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UK Oil & Gas Investments PLC Update - Broadford Bridge-1

14/07/2017 4:11pm

UK Regulatory (RNS & others)


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RNS Number : 1664L

UK Oil & Gas Investments PLC

14 July 2017

14 July 2017

UK Oil & Gas Investments PLC

("UKOG" or the "Company")

UK Oil and Gas Authority Grants Approval for Extensive Flow Test Programme

Broadford Bridge-1 Exploration Well, Weald Basin, UK

UK Oil & Gas Investments PLC (London AIM and ISDX: UKOG) announces that the Oil and Gas Authority ("OGA") has granted final consent for the Company's forthcoming extended flow test programme at its 100% owned Broadford Bridge-1 ("BB-1") oil exploration well. As previously reported, given the multiple positive indications of oil-filled fractures throughout a vertical Kimmeridge section of more than 1100 vertical ft, the planned flow test programme has now been substantially increased. The programme will now test around 900 feet of naturally-fractured Kimmeridge section over multiple zones and is designed to establish if oil can flow at commercial rates and in commercial quantities from BB-1.

A comprehensive electric logging and fracture-imaging programme is now underway, the final two logging runs of which are scheduled to be run at the weekend. The Company will provide an update on preliminary log evaluation results in due course.

Flow-testing will follow directly after the completion of electric logging and the setting of 7-inch steel casing.

About BB-1

BB-1, an exploration step-out, is located near 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 KL1-KL4 limestone and shale target section is supportive that a significant continuous oil deposit, with a vertical extent in excess of 1100 feet has been demonstrated at BB-1. The uppermost two units of this zone, KL4 and KL3, flowed oil at a stable aggregate rate of 1365 barrels per day in the HH-1 discovery near Gatwick Airport.

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.

Stephen Sanderson, UKOG's Executive Chairman, commented:

"I am confident that the logging and testing results will add further weight to the "proof of concept" that BB-1 lies within a regionally extensive continuous Kimmeridge oil deposit. The thickness and vertical extent of this deposit would be of national significance.

More importantly, perhaps, the expanded testing programme will also determine whether BB-1 itself is commercially viable and provides the basis for the Company's first 100% owned Kimmeridge oil production site."

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 
-----------------  ------------------------------------------------ 
 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 
-----------------  ------------------------------------------------ 
 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        31.2%          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        31.2%             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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