TIDMUKOG

RNS Number : 8408L

UK Oil & Gas PLC

15 January 2021

The following amendment has been made to the "Formal government consent granted for Turkish Resan Licence acquisition" announcement released on 15/01/2021 at 07:00am under RNS No 8331L:

An updated Resan presentation is available on the Company's website:

https://www.ukogplc.com/ul/UKOGTurkey140121.pdf

All other details remain unchanged.

The full amended text is shown below.

UK Oil & Gas PLC

("UKOG" or the "Company")

Formal government consent granted for Turkish Resan Licence acquisition

UK Oil & Gas PLC (London AIM: UKOG) is delighted to announce that the Company's wholly owned subsidiary, UKOG Turkey Ltd, has received notice that formal government consent for the Company's acquisition of a 50% interest in the 305 km(2) Basur-Resan oil appraisal and exploration licence, ("Licence"), has now been granted via official decree. Forthwith, together with the operator, Aladdin Middle East Ltd ("AME"), the Company is a named party to the Licence, officially designated as AR/AME/K/M47-b1, b2.

As per the Company's 14 October 2020 announcement, the board views the Licence's forthcoming 2021 appraisal drilling programme, aimed initially at proving the commerciality of the Basur-Resan oil discovery, to present a compelling and potentially transformational growth opportunity for the Company.

Highlights:

-- Basur-Resan oil discovery ("Discovery") contains an estimated mean case discovered recoverable oil volume of 37 million barrels ("mmbbl") gross and 18.5 mmbbl UKOG net 50% interest (i.e., the average case estimated volume that could be produced to surface).

-- Rapid monetisation of the Discovery's success case is possible within a year in Turkey, plus drilling and operating costs are significantly lower than the UK.

An updated Resan presentation is available on the Company's website: https://www.ukogplc.com/ul/UKOGTurkey140121.pdf

Stephen Sanderson UKOG's Chief Executive commented:

"It is now evident that, in the success case, the Basur-Resan appraisal project has the potential to surpass the recoverable oil and gas volumes currently assigned by Xodus to our material UK Arreton and Loxley appraisal projects. It also has the advantage of lower drilling and operating costs and, facilitated by Turkish petroleum law, the possibility to rapidly monetise the success case within a year. For these reasons success could be transformational for the Company.

Along with further optimising Horse Hill and pursuing a Loxley planning appeal, the Company will now focus its efforts in the first half of 2021 towards the design and delivery of the Basur-3 appraisal well. We also look forward to hearing the outcome of our December Turkish new licence application, which could add further similar sized potential into our growing portfolio."

Basur-Resan: a potentially material discovered and undeveloped oil resource

As previously reported on 23 July and 14 October 2020, the Licence contains the aerially extensive and as yet undeveloped Discovery, along with two other undrilled exploration prospects.

As at UKOG's material Loxley discovery, the Discovery was successfully tested at its north western end via the 1964 Basur-1 discovery well, which flowed 500 bbl of oil to surface over a 6-hour period from naturally fractured and dolomitised Mardin limestones, an extrapolated rate equivalent to 2,000 bbl of oil per day.

As per the Company's 14 October RNS, Xodus' June 2020 report estimates the Discovery to contain material aggregate gross mean and high case discovered recoverable volumes (i.e., the estimated volumes that could be produced to surface) of 37.2 mmbbl and 67 mmbbl respectively, with UKOG's corresponding 50% net share being 18.6 mmbbl and 33.5 mmbbl.

The table below illustrates that the Discovery's estimated mean recoverable volumes are also significantly larger than those estimated for UKOG's other UK appraisal assets (see UKOG 2018 CPR and Loxley RNS 01 October 2020):

 
      UKOG Appraisal Projects: Xodus mean case discovered recoverable 
                                oil volumes 
                      Basur-Resan     Arreton Portland    Loxley Portland 
                     mmbbl (50% WI)    mmbbl (95% WI)     mmboe* (100% WI) 
                   ----------------  -----------------  ------------------ 
 Gross discovery          37                2.7                 7.1 
                   ----------------  -----------------  ------------------ 
 UKOG Net                18.5               2.6                 5.5 
                   ----------------  -----------------  ------------------ 
 

Notes: * 6.1 billion ft(3) = 1 mmbbl oil equivalent or mmboe Net = PEDL234 only, Gross = PEDL 234 + PEDL235

Rapid success case monetisation possible - months versus years in UK

As previously stated on 14 October, AME's nearby East Sadak field was discovered and put into production in the same year, 2014, and has seen a total of 10 wells drilled to date. Unlike the UK, which requires numerous planning and regulatory steps before production can commence, Turkish petroleum law Article 6 (10) states that licensees are obliged to develop the field and commence production following a discovery. E. Sadak thus demonstrates that licensees are able to transition a successful well test directly into long-term production with minimal delay.

