Operational Update

RNS Number : 2438T

UK Oil & Gas Investments PLC

10 October 2017

 

UK Oil & Gas Investments PLC

       ("UKOG" or the "Company")        

Operational Update

Oil & Gas Recovered to Surface, Revised Flow Test and Workover Programme Planned,

Broadford Bridge -1z Kimmeridge Limestone Discovery, PEDL234, Weald Basin, UK

UK Oil & Gas Investments PLC (London AIM: UKOG) is pleased to announce that it has recovered measurable volumes of light oil and solution hydrocarbon gas to surface from the Kimmeridge reservoir section during well clean-up operations, at its 100% owned Broadford Bridge-1z ("BB-1z") exploration well, located in licence PEDL234.  The well has also free flowed for short periods during the well clean-up sequence in which spent completion fluids mixed with hydrocarbons were returned to surface. Well clean-up operations, utilising a high capacity linear rod pump, continue. Further developments will be reported in due course

To ensure that the flow testing of Kimmeridge reservoir zones is fully optimised, the Company will proceed ahead to workover the well and implement a revised testing programme.  The well clean-up operation will continue, then the current multi-zone completion assembly will be retrieved, the well worked over and flow tested sequentially over multiple, individual reservoir zones. Additional perforated zones will be added to the existing 1064 ft aggregate perforated section.

This operationally more flexible test operation will utilise a similar methodology to that successfully undertaken at the  Horse Hill oil discovery, albeit with a much-increased initial lifting capability. The rig-less test will involve both nitrogen lifting and pumping as permitted under BB-1z's current regulatory consents.

The decision to workover the well follows receipt of two independent cement-bond analyses by Premier Oilfield Laboratories in Houston, USA and Xodus in the UK. These analyses, together with the Company's own internal evaluation, demonstrate that the quality of the cement-bond over some of the reservoir zones within the current BB-1z well is less than optimal. The findings conclude that, due to the cement-bond condition over segments of the reservoir section, the current completion programme has not effectively connected the wellbore to much of the best open natural fractures. Therefore, the testing to date has not properly evaluated the full flow potential of the overall Kimmeridge reservoir sequence.

Rectifying poor cement bonding in a wellbore is standard oilfield practice and is carried out by squeezing further fresh cement slurry through new or existing perforations in the well's heavy-gauge steel casing. Consequently, following the removal of the current BB-1z well completion assembly, the Company plans to carry out a short sequence of cement-squeezes through the 7-inch casing to rectify sections of the reservoir zone's cement-bond.

Ongoing analysis of electric logs has also revealed further Kimmeridge reservoir zones of interest and these will be perforated and included in the new forward testing programme.

The cement-squeeze and new flow test programme is planned to commence upon the completion of well clean-up operations and delivery of the necessary equipment. The commencement of the programme will be announced in due course. 

Stephen Sanderson, UKOG's Executive Chairman, commented:

"The recovery of free, mobile light oil and solution gas to surface is significant and encouraging news and testament to the Kimmeridge Limestone reservoir's ability to deliver hydrocarbons even from a less than optimal completion.  The periods of good natural flow and identification of additional prospective reservoir zones to flow test add further positive outcomes.

Although the forthcoming workover presents additional unplanned work, the reservoir zone's cement-bond integrity is readily rectifiable by the planned short cement-squeeze phase, a common-place and routine oilfield practice. The well will then be restored to an optimal condition for further testing.

I am confident that the revised forward testing plan will be able to deliver the results that will help demonstrate BB-1z's near term commercial viability."

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: [phone] 

WH Ireland (Nominated Adviser and Broker)

James Joyce / James Bavister                                                   Tel: [phone]

Cenkos Securities PLC (Joint Broker)

Nick Tulloch / Neil McDonald                                                   Tel: [phone]

Square 1 Consulting (Public Relations)

Brian Alexander / David Bick                                                    Tel: [phone]

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
cement	high grade impermeable Portland cement or concrete used to fill the space or annulus between the well's steel casing and surrounding rock formation. The cement bonds to both the steel casing and surrounding rock to form an impermeable pressure seal.
cement-bond	the measure of the ability of the well's cement to contain pressure. The cement-bond isolates the rock from the well bore and thus prevents rock formation fluids from moving vertically upwards or downwards via the well bore. A good cement bond permits fluid to flow into the well bore solely via perforations through the cement and casing.
cement-squeeze	a remedial workover process whereby cement slurry is pumped into the well's annulus to fill uncemented areas or zones where cement bond is deemed to be inadequate
completion (assembly)	a generic term used to describe the assembly of downhole steel production tubing and equipment that allows safe and efficient production from an oil or gas well
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
electric logs	measurements of the electrical properties of the rock and fluids in and surrounding the wellbore to determine the petrophysical and geological properties of the rock in its in-situ state. The electric logs in BB-1z include 3-dimensional images of the electrical resistivity of the rock which when processed are designed to map and characterise natural fractures, these are known as " image logs"
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
free flow	a well flowing to the surface without the use of a downhole pump
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
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
workover	the process of performing maintenance or remedial treatments on an oil or gas well, such as the removal and replacement of the well completion assembly

UKOG Licence Interests

The Company has interests in the following ten UK licences:

Asset	Licence	UKOG's Interest	Licence Holder	Operator	Area (km2)	Status
Avington 1	PEDL070	5%	UKOG (GB) Limited	IGas Energy Plc	18.3	Field in stable production
Baxters Copse 2	PEDL233	50%	UKOG Weald Limited	IGas Energy Plc	89.6	Appraisal/development well planned; licence extended to 2018
Broadford Bridge 3	PEDL234	100%	Kimmeridge Oil & Gas Limited 4	Kimmeridge Oil & Gas Limited 4	300.0	BB-1&1z drilling completed testing underway
Holmwood 3	PEDL143	40%	UKOG	Europa Oil & Gas (Holdings) plc	91.8	Holmwood-1 exploration well planned in 2017
Horndean 1	PL211	10%	UKOG (GB) Limited	IGas Energy Plc	27.3	Field in stable production
Horse Hill 5	PEDL137	32.435%	Horse Hill Developments Ltd ⁶	Horse Hill Developments Ltd ⁶	99.3	Submitted planning application for long term production tests and drilling of two wells
Horse Hill 5	PEDL246	32.435%	Horse Hill Developments Ltd⁶	Horse Hill Developments Ltd ⁶	43.6	As above
Isle of Wight (Offshore) 3	P1916	100%	UKOG Solent Limited	UKOG Solent Limited	46.7	Preparing drilling planning submission
Isle of Wight (Onshore) 2, 3	PEDL331	65%	UKOG	TBA	200.0	Preparing drilling planning submission
Markwells Wood 2	PEDL126	100%	UKOG (GB) Limited	UKOG (GB) Limited	11.2	Submitted planning application for appraisal and field development

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 and 1z discovery well and the extension of the Godley Bridge Portland gas discovery.

4. UKOG has a 100% interest in Kimmeridge Oil & