Arreton-2 IOW Xodus Assessment

RNS Number : 2351N

Solo Oil Plc

28 January 2016

 

FOR IMMEDIATE RELEASE                                                                                                            28 January 2016

SOLO OIL PLC

("Solo" or the "Company")

Arreton-2 Oil Discovery, Onshore Isle of Wight, UK

Xodus Assessment of Oil in Place and Recoverable Resources

Solo has today been informed by UK Oil & Gas Investments PLC ("UKOG"), its partner in the recently announced UK 14^th Round Licence award on the Isle of Wight, that a volumetric analysis carried out independently by Xodus Group Ltd ("Xodus") calculates that the historic Arreton-2 well, now interpreted to be an undeveloped oil discovery ("Arreton Main"), and the adjacent low-risk Arreton North and South Prospects ("Arreton Prospects") may contain an aggregate gross Best Estimate ("P50") Oil in Place ("OIP") of 219 million barrels ("mmbbls") within Purbeck, Portland and Inferior Oolite limestone reservoirs. The Arreton Main discovery and Arreton Prospects lie within the 200 square kilometre 14th Round block ("Licence") offered to the Company by the Oil and Gas Authority ("OGA") and in which the Company holds a 30% working interest.

OIP is the total estimated quantity of oil in the ground before any extraction or production and should not be construed as Contingent Resources or Reserves.

Neil Ritson, Solo's Chairman commented:

"We are delighted with the technical progress being made on the recently offered licence PEDL 331 and look forward to further plans as they emerge from the licence group. The Arreton-2 discovery, Arreton Main, clearly contains significant potential for producible oil and there are similar undrilled prospects within the licence."

Summary of Recoverable Oil Resources

Xodus calculates that Arreton Main contains aggregate P50 Contingent Resources of 4.7 mmbbls net to Solo's interest. The resources are an aggregate of two separate oil columns, one within conventional Purbeck and Portland limestone reservoirs and a deeper one within a conventional Inferior Oolite limestone reservoir.

The additional two low-risk undrilled adjacent look-alike prospects are calculated to contain a further aggregate P50 net Contingent Resources of 3.2 mmbbls solely within the Portland reservoir unit.

Licence PEDL 331

As previously announced on the 17 December 2015, the OGA offered the Licence to Solo (30% interest) and its partners, UKOG (65% interest) and Angus Energy (5% interest). The Licence will be designated Petroleum Exploration and Development Licence 331 ("PEDL 331"). UKOG and its partners are finalising necessary documentation with the OGA and the PEDL 331 Licence start date is planned for April 2016. The first exploration period of the Licence will last for 5 years.

The Arreton-2 well, drilled in 1974 by British Gas, penetrated a large anticlinal structure and found strong oil shows in the Upper Jurassic Portland reservoir section. A recent petrophysical analysis of the Arreton-2 electric logs by Nutech Energy Alliance's ("Nutech") has calculated a total oil pay of 78 feet within the Portland.  A further 127 feet of total oil pay is also calculated in limestones within the underlying oolite reservoir formations.

Xodus' Analysis

The analysis conducted by Xodus comprised a detailed review of UKOG's seismic interpretation, well data, petrophysics and related reports. The petrophysical input parameters used in the study are based on Nutech analysis of the Arreton-2 discovery well. Xodus independently derived the volume estimates assisted by a stochastic simulation software tool.

The gross OIP ranges estimated by Xodus for identified prospective reservoirs within Arreton Main and Arreton Prospects are shown in Table 1 below. OIP is the total estimated quantity of oil in the ground before any extraction or production and is not to be construed as Contingent Resources or reserves. Note that the Total Contingent Resources are derived from a stochastic (probabilistic) summation not an arithmetic summation. These OIP estimates have been used to calculate recoverable resources by the application of a recovery factor.

