Share Name Share Symbol Market Type Share ISIN Share Description
Primorus Inv. LSE:PRIM London Ordinary Share GB0002673332 ORD 0.01P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.015p +8.82% 0.185p 0.17p 0.20p 0.185p 0.165p 0.17p 24,043,903 14:31:59
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 0.0 -0.7 -0.1 - 5.17

Primorus Investments PLC Horse Hill Update

14/06/2018 12:30pm

UK Regulatory (RNS & others)


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Primorus Investments PLC

14 June 2018

Primorus Investments plc

("Primorus" or the "Company")

UK Oil and Gas Authority ("OGA") Grants Approval for Extended Flow Test ("EWT") Programme

Horse Hill-1 Kimmeridge and Portland Oil Discovery, Weald Basin, UK

Highlights:

   --     Planned 150-day production EWT set to commence on Horse Hill oil discovery. 
   --     All EWT regulatory permissions now in place and operations are fully funded. 

-- The EWT follows the successful short-term 2016 flow tests which achieved an aggregate stable rate of 1,688 barrels of oil per day ("bopd") over three 30-90 hour test periods.

-- EWT comprises 3 separate long-term flow periods of the oil productive Portland, Kimmeridge Limestone 4 ("KL4") and Kimmeridge Limestone 3 ("KL3") zones.

-- Programme aims to confirm commerciality of Portland and Kimmeridge Limestone oil discoveries and gear-up for first permanent oil production targeted in 2019.

-- Drilling of HH-2 appraisal well as future producer to directly follow successful flow testing outcome. Planning approval and environmental permits for drilling are in place.

Horse Hill Developments Limited ("HHDL"), the operator of the Horse Hill-1 ("HH-1") oil discovery, has informed the Company that the UK Oil & Gas Authority ("OGA") has granted its consent for the forthcoming HH-1 EWT programme. All other necessary regulatory consents from Surrey County Council ("SCC"), the Environment Agency ("EA") and the Health and Safety Executive have been in place for some months.

Primorus holds a 5.0% interest in HHDL which in turn holds a 65% interest in the HH-1 discovery. Commencement of the EWT, expected shortly, will be announced in due course.

Horse Hill Oil Discovery

The HH-1 Portland sandstone and KL3 and KL4 oil discoveries lie within onshore Weald Basin licences PEDL137 and PEDL246, covering an area of 55 square miles (143 km(2) ) north of Gatwick Airport. As reported on 21 March 2016, HH-1 flow tested at a significant commercial aggregate stable dry oil rate of 1,688 barrels of oil per day ("bopd") from the Portland, KL3 and KL4 reservoir horizons. Over the 30-90 hour flow periods from each of the 3 zones, no clear indication of any reservoir pressure depletion was observed.

EWT Overview

The EWT will comprise a series of three separate test sequences commencing in the Portland followed by the KL4 and finally, the deeper KL3. If time permits a test combining the KL4 and KL3 (a commingled test) may be undertaken. Each test will utilise existing perforated zones as per the 2016 test programme. The expected duration of the full flow programme is around 150 days.

As the 2016 short flow test campaign established commercially viable initial flow rates for each of the Portland, KL4 and KL3 zones, the 2018 long-term testing programme's goal is to confirm that HH-1's reservoirs are each connected to a commercially viable oil volume, thus enabling a declaration of commerciality to be made.

It is expected that, should the minimum commercial volume threshold be met or exceeded, a declaration of commerciality for each horizon could be made soon after the completion of each testing sequence.

Portland Test

As per the 2016 test, which flowed oil from the Portland at a stable metered rate of 323 bopd over an 8.5 hour period, a linear rod-pump will be utilised to flow Portland oil from around 35 metres of existing perforations located at around 615 metres below surface. As the 2016 test rates were constrained by the pump's stroke capacity, the new test will use a larger pump with a capacity of around 475 bopd.

