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UK Oil & Gas Investments PLC Operational Update and Warrant Exercise

31/07/2017 6:05pm

UK Regulatory (RNS & others)


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TIDMUKOG

RNS Number : 6585M

UK Oil & Gas Investments PLC

31 July 2017

UK Oil & Gas Investments PLC

("UKOG" or the "Company")

Operational Update and Warrant Exercise

All Approvals for a Rig-less Flow Test in Place,

Broadford Bridge-1 Exploration Well, Weald Basin, UK

Highlights

-- All flow test regulatory permissions now in place following review by the Health and Safety Executive ("HSE"). Work continues to "complete" the well as a potential oil producer to be followed by a rig-less flow-test, encompassing multiple Kimmeridge zones over a total aggregate perforated section of 926 ft.

-- Preliminary log interpretations indicate that the extensively naturally-fractured Kimmeridge section is oil bearing from around 3,800 ft to below 5,640 ft measured depth ("MD") a vertical section of around 1,330 ft. This observation is in accord with the mobile light oil recovered to surface in cores and recovered from drilling fluid, together with wet gas shows.

-- An application to extend the exploration/testing phase for a further year to 15 September 2018 has been submitted to West Sussex County Council ("WSCC") with a decision expected in September 2017.

UK Oil & Gas Investments PLC (London AIM and ISDX: UKOG) announces that as the HSE have consented to the revised and expanded flow test programme, all necessary regulatory permits are now in place to commence flow testing at its 100% owned Broadford Bridge-1 ("BB-1") exploration well located in licence PEDL234. Operations at site continue to prepare and complete BB-1 as a potential oil producing well from multiple zones over a gross perforated interval of 926 feet. Flow testing will commence after the rig has vacated the site.

Specialists at Premier Oilfield Laboratories ("POL") and Nutech, both located in Houston, USA, have examined electric logs from BB-1 and their preliminary evaluations calculate that the Kimmeridge is oil bearing from around 3,800 ft to below 5,640 ft MD. These results accord with core data, drilling data and observed oil and wet gas shows. They extend the gross possible vertical thickness of the Kimmeridge Continuous Oil Deposit to around 1,330 ft. Final log evaluation results integrating core and rock cutting measurement and fluid data will be reported in due course.

The flow test programme is specifically designed to gather further supportive evidence that the Kimmeridge contains a continuous oil deposit, with mobile light oil and which can flow to surface at commercial rates and in commercial volumes.

The Company has submitted an application to WSCC to extend the current BB-1 exploration and testing phase planning permission for a further year. The extension will enable a fully comprehensive extended flow test programme to be conducted. A decision from the WSCC Planning Committee is expected in September 2017.

About BB-1

BB-1, an exploration step-out, is located south of Billingshurst, West Sussex, within the 300 km(2) PEDL234 licence, in which the Company has a 100% interest via its ownership of the licence's operator, Kimmeridge Oil & Gas Limited ("KOGL").

As previously reported, in the Company's opinion, the multiple positive indications of mobile light oil observed throughout the entire naturally fractured Kimmeridge Limestone 0 ("KL0") to KL4 and shale target section are supportive that a significant continuous oil deposit, with a vertical extent of around 1,330 ft has been demonstrated at BB-1. The uppermost two units of this zone, KL4 and KL3, flowed oil at a stable aggregate rate of 1,365 barrels per day in the Horse Hill-1 discovery near Gatwick Airport in 2016.

This continuous oil deposit therefore likely underlies the entire PEDL234 licence and a significant area of the wider Weald Basin, including the Horse Hill-1 Kimmeridge oil discovery some 27 km to the north east. The Company has the largest licence holding in the Weald Basin and within the prospective area of the Kimmeridge play.

Other Business

The Company notes that SCDM Energy, the French owned oil and gas exploration and production company, has increased its holding in the Company to 174,954,179 ordinary voting shares, representing 5.03% of the issued share capital as of 25(th) July 2017.

The Company has also received notice of the exercise of warrants to subscribe for a total of 40,625,000 new ordinary shares in the Company (the "New Ordinary Shares"). The Company has received GBP325,000 in respect of this exercise. Application has been made for these New Ordinary Shares to be admitted to trading on AIM and it is anticipated that trading in such shares will commence on or around 4 August 2017.

Following Admission, the Company's enlarged issued share capital will comprise 3,520,759,100 ordinary shares. The Company does not hold any shares in treasury. This figure of 3,520,759,100 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Stephen Sanderson, UKOG's Executive Chairman, commented:

" Whilst the delivery and completion of the well as a potential oil-producer is not as swift a process as a simple rig-based drill stem test (or DST), this configuration is designed to provide significant future cost and potential test performance benefits. This is a sound investment in the future of BB-1 and is a key necessary step to help us achieve our corporate goal to establish first Kimmeridge production by the end of 2018/early 2019. Operations at BB-1 remain on track."