Table 1: Gross OIP Volume Estimates for all reservoirs in Arreton Main and two Arreton Prospects

Gross OIP (mmbbls)	Low P90	Best P50	High P10	Mean
Arreton Main - Portland	6.8	21.3	61.6	29.3
Arreton Main - Purbeck	4.7	9.2	19.6	11.2
Arreton Main - Inferior Oolite	52.0	87.5	137.0	91.7
Arreton North - Portland	3.7	22.0	59.9	27.6
Arreton South - Portland	14.2	55.2	138.0	67.4
Total OIP (stochastic sum)	144	219	322	227

Contingent Resource Estimates:

Table 2 below summarises the calculated Arreton Main Contingent Resources. Note that the Purbeck and Portland limestone reservoirs contain one continuous oil column. Good oil shows were found in the Arreton-2 well within the calculated oil columns. The Commercial Risk Factor for Contingent Resources is the estimated chance, or probability, that the volumes will be commercially extracted. The recoverable resources shown are derived by applying a recovery factor to the Oil in Place ("OIP") volumes shown in Table 1 above. Note that the Total Contingent Resources are derived from a stochastic (probabilistic) summation not an arithmetic summation.

Table 2: Arreton Main Contingent Resources within Purbeck, Portland and Inferior Oolite reservoirs

Oil Contingent Resources (mmbbls)	Gross Oil Contingent Resources			Oil Contingent Resources Net to Solo			Commercial Risk Factor
Arreton Main Oil discovery	1C /P90	2C /P50	3C/P10	1C/P90	2C/P50	3C/P10	(%)
Portland reservoir	0.8	2.6	7.8	0.4	0.8	2.3	50%
Purbeck reservoir	0.6	1.1	2.5	0.4	0.3	0.7	50%
Inferior Oolite reservoir	6.2	10.8	17.6	1.8	3.2	5.3	50%
Total Contingent Resources (stochastic sum)	9.9	15.7	24.1	3.0	4.7	7.2

Xodus has classified the volumes in Table 2 as Contingent Resources, being those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, and where the project is not yet considered mature enough for commercial development due to one or more contingencies.

Prospective Resources Estimates:

Table 3 below summarises the calculated Prospective Resources for the two Arreton Prospects. The Risk Factor for Prospective Resources is the geological chance of success (or "COS"), or the probability of discovering hydrocarbons in sufficient quantity for them to flow to the surface. The calculated COS is very high, denoting these as low-risk prospects. The recoverable resources are derived by applying a recovery factor to the Oil in Place ("OIP") volumes shown in Table 3 below. Note that the Total Contingent Resources are derived from a stochastic (probabilistic) summation not an arithmetic summation.

Table 3: Arreton North and Arreton South Prospective Resources within the Portland Limestone reservoir

Oil Prospective Resources (mmbbls)	Gross Oil Prospective Resources			Oil Prospective Resources Net to Solo			Geological Risk Factor
Portland Reservoir	Low P90	Best P50	High P10	Low P90	Best P50	High P10	COS (%)
Arreton North	0.5	2.7	7.6	0.15	0.8	2.3	69%
Arreton South	1.7	6.8	17.4	0.5	2.0	5.2	73%
Total Prospective Resources (stochastic sum)	4.0	10.5	21.6	1.2	3.2	6.5

Xodus Reporting Standards:

Xodus' OIP volume and recoverable resources estimates have been prepared in accordance with the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE), reviewed, and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE).

Future Plans

UKOG have indicated that they will accelerate discussions with the Local Planning Authority and will submit the necessary applications in 2016 to obtain regulatory consents to appraise the Arreton Main oil discovery. Drilling studies and cost estimates for a re-drill of the Arreton-2 discovery have been completed. Plans to acquire additional 2D seismic coverage to further define the Arreton Main discovery and Arreton Prospects will take place in due course after further drilling on Arreton Main.

Further definition of additional prospects in the west of the Licence is ongoing, as is the completion of Nutech's analysis of the OIP per square mile in the thermally mature Kimmeridge, Oxford Clay and Lias shale and limestone sections of the Licence. Xodus will also shortly complete its evaluation of the recoverable resources of the nearby offshore M Prospect in Licence P1916, which it is believed may have a landward extension within PEDL 331.

