stephen Sanderson, UKOG's Executive Chairman and Chief
Executive, commented:
"Test results to date have exceeded our initial expectations
given the length of time the well was shut-in since 2016. Although
we are in the very early stages of our 150-day test campaign at
Horse Hill, the signs to date are extremely positive for the
Portland oil pool. The unexpected bonus of natural oil flow to the
surface, without the use of a pump, gives us cause for further
optimism regarding the Portland's overall commercial potential. It
is important at this stage, however, to keep our expectations at a
realistic level.
The Company looks forward to further positive results from the
remaining Portland test sequences and then the testing of the two
deeper and higher productivity Kimmeridge Limestone oil pools.
Further updates will be made throughout the test campaign."
Extended Well Test ("EWT") Overview
As the 2016 short flow test campaign established commercially
viable initial flow rates for each of the Portland, KL4 and KL3
zones, the 2018 EWT's prime goal is to confirm that the wellbore is
connected to a commercially viable oil volume within one or more of
the three zones.
The long-term reservoir performance data is also expected to
provide the necessary data to enable, for the first time, Petroleum
Resources Management System compliant Kimmeridge and Portland
reserve figures to be estimated at Horse Hill.
Each test sequence will include a short, optimised rate test,
together with a sequence of "choked back" (i.e. reduced)
steady-state flow periods necessary to obtain the data required to
determine the connected oil volume within each zone. A series of
associated long pressure build up tests are also planned. Oil
produced from the EWT will be sold on the "spot" oil market and any
revenues will be utilised to offset overall testing costs.
Qualified Person's Statement
Stephen Sanderson, UKOG's Executive Chairman and Chief
Executive, 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: 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
Public Relations
Brian Alexander / David Bick Tel: 01483 243450
UKOG Licence Interests
The Company has interests in the following UK licences:
Asset Licence UKOG's Licence Operator Area Status
Interest Holder (km(2)
)
Avington UKOG (GB) IGas Energy Field currently
(1) PEDL070 5% Limited Plc 18.3 shut in
----------------- ---------- -------------- ------------------ -------- -----------------------
Kimmeridge Kimmeridge BB-1 & 1z completed,
Broadford Oil & Gas Oil & Gas preparing two
Bridge Limited Limited further planning
(3) PEDL234 100% (4) (4) 300.0 applications
----------------- ---------- -------------- ------------------ -------- -----------------------
Europa Oil Holmwood-1 exploration
Holmwood & Gas (Holdings) well planned
(3) PEDL143 40% UKOG plc 91.8 in 2018
----------------- ---------- -------------- ------------------ -------- -----------------------
Horndean UKOG (GB) IGas Energy Field in stable
(1) PL211 10% Limited Plc 27.3 production
----------------- ---------- -------------- ------------------ -------- -----------------------
Production tests
Horse Hill Horse Hill and further appraisal
Horse Hill Developments Developments well(s) scheduled
(5) PEDL137 32.435% Ltd Ltd 99.3 for 2018
----------------- ---------- -------------- ------------------ -------- -----------------------
Horse Hill Horse Hill
Horse Hill Developments Developments
(5) PEDL246 32.435% Ltd Ltd 43.6 As above
----------------- ---------- -------------- ------------------ -------- -----------------------
Preparing Arreton-3
Isle of oil discovery
Wight (Onshore) appraisal well
(2, 3) PEDL331 65% UKOG UKOG 200.0 planning submission
----------------- ---------- -------------- ------------------ -------- -----------------------
Revised drilling
Markwells UKOG (GB) UKOG (GB) and testing planning
Wood (2) PEDL126 100% Limited Limited 11.2 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
discovery well, the extension of the Godley Bridge Portland gas
discovery plus further exploration
prospects.
4. UKOG has a 100% interest in Kimmeridge Oil & Gas Limited,
which has a 100% interest in PEDL234.
5. Oil discovery with successful flow test in 3 zones, further
long-term testing scheduled in 2018
6. UKOG has a direct 49.9% 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.
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 or visit www.rns.com.
END
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