Qualified Person's Statement

Stephen Sanderson, UKOG's Executive Chairman, 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 Bavister                                                   Tel: 020 7220 1666 

Cenkos Securities PLC (Joint Broker)

   Nick Tulloch / Neil McDonald                                                   Tel: 0131 220 6939 

Square 1 Consulting (Public Relations)

Brian Alexander / David Bick Tel: 01483 243450 / 020 7929 5599

Glossary:

 
 casing                heavy gauge steel tubing designed 
                        to line the wall of a well. The 
                        casing provides a safe controlled 
                        space in which the drill pipe and 
                        bit can operate in isolation from 
                        conditions in overlying rock units. 
                        The steel tubing is bonded to the 
                        surrounding rock by impermeable 
                        concrete, known as "cement" 
--------------------  ------------------------------------------------ 
 core or coring        a drilling technique that involves 
                        using a doughnut-shaped drilling 
                        bit to capture or "cut" a continuous 
                        cylinder-shaped core of undamaged 
                        in-situ rock. The core is captured 
                        in a steel pipe or "core barrel" 
                        above the bit. Core is normally 
                        cut in 30 feet lengths, or multiples 
                        of 30 feet, and normally with a 
                        diameter of 3.5 or 4 inches. Core 
                        is taken in petroleum reservoir 
                        rocks for detailed laboratory analyses 
                        of petrophysical and geomechanical 
                        parameters 
--------------------  ------------------------------------------------ 
 completion            the process of making a well ready 
  or well completion    for production. This principally 
                        involves preparing the bottom of 
                        the hole to the required specifications, 
                        running in the production tubing 
                        and its associated down hole tools 
                        as well as perforating as required, 
                        together with the selection of 
                        the appropriate completion fluid 
                        contained in the well. The process 
                        of running in and cementing the 
                        casing can also be included in 
                        this category. 
--------------------  ------------------------------------------------ 
 continuous            a petroleum accumulation that is 
  oil deposit           pervasive throughout a large area, 
  or resource           which is not significantly affected 
  deposit               by hydrodynamic influences (i.e. 
                        the buoyancy of oil in water) and 
                        is not trapped by structural or 
                        stratigraphic geological conditions. 
                        The deposit, in contrast to conventional 
                        accumulations, has therefore not 
                        accumulated by the migration of 
                        petroleum over medium to long distances. 
                        The petroleum in such deposits 
                        is found within, or immediately 
                        adjacent or close to, the pore 
                        spaces where the petroleum is generated, 
                        i.e. those pore spaces lying within 
                        petroleum source rocks containing 
                        organic rich compounds (kerogen) 
                        that, when heated over geological 
                        time, transform into petroleum. 
                        These accumulations are generally 
                        associated with organic-rich shales 
                        such as the Kimmeridge Clay Formation. 
                        Such accumulations do not generally 
                        contain significant volumes of 
                        free, mobile formation water and 
                        therefore have no observable hydrocarbon-water 
                        contacts. The extent of the accumulation 
                        is generally defined by the limit 
                        of where burial depths have been 
                        sufficient to transform organic 
                        matter within the petroleum source 
                        rock unit into petroleum. 
--------------------  ------------------------------------------------ 
 discovery             a discovery is a 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 
--------------------  ------------------------------------------------ 
 electric logs          Tools which measure the electrical 
                         properties of the rock and fluids 
                         in and surrounding the wellbore 
                         to determine the petrophysical 
                         and geological properties of the 
                         rock in its in-situ state. The 
                         logging equipment is lowered into 
                         the borehole on a steel cable through 
                         which a wire conveys data to be 
                         recorded at surface. The logging 
                         at BB-1 also includes tools which 
                         record 3-dimensional images and 
                         ultrasound scans of the rock designed 
                         to map and characterise natural 
                         fractures, know as " image logs" 
--------------------  ------------------------------------------------ 
 limestone             a 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. 
                        Chalk is a form of fine-grained 
                        limestone 
--------------------  ------------------------------------------------ 
 lost circulation      a zone of highly porous and permeable 
  zone (LCZ)            rock or voids directly intersecting 
                        the wellbore into which drilling 
                        fluid can escape. Commonly LCZs 
                        occur in extensive open fracture 
                        networks, voids or vugs within 
                        limestones and highly porous and 
                        permeable sandstones 
--------------------  ------------------------------------------------ 
 naturally             a fractured reservoir contains 
  fractured             open and usually connected cracks 
  reservoir             or fissures within the rock matrix; 
                        fractures can enhance permeability 
                        of rocks greatly by connecting 
                        pore-spaces together; naturally 
                        fractured reservoirs have been 
                        created over geological time by 
                        nature, not man-made via hydraulic 
                        fracturing 
--------------------  ------------------------------------------------ 
 shale                 a fissile rock that is formed by 
                        the consolidation of clay, mud, 
                        or silt particles, and that has 
                        a finely stratified or laminated 
                        structure. Certain shales, such 
                        as those of the Kimmeridge Clay, 
                        often contain a significant proportion 
                        of organic material, which when 
                        subject to increasing temperature 
                        and pressure over geological time 
                        transform into petroleum (known 
                        as petroleum "source rocks") 
--------------------  ------------------------------------------------ 
 step-out well         a well specifically designed to 
                        determine the lateral extent of 
                        a discovered hydrocarbon accumulation 
                        or play 
--------------------  ------------------------------------------------ 
 wet gas               natural gas, predominantly consisting 
                        of methane (C1), ethane (C2) and 
                        propane (C3) but also containing 
                        the longer molecular chain natural 
                        gases butane and iso-butane (C4), 
                        pentane and iso-pentane (C5). The 
                        C4 and C5 gases are created during 
                        oil-generation within a petroleum 
                        source rock unit when oil is thermally 
                        cracked. At Horse Hill these natural 
                        gases lie in solution within the 
                        oil in the KL3 and KL4 Kimmeridge 
                        Limestone reservoirs (i.e. solution 
                        or associated gas and not as a 
                        separate free-gas phase). 
--------------------  ------------------------------------------------ 
 

UKOG Licence Interests

The Company has interests in the following ten UK licences:

 
Asset              Licence        UKOG's       Licence Holder      Operator      Area (km(2) )          Status 
                                 Interest 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
                                                 UKOG (GB)       IGas Energy                        Field in stable 
Avington (1)       PEDL070          5%            Limited            Plc             18.3             production 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
Baxters Copse      PEDL233         50%           UKOG Weald      IGas Energy         89.6        Appraisal/development 
(2)                                               Limited            Plc                         well planned; licence 
                                                                                                   extended to 2018 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
                                               Kimmeridge Oil   Kimmeridge Oil 
Broadford Bridge                               & Gas Limited    & Gas Limited                        BB-1 drilling 
 (3)               PEDL234         100%             (4)              (4)             300.0             underway 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
Holmwood (3)       PEDL143         30%              UKOG         Europa Oil &        91.8             Holmwood-1 
                                                                Gas (Holdings)                     exploration well 
                                                                     plc                            planned in 2017 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
                                                 UKOG (GB)       IGas Energy                        Field in stable 
Horndean (1)        PL211          10%            Limited            Plc             27.3             production 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
Horse Hill (5)     PEDL137       32.435%         Horse Hill       Horse Hill         99.3         Submitted planning 
                                                Developments     Developments                    application for long 
                                                    Ltd              Ltd                         term production tests 
                                                                                                  and drilling of two 
                                                                                                         wells 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
                                                 Horse Hill       Horse Hill 
                                                Developments     Developments 
Horse Hill (5)     PEDL246       32.435%            Ltd              Ltd             43.6              As above 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
Isle of Wight                                   UKOG Solent      UKOG Solent                      Preparing drilling 
 (Offshore) (3)     P1916          100%           Limited          Limited           46.7         planning submission 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
Isle of Wight 
 (Onshore) (2,                                                                                    Preparing drilling 
 3)                PEDL331         65%              UKOG             TBA             200.0        planning submission 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
Markwells Wood     PEDL126         100%          UKOG (GB)        UKOG (GB)          11.2         Submitted planning 
 (2)                                              Limited          Limited                          application for 
                                                                                                  appraisal and field 
                                                                                                      development 
----------------  ---------  ---------------  ---------------  ---------------  --------------  ---------------------- 
 

Notes:

1. Oil field currently in production.

2. Oil discovery pending development and/or appraisal drilling.

3. Exploration asset with drillable prospects and leads. Contains the extension of the Godley Bridge Portland gas discovery and the site of the forthcoming Broadford Bridge-1 well.

4. UKOG has a 100% interest in Kimmeridge Oil & Gas Limited, which has a 100% interest in PEDL234.

5. Oil discovery with recently completed flow testing.

6. UKOG has a direct 48% 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 company news service from the London Stock Exchange

END

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