TIDMGUN
RNS Number : 1666W
Gunsynd PLC
07 February 2017
Gunsynd plc
("Gunsynd" or the "Company")
Upgrade to Portland Oil Resources, Horse Hill Oil Discovery,
PEDL137, Weald Basin, UK
Highlights
-- Xodus calculate Portland sandstone P50 Oil in Place ("OIP")
of 32 million barrels ("MMbbl"), a 53% increase from the 21 MMbbl
previously reported prior to successful 2016 flow testing
-- Gross recoverable Portland 2C Contingent Resources 1.5 MMbbl
-- Base Case Portland initial oil-rate estimated at 350 barrels
of oil per day ("bopd") per well
-- Ultimate recovery could be increased by a further 8-14% of
OIP via early implementation of a water re-injection scheme. If
successful, this could represent a 114%-440% addition to 2C
recoverable resources, equating to an additional 1.7-6.6 MMbbl
gross recoverable, or 0.5-2.1 MMbbl net to the Company
-- Work plans now aimed towards Portland long-term production by end 2018
Gunsynd plc (AIM: GUN) announces that a new Report by Xodus
Group Ltd ("Xodus") calculates the Horse Hill Portland sandstone
conventional oil accumulation to contain an OIP of 32 MMbbl, an
increase of 53% from the previously reported 21 MMbbl of May 2015.
The upgrade results from the incorporation of Nutech's revised
petrophysics, as reported in July 2016. As previously stated by the
Company, OIP should not be misconstrued as recoverable Contingent
Resources or reserves, which are detailed below.
Gunsynd holds a 2% shareholding in HHDL, which in turn owns 65%
of PEDL137 and PEDL246. Gunsynd's direct attributable interest in
these Licences is therefore 1.3%.
In March 2016 HHDL reported the final Horse Hill-1 ("HH-1")
Portland test flowed at a stable dry oil rate of 323 bopd,
producing light, sweet, 35 API gravity crude. The Portland was
produced at the rod-pump's maximum achievable rate and thus flow
was constrained by the pump's mechanical capacity. The test data
analyses show no clear indication of depletion.
As a result of further analysis of the Portland flow test data,
plus a review of similar producing fields, Xodus now assess the
gross recoverable Portland 2C Contingent resources at 1.5 MMbbl.
Calculated OIP and resources reflect oil contained in the entire
Portland structure, as penetrated by the HH-1 and Collendean Farm
-1 wells.
The Contingent Resource volumes given are those estimated to be
attributable to primary recovery from the Portland reservoir.
Results utilise a base case of three wells, draining both the Horse
Hill and Collendean Farm fault blocks, each well with an initial
production rate of 350 bopd.
The report also details that, for a shallow but permeable
reservoir such as the Portland, should a water re-injection scheme
be undertaken to provide pressure support in the field's early
productive life, it is reasonable to expect a material increment in
overall oil recovery. The successful implementation of such a
scheme is estimated to lead to the recovery of an additional 8-14%
of OIP, equivalent to a further 1.7-6.6 MMbbl of gross recoverable
oil.
A summary of the Report's results is shown in tables 1 and 2
below.
As previously reported in October 2016, HHDL submitted a
planning application to Surrey County Council for an extensive HH-1
appraisal programme, including long-term production testing and a
new deviated well, HH-2, designed to access the Portland in both
the HH-1 and Collendean Farm-1 proven oil-bearing fault blocks.
Table 1, Portland Sandstone, gross discovered OIP MMbbl:
Horse Hill Discovery Low (P90) Best (P50) High (P10) Mean
---------------------- ---------- ----------- ----------- -----
Portland OIP MMbbl 21.5 32.2 47.4 33.5
---------------------- ---------- ----------- ----------- -----
Table 2, Portland Sandstone, gross and net to Gunsynd Contingent
Resources mbbls:
Horse Hill Portland Sandstone Gross Field - 100% Net to Gunsynd - 1.3%
------------------------------- ----------------------- --------------------------
Resource Category 1C 2C 3C 1C 2C 3C
------------------------------- ----- ------- ------- ------- -------- -------
Recoverable Oil mbbls
(primary recovery only) (1) 592 1,498 3,629 7.7 19.5 47.2
------------------------------- ----- ------- ------- ------- -------- -------
(1) Xodus Report states recovery could likely be improved by a
further 8-14% of OIP via an early water re-injection scheme
HH-1 Oil Discovery, Location and Company Interest
The HH-1 oil discovery well is located within onshore
exploration Licence PEDL137, on the northern side of the Weald
Basin near Gatwick Airport. HHDL owns a 65% interest in PEDL137 (as
well as in PEDL246) and is the licence's operator.
