TIDMUKOG
RNS Number : 9998L
UK Oil & Gas PLC
11 September 2019
UK Oil & Gas PLC
("UKOG" or the "Company")
Horse Hill Oil Field Granted Long-term Production Consent by
Surrey County Council
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce
that, earlier today, Surrey County Council's ("SCC") Planning and
Regulatory Committee granted full planning consent for long-term
oil production at the Company's flagship Horse Hill oil field near
Gatwick Airport. Following yesterday's acquisition of Tellurian's
35% stake in Horse Hill, the Company now holds a significant and
controlling 85.635% interest in the field and the highly
prospective surrounding PEDL137 and PEDL246 licences. The field is
operated by the Company's subsidiary, Horse Hill Developments Ltd
(HHDL), in which it holds a 77.9% controlling interest.
Planning Consent Summary
The planning consent gives permission to produce oil over a
period of 25 years at up to 3,500 barrels of oil per day from a
total of six wells within the Portland and Kimmeridge oil pools,
including the existing Horse Hill-1 ("HH-1") and the forthcoming
HH-2/2z horizontal well. Consent also includes permission to drill
one water reinjection well to help maximise oil recovery. All
existing and future wells will be drilled from within the existing
20 x 15 metre concrete pad. No further drilling sites beyond Horse
Hill are required.
What Does the Consent Mean to UKOG and Horse Hill?
Critically, this consent means that the field's immediate oil
production from HH-1 and HH-2/2z will no longer be limited to
existing extended well test planning consents. The ability to
produce over the field's economic lifespan also enables the
transfer of current and future assigned recoverable resource
volumes into the category of Reserves, which, by definition,
conveys with more certainty that a known volume of petroleum can be
produced commercially over a given time.
The commercial certainty associated with the allocation of
Reserves at Horse Hill is therefore a critical step necessary to
help facilitate the potential use of debt-based funding for field
development and other Company working capital requirements. It is
planned to commission a new Competent Persons Report to establish
the Company's net Reserves following completion of HH-2z production
testing in the Autumn.
The permission also enables the Company to finalise its Field
Development Plan and submit it to the Oil and Gas Authority ("OGA")
for the necessary regulatory and technical consent. Meetings in
this respect have been scheduled with OGA in the coming weeks.
The field's environmental permit application, covering the four
new wells and production activities, was submitted to the
Environment Agency ("EA") in January and is under review. Drilling
of the four new production and reinjection wells will require the
usual drilling regulatory consents from the HSE and OGA.
Forward Operational Plans at Horse Hill
The first new horizontal production well, Horse Hill-2/2z
("HH-2/2z"), designed to produce at rates potentially of up to 2-3
times the rate of the vertical HH-1 well, is scheduled to start
drilling before the end of this month, with a further new Portland
production well and Portland water reinjection well planned to
follow upon completion of production testing in early 2020. During
HH-2/2z drilling, the Kimmeridge oil pool will continue to be
production tested to provide further key technical data and
associated sales revenues to partially offset drilling and testing
costs. Planning approval also exists to sidetrack the HH-1 well
horizontally into either the Kimmeridge or Portland oil pools.
Stephen Sanderson, UKOG's Chief Executive, commented:
"This landmark milestone, perhaps the most significant event at
Horse Hill since the HH-1 oil discovery, paves the way for the
Company to realise the full value of future long-term production
from the Horse Hill oil field, our flagship asset. It is also a key
enabler that will help us achieve our goal of long-term oil
production and related cash flow by year end.
The decision's timing fits hand in glove with yesterday's
completion of the acquisition of Tellurian's 35% interest in Horse
Hill. It fully justifies the price paid to boost our share of oil
sales revenues, net Reserves and recoverable resources by over
69%.
Now that we are firmly in control of the forward Horse Hill
drilling programme and development schedule, the Company is well
placed to deliver its stated goals. We look forward to maintaining
the considerable forward momentum of the past weeks during the
forthcoming simultaneous drilling and production testing
campaign."
