TIDMUKOG
RNS Number : 4285F
UK Oil & Gas Investments PLC
20 February 2018
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Oil Flows to Surface from Kimmeridge Limestone 5
Broadford Bridge-1/1z Oil Discovery, Weald Basin, UK
Highlights
-- Oil flowed to surface from Kimmeridge Limestone 5 ("KL5")
throughout 96 hours of near-continuous rod-pumping. Fluid returns,
measured as half-hourly instantaneous pumped rates, currently range
from around 10 to 72 barrels per day ("bpd").
-- Fluids flowed to surface consist of oil mixed with returned
reactants ("spent acid") from an acid-wash programme. Associated
average oil percentages ("oil-cut") exceed 30% with intermittent
periods exceeding 50% by volume and continue to increase. To date,
no obvious formation water has been observed in returns.
-- 24-hour pumping operations will continue to enable flow to
stabilise, return all spent acid and achieve 100% oil
("clean-up").
UK Oil & Gas Investments PLC (London AIM: UKOG) announces
that oil has flowed to surface from the naturally fractured KL5
reservoir at its 100% owned BB-1/1z exploration discovery, located
in licence PEDL234. Fluid returns to surface, measured as
half-hourly instantaneous pumped flow-rates over a 96-hour
near-continuous period, ranged between 10 to 72 barrels per day
("bpd").
To date, fluid returns through the test equipment consist of a
mixture of oil plus returned spent-acid from an acid wash
treatment, with no observed obvious formation water component.
Associated oil-cut steadily increased to over 30%, with
intermittent periods exceeding 50% by volume. Flow continues to
clean-up with an improving oil-cut trend.
The artificial lift programme, which commenced last Friday,
included several initial half-hour shut-downs to bleed off produced
associated gas before it locked-up the pump. One short pressure
build-up test was also undertaken.
As the KL5 zone's steel casing was not perforated during the
original 2017 well completion programme, two new casing-perforation
runs were undertaken prior to testing.
The current test, number 7, the first ever within the KL5 in the
Weald's 100-year exploration history, straddles a discrete
naturally fractured limestone interval close to the top of KL4,
which corresponds to the previously reported occurrence of live oil
in open natural fractures seen in BB-1 core.
General Testing Update and Future Plans
The KL5 24-hour rod-pumping programme is planned to continue
until further notice to enable flow to stabilise and further
clean-up with the aim of achieving 100% oil to surface.
Prior to the KL5 test, oil and associated gas were recovered to
surface from tests 5 and 6 within the uppermost KL3 and KL4, but
with no sustained flow. Due to the limited time remaining on the
planning consent, the decision was made to spend no further time on
these zones and proceed ahead to the KL5 zone which, as reported in
December, was known from core and geochemical analyses to contain
oil in fractures and within the limestone rock matrix.
In the light of results and analyses from tests 5 and 6,
together with learnings from test 7 in KL5, the Company and its
consultants are currently investigating the possibility that zones
5 and 6, originally perforated in summer 2017 and acidised during
the original test programme, were damaged by a combination of the
long residence times of spent acid within the reservoir prior to
current testing and the perforating technique utilised.
It is now thought that both fractures and perforated channels
around the wellbore of KL3 and KL4 could be partially blocked by
released clay particles and cement related debris, thus preventing
sustainable fluid inflow.
In this respect, serious consideration is being given to a
possible future short sidetrack and selective re-test of KL3 and
KL4 which electric logs show as oil-saturated.
Existing planning consent time permitting, following completion
of KL5 testing, the plan remains to test a 40 ft thick limestone
zone in KL1 which, as per KL5, was not perforated or acid-washed in
2017.
About BB-1/1z
As previously reported, BB-1 was purposely drilled in a location
where no conventional hydrocarbon trapping mechanism within the
Kimmeridge reservoir section is evident. Therefore, in the
Company's opinion, the now proven flow to surface of moveable,
light Kimmeridge oil and associated solution gas at the BB-1z
sidetrack, provides further proof that the Kimmeridge at Broadford
Bridge contains a continuous oil deposit of up to 1400 ft gross
vertical thickness.
The near identical Kimmeridge reservoir parameters and geology
seen at BB-1/1z and the Horse Hill-1 Kimmeridge oil discovery, in
which the Company holds a 32.435% interest, some 27 km to the
northeast, demonstrates that the Kimmeridge oil accumulation is
also laterally extensive across the Central Weald Basin and,
consequently, a potentially significant national oil resource.
As previously reported in December, the integration of BB-1z
petrophysical analyses with Geomark Research's in-depth geochemical
analyses, strongly suggests that Broadford Bridge lies within the
southern flank of the Kimmeridge continuous oil deposit, with the
commercially viable extent of the play, determined by the presence
of significant volumes of in-situ generated mobile oil within
Kimmeridge shales and fractured limestones, terminating some few
kilometres to the south of PEDL234.
UKOG, as the largest licence holder in the Kimmeridge oil
accumulation's "sweet-spot" is well positioned to exploit this
extensive and likely commercially viable oil resource.
Stephen Sanderson, UKOG's Executive Chairman, commented:
"These positive and encouraging initial oil flows from the
first-ever Kimmeridge Limestone 5 test provide further supporting
evidence for the presence and significant spatial extent of a
viable Kimmeridge continuous oil deposit within the PEDL234
Licence.
