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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