UK Oil & Gas PLC EWT Update: Horse Hill-1 (6284D)

TIDMUKOG

RNS Number : 6284D

UK Oil & Gas PLC

10 October 2018

UK Oil & Gas PLC

("UKOG" or the "Company")

Extended Well Test ("EWT") Update: Kimmeridge oil flows continuously to surface

Horse Hill-1 ("HH-1") Portland and Kimmeridge Oil Discovery, Weald Basin, UK

UK Oil & Gas PLC (London AIM: UKOG) announces that Horse Hill Developments Ltd ("HHDL"), a UKOG subsidiary company and the operator of the HH-1 Kimmeridge Limestone and conventional Portland Sandstone oil discovery, has informed the Company that the Kimmeridge Limestone 3 ("KL3") EWT programme has recorded sustained light, sweet, 40-41deg API crude oil flow continuously and naturally to surface over the past 50 hours at sustained rates significantly exceeding those recorded during the KL3 short flow test programme in 2016. HH-1 is located in licence PEDL137 in which UKOG holds a 46.735% beneficial interest. Key EWT results to date are summarised below:

Key Points:

   --     KL3 EWT flow sequence commenced ahead of planned KL4 test. 

-- KL3 flowed 40-41deg API continuously and naturally to surface (i.e. without any pump) over a 50 hour initial planned oil flow period. Oil flow initiated instantaneously with minimal pressure "draw-down". First planned 24-hour shut-in and pressure build-up test ("PBU") now underway.

-- Sustained continuous oil rates of between 563 and 771 barrels of oil per day ("bopd") on 36/64 and 38/64 inch choke, respectively, recorded over last 24 hours through test separator. Gas rates up to 186,000 cu ft per day measured through enclosed flare. Flow sustained at constant stable bottom hole pressure.

-- Recorded sustained rates significantly exceed the 464 bopd over a short 7.5-hour total flow period reported in 2016.

-- Initial well productivity index of between 1.4 to 2.5 bpd/psi is around twice that seen in 2016 KL3 test.

   --     To date four tankers of KL3 crude have been exported to Fawley refinery. 

-- Zero formation water produced. Metered associated water rates of 52 barrels per day ("bpd") decreasing to 14 bpd (i.e. 9% decreasing to 2%) in the past 24 hours. Produced water consists wholly of returned heavy completion brine. Well continues to "clean-up" with decreasing water content.

-- Simultaneous pressure data recorded in overlying KL4 is indicative that KL3 and KL4 are one single connected oil pool with an implied minimum vertical extent of 358 ft.

-- Further updates to be provided in due course following completion of the ongoing PBU test, further well clean-up, flow stabilisation, downhole oil sampling and further pressure build up tests.

-- The KL4, which flowed at a reported rate of 901 bopd over a 4-hour period in 2016, will be flow tested after completion of the current KL3 EWT.

Stephen Sanderson, UKOG's Chief Executive, commented:

"I am delighted to have witnessed first-hand the resumption of significant continuous and sustained oil flow from the Kimmeridge at Horse Hill. Whilst it has been a long wait since the successful 2016 flow tests, it has been made more momentous by the Kimmeridge's significantly increased performance and productivity.

Whilst these are early days in the planned KL3 EWT sequence, with the well still "cleaning-up", the continuous and sustained high oil rates can only be seen as highly encouraging for the overall EWT objective of establishing the commerciality of the Kimmeridge. The Directors consider that these positive KL3 test results now make it increasingly likely that both the Kimmeridge and Portland oil pools are set to make Horse Hill one of the UK's leading onshore producing oil fields. Permanent production at Horse Hill is targeted in 2019. I look forward to the continuing news flow from the remainder of the KL3 test and the final KL4 EWT."

Qualified Person's Statement

Matt Cartwright, UKOG's Chief Operating Officer, who has over 35 years of relevant experience in the oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.