The KL5 test results, plus the many strands of technical
evidence gathered from the well, now also indicate that the BB-1
location lies towards the southern edge of a thick,
naturally-fractured, oil-saturated Kimmeridge "wedge", stretching
around 30 kms to the north of BB-1 across the Weald. UKOG, as the
largest licence holder in the thickest part of this "wedge", is
therefore ideally placed to exploit the potentially commercially
viable recoverable resources that now likely underlie our
Licences.
We look forward to further positive news from the ongoing KL5
test programme."
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: 01483 243450
WH Ireland (Nominated Adviser and Broker)
James Joyce / James Sinclair-Ford Tel: 020 7220 1666
Cenkos Securities PLC (Joint Broker)
Joe Nally / Leif Powis Tel: 0207 397 8919
Public Relations
Brian Alexander / David Bick Tel: 01483 900583/ 01483 243450
Glossary
casing heavy-gauge steel pipe that is lowered into
position in the open hole of a well and cemented
into place. Casing is run to isolate rock formations
with different pressure gradients from the well
bore and to ensure that any fluids within the
well are isolated from the surrounding rock
and surface groundwater zone
--------------------- -----------------------------------------------------------
clean-up the process whereby stable flow and 100% oil
content in fluids flowed to surface is achieved
--------------------- -----------------------------------------------------------
completion, the process of making a well ready for production.
well completion, This principally involves preparing the bottom
or test completion of the hole to the required specifications,
running in the production tubing and its associated
downhole tools as well as perforating as required,
together with the appropriate completion fluid
contained in the well. The process of running
in and cementing the casing can also be included
in this category
--------------------- -----------------------------------------------------------
continuous oil a petroleum accumulation that is pervasive throughout
deposit or resource a large area, which is not significantly affected
deposit 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
--------------------- -----------------------------------------------------------
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
--------------------- -----------------------------------------------------------
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
--------------------- -----------------------------------------------------------
extended flow a flow test, or extended well test, designed
test or production to test the longer term production performance
test of a discovery with a view to declaring commercial
viability and the establishment of permanent
production.
--------------------- -----------------------------------------------------------
flow test a test period where hydrocarbons are flowed
to surface 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
oil at a commercial flow rate and to recover
oil in commercial quantities or volumes
--------------------- -----------------------------------------------------------
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, being made of the
remains of calcareous planktonic algae called
coccoliths. The Kimmeridge Limestones are comprised
of fine grained coccoliths, fine grained calcium
carbonate mud, clay minerals, together with
dark grey organic matter
--------------------- -----------------------------------------------------------
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
--------------------- -----------------------------------------------------------
nitrogen lifting the injection of nitrogen into the fluid column
in an oil or gas well to initiate fluid flow
and production from the reservoir. Due to the
low density of nitrogen, this process reduces
the back pressure (known as "drawdown") on the
reservoir
--------------------- -----------------------------------------------------------
oil cut the volume percentage of oil in fluids flowed
to surface
--------------------- -----------------------------------------------------------
perforating, the use of tubing (typically) to convey perforating
perforation "guns" to the required well depth. Perforating
guns are devices used to prepare wells for production,
containing shaped explosive charges in a range
of sizes and configurations to optimise the
depth of penetration through the steel well
casing and surrounding cement and into the adjacent
reservoir rock
--------------------- -----------------------------------------------------------
play a set of known or postulated oil and or gas
accumulations sharing similar geological, geographical,
and temporal properties, such as source rock,
migration pathways, timing, trapping mechanism,
and hydrocarbon type
--------------------- -----------------------------------------------------------
sidetrack re-entry of a well from the well's surface location
with drilling equipment for deviating from the
existing well bore to achieve production or
well data from an alternative zone or bottom
hole location
--------------------- -----------------------------------------------------------
UKOG Licence Interests
The Company has interests in the following 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
---------------- --------- --------------- --------------- --------------- -------------- ----------------------
Broadford Bridge PEDL234 100% Kimmeridge Oil Kimmeridge Oil 300.0 BB-1 & 1z drilling
(3) & Gas Limited & Gas Limited completed, testing of
(4) (4) multiple zones
underway
---------------- --------- --------------- --------------- --------------- -------------- ----------------------
Holmwood (3) PEDL143 40% UKOG Europa Oil & 91.8 Holmwood-1
Gas (Holdings) exploration well
plc planned in 2018
---------------- --------- --------------- --------------- --------------- -------------- ----------------------
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 Production tests and
Developments Developments further appraisal
Ltd Ltd well (s ) scheduled
for 2018
---------------- --------- --------------- --------------- --------------- -------------- ----------------------
Horse Hill Horse Hill
Developments Developments
Horse Hill (5) PEDL246 32.435% Ltd Ltd 43.6 As above
---------------- --------- --------------- --------------- --------------- -------------- ----------------------
Isle of Wight PEDL331 65% UKOG UKOG 200.0 Preparing Arreton-3
(Onshore) (2, oil discovery
3) appraisal well
planning submission
---------------- --------- --------------- --------------- --------------- -------------- ----------------------
Markwells Wood PEDL126 100% UKOG (GB) UKOG (GB) 11.2 Revised drilling and
(2) Limited Limited testing planning
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.
Contains the Broadford Bridge-1&1z discovery well, the
extension of the Godley Bridge Portland gas discovery plus further
exploration prospects.
4. UKOG has a 100% interest in Kimmeridge Oil & Gas
Limited
5. Oil discovery with successful flow test in 3 zones, further
long-term testing scheduled in 2018
6. UKOG has a direct 49.9% 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 company news service from the London Stock Exchange
END
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