Given the currently estimated low Portland production costs of around $20-25 per barrel, the 32 million barrels most likely Portland oil in place calculated by Xodus in 2017, together with the good flow rates recorded in 2016, the Portland is a strong candidate for commercial viability. Consequently, subject to a successful test outcome, a Portland commercial declaration by late summer 2018 is a realistic possibility.

KL3 and KL4 Tests

The planned Kimmeridge programme is designed to build upon the short stabilised natural flow periods of the 2016 test campaign, which tested at an aggregate stable dry oil rate of 1,365 bopd, comprised of 901 bopd and 464 bopd from the KL4 and KL3 zones respectively. The 2016 dry oil rates were recorded over 4-7.5 hour stabilised flow periods.

The two 2018 long term Kimmeridge tests will utilise existing perforations and will access around a 30 metre gross reservoir zone in each of the KL3 and KL4 zones, located at around 840 and 900 metres below surface respectively. As well as determining the volume of Kimmeridge oil in contact with the wellbore, the testing programme is designed to assess whether the Kimmeridge is one large single reservoir where both KL3 and KL4 are connected by natural fractures within the encasing oil generative shales.

Furthermore, the long term Kimmeridge reservoir performance data is expected to provide the necessary data to enable Petroleum Resources Management System compliant Kimmeridge limestone reserve and resource figures to be estimated at Horse Hill and, by analogy, for the wider Kimmeridge play.

Future Drilling and Production Plans

Subject to a successful testing outcome in the Kimmeridge and Portland, the HH-2 appraisal well is planned to immediately follow the EWT in late 2018/early 2019. The well will be drilled as a future Portland production well. Drilling plans include optionality to deepen HH-2 into the Kimmeridge to gather core and image log data, together with a possible northwards deviation to access the adjacent oil bearing Collendean Farm fault block's significant Portland oil resources.

Similarly, contingent upon EWT success, an HH-1z Kimmeridge sidetrack spud is planned in 2019 following integration of HH-1 Kimmeridge production data into a reservoir model and data from any future HH-2 Kimmeridge core. Necessary Planning and EA permits for HH-2 and HH-1z are in place.

To achieve its goal of stable, long-term Horse Hill oil production during 2019, HHDL now plans to submit a further production planning application to SCC in summer 2018. This application will seek consent to produce oil initially from HH-1 & 1z, and HH-2, together with further production wells in a second contingent drilling phase.

Glossary:

 
 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 
 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 
                       ------------------------------------------------------- 
 oil field              an accumulation, pool or group of pools of 
                         oil in the subsurface. An oil field consists 
                         of a reservoir in a shape that will trap hydrocarbons 
                         and that is covered by an impermeable or sealing 
                         rock 
                       ------------------------------------------------------- 
 pump stroke capacity   in a rod pump the product of the rod cross-sectional 
                         area, maximum distance between the top and 
                         bottom of the rod stroke movement and the 
                         pump stroking speed 
                       ------------------------------------------------------- 
 recoverable volumes    those quantities of petroleum (oil in this 
  or resources           case) estimated, as of a given date, to be 
                         potentially recoverable from known accumulations 
                       ------------------------------------------------------- 
 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 and may be sub-classified based 
                         on project maturity and/or characterised by 
                         development and production status 
                       ------------------------------------------------------- 
 sandstone              a clastic sedimentary rock whose grains are 
                         predominantly sand-sized. The term is commonly 
                         used to imply consolidated sand or a rock 
                         made of predominantly quartz sand. 
                       ------------------------------------------------------- 
 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

For further information, please contact:

 
 Primorus Investments plc:          +44 (0) 20 7440 0640 
 Alastair Clayton 
 
 Nominated Adviser:                 +44 (0) 20 7213 0880 
 Cairn Financial Advisers LLP 
 James Caithie / Sandy Jamieson 
 
 Broker:                            +44 (0) 20 3621 4120 
 Turner Pope Investments Limited 
 Andy Thacker 
 

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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June 14, 2018 07:30 ET (11:30 GMT)

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