For further information, please contact:

UK Oil & Gas PLC

Stephen Sanderson / Kiran Morzaria Tel: [phone]

WH Ireland (Nominated Adviser and Broker)

James Joyce / James Sinclair-Ford Tel: [phone]

Cenkos Securities PLC (Joint Broker)

Joe Nally / Neil McDonald Tel: [phone]

Novum Securities (Joint Broker)

John Bellis Tel: [phone]

Public Relations

Brian Alexander / David Bick Tel: [phone]

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 
 draw down       the difference between the average static reservoir 
                  pressure and the flowing bottomhole pressure 
                --------------------------------------------------------- 
 extended well   a flow test or well test, as per the permission 
  test            granted by the Oil and Gas Authority, with an 
                  aggregate flow period duration over all zones 
                  of greater than 96 hours and up to 90 days maximum 
                --------------------------------------------------------- 
 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 
                --------------------------------------------------------- 
 Productivity    A mathematical means of expressing the ability 
  Index           of a reservoir to deliver fluids to the wellbore. 
                  The PI is usually stated as the volume delivered 
                  per psi of drawdown at the sandface (bbl/d/psi). 
                --------------------------------------------------------- 
 

UKOG Licence Interests

The Company has interests in the following UK licences:

 
Asset               Licence      UKOG         Licence          Operator         Area            Status 
                                Interest       Holder                           (km(2) 
                                                                                  ) 
Avington                                     UKOG (GB)        IGas Energy                   Field currently 
 (1)                PEDL070       5%          Limited             Plc           18.3            shut in 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
Broadford                                                                                    BB-1 & 1z oil 
 Bridge                                     UKOG (234)        UKOG (234)                  discovery, planning 
 (4)                PEDL234      100%         Ltd (4)           Ltd (4)         300.0     application approved 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
                                                                                           Seeking alternate 
                                                              Europa Oil                     sites to drill 
Holmwood                                                    & Gas (Holdings)               Holmwood and other 
 (3)                PEDL143       40%          UKOG               plc           91.8      Kimmeridge prospects 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
Horndean                                     UKOG (GB)        IGas Energy                   Field in stable 
 (1)                 PL211        10%         Limited             Plc           27.3           production 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
                                                                                           Production tests 
                                                                                           ongoing, 2 further 
                                            Horse Hill        Horse Hill                    appraisal wells 
Horse Hill                                  Developments      Developments                   scheduled for 
 (5)                PEDL137     46.735%         Ltd               Ltd           99.3            2018/19 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
                                            Horse Hill        Horse Hill 
Horse Hill                                  Developments      Developments 
 (5)                PEDL246     46.735%         Ltd               Ltd           43.6           As above 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
                                                                                          Preparing planning 
                                                                                             submission for 
                                                                                             Arreton-3 oil 
Isle of                                                                                      appraisal well 
 Wight (Onshore)                                                                           and Arreton South 

 (2, 3)             PEDL331       65%          UKOG              UKOG           200.0       exploration well 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
                                                                                           Revised drilling 
Markwells                                    UKOG (GB)         UKOG (GB)                  and testing planning 
 Wood (2)           PEDL126      100%         Limited           Limited         11.2      application underway 
-----------------             ----------  --------------  ------------------  --------  ---------------------- 
 

Notes:

1. Oil field currently in production.

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

3. Exploration asset with drillable prospects and leads. PEDL234 contains the Broadford Bridge-1 and 1z

oil discovery well, the extension of the Godley Bridge Portland gas discovery plus further exploration

prospects.

4. UKOG has a 100% interest in UKOG (234) Ltd, which has a 100% interest in PEDL234.

5. Oil discovery in 3 zones, EWT ongoing, two further wells HH-1z and HH-2 planned in early 2019

6. UKOG has a direct 71.9% 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 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 [e-mail] or visit www.rns.com.

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October 10, 2018 08:55 ET (12:55 GMT)