UK Oil & Gas Investments PLC Update - Broadford Bridge-1 (6560L)

TIDMUKOG

RNS Number : 6560L

UK Oil & Gas Investments PLC

20 July 2017

20 July 2017

UK Oil & Gas Investments PLC

("UKOG" or the "Company")

Further Kimmeridge Oil Reservoir Zone Identified,

Broadford Bridge-1 Exploration Well, Weald Basin, UK

Highlights

-- Preliminary image log interpretations reveal a further, highly naturally-fractured Kimmeridge shale and limestone reservoir zone, designated "KL0", from 5,508-5,640 ft measured depth ("MD"). Fractures on image logs coincide with lost circulation zones, oil in mud and wet gas shows.

-- Gross possible Kimmeridge fractured oil-bearing zone increased by 132 ft to 1,622 ft MD, a true vertical section of around 1,200 ft; spans five entire naturally fractured Kimmeridge Limestone and shale zones (KL0-KL4) from 4,018-5,640 ft MD. Zone may extend further upwards into fractured zones above 3,800 ft MD.

-- Schlumberger electric logging and fracture imaging completed, cement plug in deeper Corallian sandstone set and 7-inch steel casing currently being run in the hole. Flow testing of multiple zones over an aggregate 900 ft total perforated section to commence following setting of remaining 7-inch steel casing to TD and well completion.

UK Oil & Gas Investments PLC (London AIM and ISDX: UKOG) announces that third party specialists at P-Ten (UK), and Premier Oilfield Laboratories ("POL"), USA, have examined image logs and 13 cores from its 100% owned Broadford Bridge-1 ("BB-1") exploration well located in licence PEDL234. They report extensive natural fracturing throughout the entire Kimmeridge section, including a previously unidentified potential oil bearing fracture-zone below the lowest Kimmeridge Limestone, KL1. This new reservoir zone, designated as KL0, is intensely fractured and spans the interval 5,508-5,640 ft MD. These results accord with drilling data, observed oil and wet gas shows and extend the gross possible vertical thickness of the Kimmeridge Continuous Oil Deposit to around 1,200 ft. Further fractured zones were recorded on image logs above KL4 between 3,800-4,018 ft MD.

The Company is currently mobilising equipment to perforate and flow test a total combined 900 ft of the Kimmeridge section, beginning with the deepest reservoir zones. Permissions from the Oil and Gas Authority, Environmental Authority and West Sussex County Council are in place, final consent from the Health and Safety Executive is expected in due course.

The flow test programme is specifically designed to gather further supportive evidence that the Kimmeridge contains a Continuous Oil Deposit containing mobile light oil and which can flow to surface at commercial rates and in commercial volumes. Further updates on flow testing, set to commence following completion of 7-inch casing and well completion, will be provided in due course.

Schlumberger's comprehensive electric logging and fracture-imaging programme has now been successfully executed. This includes the first use in the Weald and Kimmeridge section of Schlumberger's Lithoscanner tool, used for elemental and total organic carbon analysis in shales and limestones.

Detailed log interpretations, calibrated to the 554 ft of BB-1 core data, are ongoing at COREX in Aberdeen, and at POL and Nutech in Houston, Texas. Further log interpretation updates and results will be announced in due course.

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 KL0-KL4 limestone and shale target section is supportive that a significant Continuous Oil Deposit, with a vertical extent of around 1,200 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 1,365 barrels per day in the HH-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.

Stephen Sanderson, UKOG's Executive Chairman, commented:

"BB-1, UKOG's new flagship asset, continues to provide a stream of data and ground-breaking technical insights into what we believe is a new and potentially highly significant oil resource. This comprehensive and extensive data set is a sound investment into the future of BB-1 and our corporate goal to establish first Kimmeridge production by the end of 2018/early 2019.

With the technical data from drilling, core and logs continuing to provide mutually supportive evidence of "proof of geological concept", we will now move on very shortly, via a comprehensive extended flow testing programme, to test the concept that oil can flow to surface from the KL0-KL4 at commercial rates and volumes, the litmus test for any oil company.

Whilst there is always uncertainty in any new well and testing outcome, the technical results from BB-1 to date continue to remain both positive and most encouraging."

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: [phone] 

WH Ireland (Nominated Adviser and Broker)

   James Joyce / James Bavister                                                   Tel: [phone] 

Cenkos Securities PLC (Joint Broker)

   Nick Tulloch / Neil McDonald                                                   Tel: [phone] 

Square 1 Consulting (Public Relations)

Brian Alexander / David Bick Tel: [phone]

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 oil         a petroleum accumulation that is pervasive 
  deposit or resource    throughout a large area, which is not significantly 
  deposit                affected 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 rock 
  zone (LCZ)             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 fractured    a fractured reservoir contains open and usually 
  reservoir              connected cracks 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

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July 20, 2017 08:03 ET (12:03 GMT)