Significantly lower cost operations than UK

Based upon AME's actual costs at nearby E. Sadak, gross Basur-3 well and flow test costs are estimated by AME at $3 million (c. GBP2.4 million), lower than the c. $7.5 million (c. GBP6 million) drilling and testing costs of UKOG's similar depth HH-2 well. General manpower, service and administration costs are also below those in the UK.

Qualified Person's Statement

Matt Cartwright, UKOG's Commercial Director, who has 37 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 941493 
  WH Ireland Ltd (Nominated Adviser 
   and Broker) 
  James Joyce / James Sinclair-Ford    Tel: 020 7220 1666 
  Communications 
  Brian Alexander                      Tel: 01483 941493 
 
 
 

Glossary

 
 discovery             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 
 dolomite/dolomit      a crystalline form of calcium carbonate or 
  i sed                 lime. The geological process of turning the 
                        more common calcite crystalline form of calcium 
                        carbonate into dolomite increases the pore 
                        space in the rock by approximately 13% thus 
                        improving the rocks ability to store oil and 
                        improve potential oil flow 
                      ------------------------------------------------------ 
 gross                 100% share 
                      ------------------------------------------------------ 
 high case             or P10, a 10% probability respectively, that 
                        a stated volume will be equalled or exceeded 
                      ------------------------------------------------------ 
 limestone             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 
                      ------------------------------------------------------ 
 mean                  the expected or average outcome of a defined 
                        probability distribution, in this case the 
                        calculated distribution of recoverable volumes 
                      ------------------------------------------------------ 
 naturally fractured   fractured reservoirs contain naturally occurring 
  reservoirs            cracks or fissures within the rock; fractures 
                        can significantly enhance the permeability 
                        of rocks by connecting pores together and enabling 
                        more storage of oil or gas and permitting greater 
                        flow capability; naturally fractured reservoirs 
                        have been created over geological time by nature, 
                        not man-made via hydraulic fracturing 
                      ------------------------------------------------------ 
 net                   UKOG's 50% Resan licence interest share 
                      ------------------------------------------------------ 
 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 
                      ------------------------------------------------------ 
 recoverable volumes   those quantities of petroleum estimated, as 
  or resources          of a given date, to be potentially recoverable 
                        from known accumulations, but the applied project(s) 
                        are not yet considered mature enough for commercial 
                        development due to one or more contingencies. 
                        Resources are further categorised in accordance 
                        with the level of certainty associated with 
                        the estimates and may be sub-classified based 
                        on project maturity and/or characterised by 
                        their economic status. 
                      ------------------------------------------------------ 
 

UKOG Licence Interests

The Company has interests in the following UK and international licences:

 
Asset            Licence      UKOG      Licence Holder      Operator      Area          Status 
                             Interest                                      (km 
                                                                           (2) 
                                                                            ) 
Avington                                  UKOG (GB)       IGas Energy             Field temporarily 
 (1)             PEDL070       5%           Limited            Plc        18.3          shut in 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
Loxley                                                                              Loxley/Godley 
 & Broadford                                                                          Bridge gas 
 Bridge                                                                               discovery, 
 (2, 3,                                   UKOG (234)       UKOG (234)                 BB-1/1z oil 
 7)              PEDL234      100%          Ltd (4)          Ltd (4)      300          discovery 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
Horndean                                  UKOG (GB)       IGas Energy              Field in stable 
 (1)              PL211        10%          Limited            Plc        27.3        production 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
                                          Horse Hill       Horse Hill 
Horse                                    Developments     Developments             Field in stable 
 Hill (1)(,)     PEDL137     85.635%          Ltd              Ltd        99.3        production 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
                                          Horse Hill       Horse Hill 
Horse                                    Developments     Developments             Field in stable 
 Hill (1)(,)     PEDL246     85.635%          Ltd              Ltd        43.6        production 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
                                                                                 Planning application 
                                                                                       submitted 
Isle                                                                                  for Arreton 
 of Wight                                                                            oil appraisal 
 (2, 3)          PEDL331       95%           UKOG             UKOG        200            well 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
                                                                                      Appraisal 
                                                                                    of Basur-Resan 
                                                                                     oil discovery 
Resan                                                                                plus further 
 Turkey                                                                            expl. prospects. 
 (2, 3,         M-47-b1,                 UKOG Turkey     Aladdin Middle            Drilling planned 
 8)                 b2         50%            Ltd             East        305           in 2021 
-------------              ----------  ---------------  ---------------  -----  --------------------- 
 

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 Loxley Portland gas accumulation, the Broadford Bridge-1/1z Kimmeridge oil discovery, plus further undrilled Kimmeridge exploration prospects.

5. Portland and Kimmeridge oil field with productive and commercially viable zones, HH-1 in stable oil production, production planning consent granted in September 2019, long-term production consent granted in March 2020.

   6.   UKOG has a direct 77.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246. 
   7.   Gas discovery pending appraisal drilling and development with underlying Kimmeridge potential 

8. High-impact oil appraisal project with an upside OIP range of 150-500 mmbbl gross with expected recovery factors of 10-20% of OIP

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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January 15, 2021 03:44 ET (08:44 GMT)

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