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UK Oil & Gas PLC Oil Production Update

15/03/2019 7:10am

UK Regulatory (RNS & others)


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TIDMUKOG

RNS Number : 9497S

UK Oil & Gas PLC

15 March 2019

UK Oil & Gas PLC

("UKOG" or the "Company")

Oil Production Update

Landmark 10,000 barrels of Portland oil reached at Horse Hill

UK Oil & Gas PLC (London AIM: UKOG), is pleased to announce that aggregate test production from the Portland reservoir at the Horse Hill oil field, in which the Company has a 50.635% majority interest, now exceeds 10,000 barrels ("bbl"). The continuous Portland dry oil flow (i.e. oil with zero water content), at a stable daily average rate of over 220 barrels per day ("bopd"), forms a key part of the schedule of works required to finalise the Portland field development plan and to the targeted establishment of permanent long-term Portland production by end 2019.

The Horse Hill-1 ("HH-1") well and surrounding highly prospective licences PEDL137 and PEDL246 are operated by UKOG's subsidiary Horse Hill Developments Ltd.

For prudent reservoir management purposes, the average test production rate from the Portland section has been maintained below the previously reported 362 bopd calculated optimised sustainable rate.

Rig tender documents have also been issued to contractors for the drilling of the HH-2 Portland and HH-1z Kimmeridge horizontal appraisal/production wells and for which planning and environmental permits are in place. Drilling is targeted to start in spring 2019.

HH-1 test production is planned to continue until the completion and testing of the new HH-2 Portland well.

Further details of extended well test ("EWT")results to date are summarised below.

Horse Hill 2018-19 EWT Oil Production Milestones:

   --     Over 35,000 barrels ("bbl") aggregate Kimmeridge and Portland oil production to date. 
   --    Over 25,000 bbl total Kimmeridge oil production. 
   --     Over 10,000 bbl total Portland production to date, flow continues. 

-- 165 tankers of crude exported primarily to Perenco's Hamble oil terminal. The Portland's 36deg API Brent quality crude containing zero produced water, continues to be sold at prevailing Brent crude oil prices, less a small deduction for handling and marketing.

Stephen Sanderson, UKOG's Chief Executive, commented:

"The Portland's continued excellent production performance, particularly from a non-optimised vertical well, provides building confidence that the previously reported 720-1,080 bopd horizontal well production targets are increasingly attainable. The recent rig-tender exercise also means we remain fully on track to begin the first horizontals in Spring, with long term production testing of both wells planned to follow directly afterwards. This programme puts UKOG in a strong position to deliver real growth and positive cash flow in the near future."

Qualified Person's Statement

Rob Wallace, UKOG's principal technical advisor, who has over 40 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Wallace is a Chartered Scientist, Chartered Geologist and Fellow of the Geological Society of London, an active member of the American Association of Petroleum Geologists, a member of the Petroleum Exploration Society of Great Britain and a member of the South African Geophysical Society.

For further information, please contact:

UKOG

Stephen Sanderson / Kiran Morzaria Tel: 01483 900582

WH Ireland (Nominated Adviser and Broker)

James Joyce / James Sinclair-Ford Tel: 020 7220 1666

Cenkos Securities PLC (Joint Broker)

Joe Nally / Neil McDonald Tel: 0207 397 8919

Novum Securities (Joint Broker)

John Bellis Tel: 020 7399 9400

Public Relations

Brian Alexander / David Bick Tel: 01483 900582

Glossary

 
 degAPI             a measure of the density of crude oil, as defined 
                     by the American Petroleum Institute 
 oil field          an accumulation, pool or group of pools of oil 
                     in the subsurface that produces oil to surface. 
                   --------------------------------------------------------- 
 extended well      a well test, as per the permission granted by 
  test (EWT) or      the Oil and Gas Authority, with an aggregate flow 
  production test    period duration over all zones of greater than 
                     96 hours and generally up to 90 days maximum flowing 
                     time per productive horizon. The objective being 
                     to establish whether a discovery is commercially 
                     viable and the best methods of future production 
                     and recovery 
                   --------------------------------------------------------- 
 flow test          a flow test or well test involves testing a well 
                     by flowing hydrocarbons to surface, typically 
                     through a test separator. Key measured parameters 
                     are oil and gas flow rates, downhole pressure 
                     and surface pressure. The overall objective is 
                     to identify the well's capacity to produce hydrocarbons 
                     at a commercial flow rate. 
                   --------------------------------------------------------- 
 horizontal well    a well that during drilling is steered so as to 
                     follow and remain within a particular geological 
                     stratum or reservoir unit having a trajectory 
                     that runs approximately parallel to the top and 
                     or base of the target horizon 
                   --------------------------------------------------------- 
 

UKOG Licence Interests

The Company has interests in the following UK licences:

 
Asset               Licence     UKOG's        Licence          Operator         Area              Status 
                                Interest       Holder                           (km(2) 
                                                                                  ) 
                                                                                             Field currently 
Avington                                     UKOG (GB)        IGas Energy                    temporarily shut 
 (1)                PEDL070       5%          Limited             Plc           18.3                in 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
Broadford                                                                                BB-1 & 1z oil discovery, 
 Bridge                                     UKOG (234)        UKOG (234)                   planning application 
 (3)                PEDL234      100%         Ltd (4)           Ltd (4)         300.0            approved 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
                                                                                            Seeking alternate 
                                                              Europa Oil                      sites to drill 
Holmwood                                                    & Gas (Holdings)                Holmwood and other 
 (3)                PEDL143       40%          UKOG               plc7          91.8       Kimmeridge prospects 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
Horndean                                     UKOG (GB)        IGas Energy                    Field in stable 
 (1)                 PL211        10%         Limited             Plc           27.3            production 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
                                                                                             Production tests 
                                            Horse Hill        Horse Hill                   ongoing, two further 
Horse Hill                                  Developments      Developments                    appraisal wells 
 (5)                PEDL137     50.635%         Ltd               Ltd           99.3        scheduled for 2019 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
                                            Horse Hill        Horse Hill 
Horse Hill                                  Developments      Developments 
 (5)                PEDL246     50.35%          Ltd               Ltd           43.6             As above 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
                                                                                            Preparing planning 
                                                                                              submission for 
                                                                                          Arreton-3 oil appraisal 
Isle of                                                                                      well and Arreton 
 Wight (Onshore)                                                                             South exploration 
 (2, 3)             PEDL331       95%          UKOG              UKOG           200.0              well 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
Markwells                                    UKOG (GB)         UKOG (GB) 
 Wood               PEDL126      100%         Limited           Limited         11.2             MW-1 P&A 
-----------------             ----------  --------------  ------------------  --------  ------------------------- 
 

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 Broadford Bridge-1 /1z Kimmeridge oil discovery, the eastern extension of the Godley Bridge Portland gas discovery plus further undrilled Kimmeridge exploration prospects.

5. Oil field with three productive and commercially viable zones, EWT ongoing, two further wells HH-1z and HH-2 scheduled in Q2 2019, development underway subject to grant of planning consent, expected in Q3 2019.

6. UKOG has a direct 77.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.

7. Awaiting approval from the OGA to transfer operatorship from Europa to UKOG

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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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March 15, 2019 03:10 ET (07:10 GMT)

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