Qualified Person's Statement:
Stephen Sanderson, 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.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation
596/2014.
The directors of Gunsynd accept responsibility for this
announcement.
For further information please contact:
Gunsynd plc:
+44 (0) 20 7440 0640
Hamish Harris
Nominated Adviser/NEX Exchange Corporate Adviser:
+44 (0) 20 7213 0880
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
Peterhouse Corporate Finance (Joint Broker)
+44 (0)20 7469 0930
Lucy Williams
Glossary:
1C denotes the low estimate scenario
of Contingent Resources
------------------- -----------------------------------------------
2C denotes the mid or best estimate
scenario of Contingent Resources
------------------- -----------------------------------------------
3C denotes the high estimate scenario
of Contingent Resources
------------------- -----------------------------------------------
Contingent Contingent Resources are those
Resources quantities of petroleum estimated,
as of a given date, to be potentially
recoverable from known accumulations,
but the applied project(s) are
not yet considered mature enough
for commercial development due
to one or more contingencies. Contingent
Resources 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 their economic status.
------------------- -----------------------------------------------
degree API a measure of the density of crude
oil, as defined by the American
Petroleum Institute
------------------- -----------------------------------------------
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
------------------- -----------------------------------------------
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
------------------- -----------------------------------------------
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
------------------- -----------------------------------------------
mean or expected value, is the probability-weighted
average of all possible values
and is a measure of the central
tendency either of a probability
distribution or of the random variable
characterised by that distribution
------------------- -----------------------------------------------
oil in place oil in place or oil in the ground
is the quantity of oil or petroleum
that is estimated to exist originally
in naturally occurring accumulations
before any extraction or production
------------------- -----------------------------------------------
P10 (high a 10% probability that a stated
estimate) volume will be equalled or exceeded
------------------- -----------------------------------------------
P50 (best a 50% probability that a stated
estimate) volume will be equalled or exceeded
------------------- -----------------------------------------------
P90 (low estimate) a 90% probability that a stated
volume will be equalled or exceeded
------------------- -----------------------------------------------
petrophysics the study of physical and chemical
rock properties and their interactions
with fluids utilising electric
logs, physical rock and fluid measurements
------------------- -----------------------------------------------
primary recovery The first stage of hydrocarbon
production, in which natural reservoir
energy, such as gas drive, water
drive or gravity drainage, displaces
hydrocarbons from the reservoir,
into the wellbore and up to surface.
Initially, the reservoir pressure
is considerably higher than the
bottomhole pressure inside the
wellbore. This high natural differential
pressure drives hydrocarbons toward
the well and up to surface. However,
as the reservoir pressure declines
because of production, so does
the differential pressure. To reduce
the bottomhole pressure or increase
the differential pressure to increase
hydrocarbon production, it is necessary
to implement an artificial lift
system, such as a rod pump, an
electrical submersible pump or
a gas-lift installation. Production
using artificial lift is considered
primary recovery. Primary recovery
is also called primary production
------------------- -----------------------------------------------
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 grains
------------------- -----------------------------------------------
secondary a second stage of hydrocarbon production
recovery during which a fluid such as water
or gas is injected or re-injected
into the reservoir through injection
wells located in rock that has
fluid communication with production
wells. The purpose of secondary
recovery is to maintain reservoir
pressure and to displace hydrocarbons
toward the wellbore. The most common
secondary recovery techniques are
gas injection and water flooding.
Normally, gas is injected into
the gas cap and water is injected
into the production zone to sweep
oil from the reservoir
------------------- -----------------------------------------------
water re-injection a common form of secondary oil
or water flood recovery in which water is injected
or re-injected into the reservoir
formation to maintain reservoir
pressure and to displace oil towards
producing wells
------------------- -----------------------------------------------
About Xodus
Xodus Group Ltd. are an oil and gas focussed energy consultancy
with over 500 employees providing integrated subsurface and surface
solutions to a global client base. Further information can be found
on Xodus' website: www.xodusgroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
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