Qualified Person's Statement
Matt Cartwright, UKOG's Commercial Director, who has over 35
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 / Kiran Morzaria Tel: 01483 900582
WH Ireland Ltd (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 Tel: 01483 900582
Glossary
flow test or well or production 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 and to assess the volume
of oil in the ground accessed by the well
horizontal a well that during drilling is steered so as to
well follow and remain within a particular geological
stratum or reservoir unit having a trajectory that
runs approximately parallel to the top and or base
of the target horizon
---------------------------------------------------------
oil field an accumulation, pool or group of pools of oil
in the subsurface that produces oil to surface
---------------------------------------------------------
Probable Reserves or 2P, denotes the best estimate scenario of Reserves
---------------------------------------------------------
Proven Reserves or 1P, denotes the low estimate scenario of Reserves
---------------------------------------------------------
recovery factor the recoverable volume of oil expressed as a percentage
of the oil in place or in the ground before extraction
---------------------------------------------------------
recoverable those quantities of petroleum (i.e. oil or gas)
resources/volumes estimated, as of a given date, to be potentially
recoverable to surface from known accumulations
---------------------------------------------------------
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
further satisfy four criteria: they must be discovered,
recoverable, commercial, and remaining (as of the
evaluation date) based on the development project(s)
applied. Reserves are further categorised in accordance
with the level of certainty associated with the
estimates (i.e. Proven, Probable and Possible)
and may be sub-classified based on project maturity
and/or characterised by development and production
status
---------------------------------------------------------
UKOG Licence Interests
The Company has interests in the following UK licences:
Asset Licence UKOG Licence Operator Area (km(2) ) Status
Interest Holder
UKOG IGas Field currently
Avington (GB) Energy temporarily
(1) PEDL070 5% Limited Plc 18.3 shut in
---------------------- ---------- -------------- -------------- -------------- ---------------------
BB-1/1z oil
discovery,
Broadford Loxley-1 gas
Bridge/Loxley/Godley appraisal
Bridge UKOG UKOG well planning
(2, 3, (234) (234) application
8) PEDL234 100% Ltd (4) Ltd (4) 300.0 submitted
---------------------- ---------- -------------- -------------- -------------- ---------------------
Finalising
new site selection
to drill Portland
UKOG and Kimmeridge
A24 (3) PEDL143 67.5% UKOG (7) 91.8 prospects
---------------------- ---------- -------------- -------------- -------------- ---------------------
UKOG IGas
Horndean (GB) Energy Field in stable
(1) PL211 10% Limited Plc 27.3 production
---------------------- ---------- -------------- -------------- -------------- ---------------------
Production
tests ongoing,
Horse Horse two further
Hill Hill appraisal
Horse Hill Developments Developments wells scheduled
(5) PEDL137 85.635% Ltd Ltd 99.3 for 2019
---------------------- ---------- -------------- -------------- -------------- ---------------------
Horse Horse
Hill Hill
Horse Hill Developments Developments
(5) PEDL246 85.635% Ltd Ltd 43.6 As above
---------------------- ---------- -------------- -------------- -------------- ---------------------
Preparing
planning submission
for Arreton-3
oil appraisal
Isle of well and Arreton
Wight (Onshore) South exploration
(2, 3) PEDL331 95% UKOG UKOG 200.0 well
---------------------- ---------- -------------- -------------- -------------- ---------------------
UKOG UKOG
Markwells (GB) (GB)
Wood PEDL126 100% Limited Limited 11.2 MW-1 P&A
---------------------- ---------- -------------- -------------- -------------- ---------------------
Notes:
1. Oil field currently in stable production.
2. Oil discovery pending development and/or appraisal
drilling.
3. Exploration asset with drillable prospects and leads.
4. Contains the Broadford Bridge-1/1z Kimmeridge oil discovery,
the eastern extension of the Godley Bridge Portland gas discovery
plus further undrilled Kimmeridge exploration prospects.
5. Oil field with three productive and commercially viable
zones, EWT ongoing, further drilling campaign scheduled and
development underway.
6. UKOG has a direct 77.9% interest in HHDL, which has a 65%
interest in PEDL137 and PEDL246.
7. OGA consent received for the transfer of operatorship from
Europa to UKOG
8. Gas discovery pending appraisal drilling and development with
underlying Kimmeridge potential
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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END
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