Qualified Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chairman and Director for Solo Oil Plc who has over 38 years of relevant experience in the energy sector.  Mr. Ritson is a member of the Society of Petroleum Engineers, an Active Member of the American Association of Petroleum Geologists and is a Fellow of the Geological Society of London.

Glossary:

2D seismic	Seismic data collected using the two-dimensional common depth point method
1C Resources	denotes the low estimate scenario of Contingent Resources
2C Resources	denotes the mid or best estimate scenario of Contingent Resources
3C Resources	denotes the high estimate scenario of Contingent Resources
P10	a 10% probability that a stated volume will be equalled or exceeded
P50	a 50% probability that a stated volume will be equalled or exceeded
P90	a 90% probability that a stated volume will be equalled or exceeded
Contingent Resources	those 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 may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent resources are further categorized 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
COS	geological chance of success
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
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	the quantity of oil or petroleum that is estimated to exist originally in naturally occurring accumulations before any extraction or production
oolite	a sedimentary rock formed from ooids, being  spherical grains comprised of concentric layers of calcium carbonate and of diameter 0.25 - 2mm
pay	a reservoir or portion of a reservoir that contains economically producible hydrocarbons. The term derives from the fact that it is capable of "paying" an income. The overall interval in which pay sections occur is the gross pay; the smaller portions of the gross pay that meet local criteria for pay (such as minimum porosity, permeability and hydrocarbon saturation) are net pay
petrophysics	the study of physical and chemical rock properties and their interactions with fluids utilising electric logs, physical rock and fluid measurements
prospect	a project associated with a potential accumulation that is sufficiently well defined to represent a viable drilling target
Prospective Resources	those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and chance of development
recoverable resources	those quantities of petroleum (oil in this case) estimated, as of a given date, to be potentially recoverable from known accumulations
shale	a laminated and fissile very fine-grained sedimentary rock, consisting of compacted silt and clay-size mineral particles. Can contain high proportions of organic material, which if subjected to heat and pressure over geological time can generate petroleum (a petroleum source rock)
thermally mature	a term applied to petroleum source rocks which have received sufficient temperatures and pressure over geological time to generate hydrocarbons.

Notes to Editors:

About Xodus

Xodus Group Ltd. are a large oil & gas focussed energy consultancy with over 500 employees providing integrated subsurface and surface solutions to a global client base. Xodus was established in 2005 and since then has undertaken a large number of projects of various sizes across most hydrocarbon regions of the world. Xodus staff bring extensive experience in key regions and basins including the North Sea, West Africa, North Africa, Middle East, South America, and Asia. Further information can be found on Xodus' website: www.xodusgroup.com

About Nutech

Nutech, one of the world's leading companies in petrophysical analysis and reservoir intelligence, has played a major role in guiding the development of the United States unconventional resource revolution observed in the past 16 years. Nutech has extensive experience in conventional bypassed oil pay, US tight oil and gas plays and many key basins globally. Nutech are one of only four companies approved by the UK Government (OGA) to handle the sale, release and further analysis of the UK's onshore well database. Nutech's client base includes the governments of Mexico, Bahrain, Pakistan, The Netherlands, Poland, and Colombia, as well as oil and gas majors and large independents, which include Petronas, Chevron, Repsol, ConocoPhillips, BP, GDF, Devon, and SandRidge. Further information is available at www.nutechenergy.com 

For further information:

Solo Oil plc Neil Ritson Fergus Jenkins	[phone]
Beaumont Cornish Limited Nominated Adviser and Joint Broker Roland Cornish	[phone]
Shore Capital Joint Broker Pascal Keane Jerry Keen (Corporate Broker) Bell Pottinger                            Public Relations Henry Lerwill Cassiopeia Services LLP Investor Relations Stefania Barbaglio	[phone] [phone] [phone]

 

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