TIDMUKOG
RNS Number : 7435X
UK Oil & Gas PLC
23 December 2019
UK Oil & Gas PLC
("UKOG" or the "Company")
Horse Hill Oil Field: HH-1 and HH-2z Extended Well Test ("EWT")
Update
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce
the successful completion of the first phase of open hole EWT and
associated well clean-up at its Horse Hill-2z ("HH-2z") horizontal
well, in which the Company has an 85.635% net controlling interest.
During the initial clean-up phase, HH-2z achieved initial rates of
up to 1,087 barrels of fluids per day and oil cuts of up to 60%,
demonstrating the horizontal's ability to flow at rates
significantly greater than the HH-1 vertical well. Produced oil,
brought to surface via an electronic submersible pump or "ESP", has
been exported to Perenco's Hamble oil terminal for onward sale at
market price.
HH-2z is currently shut-in for a scheduled long duration
pressure build-up test ("PBU"), during which time preparations will
be finalised for a series of planned interventions to further
optimise flow rates from the Portland reservoir's sweet-spot.
Whilst HH-2z continued to clean-up prior to the current shut-in,
returning oil, completion and drilling fluids to surface, evidence
of formation water ingress was also recorded. Consequently, an
additional routine intervention is planned to shut-off the water
source, currently interpreted to be from an open natural fracture
in the "toe" (or far end) of the horizontal trajectory. During the
"long-term production" phase, which will follow after the EWT,
formation water will likely be reinjected to maintain reservoir
pressure and to minimise water disposal costs.
The HH-2z interventions are planned to commence in the New Year
following completion of the ongoing HH-2z PBU and will be reported
in due course.
Downhole pressure gauges also confirmed that HH-2z penetrated a
near virgin pressure section of the Portland oil pool. This finding
has likely positive implications for the magnitude of connected oil
in place and recoverable reserves seen by the field's two wells.
Determining the oil volume connected to HH-2z remains a key EWT
objective.
Immediately following the current HH-2z shut-in, flow lines were
reconnected to HH-1 and dry Kimmeridge oil flow was resumed on 18
December at an initial half-hourly rate of 354 barrels of oil per
day ("bopd") with an average daily rate of 301 bopd.
A further test spread will now be connected to permit EWT
production from both HH-1 and HH-2z.
Furthermore, upon establishment of stable oil flow from HH-2z, a
short HH-1 intervention is also planned to further optimise both
Kimmeridge and Portland test production from the vertical
wellbore.
A field development plan ("FDP") was also submitted to the Oil
and Gas Authority, seeking consent for the field's planned first
"long-term production" phase which will follow the conclusion of
the EWT. This phase will consist of two producing wells, HH-1 and
HH-2z. Subsequent phases, involving further infill production wells
and a possible water reinjection well, are planned to be submitted
as FDP addenda in the coming year once longer-term well behaviour
is more comprehensively understood.
UKOG holds a controlling 85.635% interest in the Horse Hill oil
field and surrounding highly prospective PEDL137 and PEDL246
licences, which are operated by UKOG's subsidiary company, Horse
Hill Developments Ltd.
Stephen Sanderson, UKOG's Chief Executive, commented:
"Although it's still early days in the EWT campaign, we are very
encouraged by the magnitude of the initial flow rates. These
confirm that HH-2z's horizontal trajectory can deliver flow rates
from the Portland sweet-spot that significantly exceed those
delivered by the HH-1 vertical discovery well.
Our team's efforts are now firmly focused upon the routine
elimination of water ingress and the continued optimisation of
HH-2z's near-wellbore, both of which are designed to ensure HH-2z
can deliver the best possible stable oil production rates over the
coming year.
Whilst there is still much to be done, these early results,
together with the timely submission of the FDP to the OGA, mean we
are well on the way to delivering significant production at Horse
Hill."
Qualified Person's Statement
Matt Cartwright, UKOG's Commercial Director, who has over 36
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
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
long-term stable oil production over the life of the well
production and or field during the 25 year Prodcution phase
of the licence. The establishment of such production
is subject to the OGA's consent of the Field Development
Plan
----------------------------------------------------------
oil field an accumulation, pool or group of pools of oil
in the subsurface that produces oil to surface
----------------------------------------------------------
well test or flow 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 volumes.
----------------------------------------------------------
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
---------------------- ---------- -------------- -------------- -------------- ---------------------
Horse Horse Production
Hill Hill tests ongoing,
Horse Hill Developments Developments HH-2/2z drilling
(5) PEDL137 85.635% Ltd Ltd 99.3 completed
---------------------- ---------- -------------- -------------- -------------- ---------------------
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 Godshill
Wight (Onshore) 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. Portland and Kimmeridge Oil field with productive and
commercially viable zones, EWT ongoing, production planning consent
granted in September 2019, appraisal/development drilling campaign
completed. Long term production start expected late 2019.
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
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
MSCBCBDDUSDBGCD
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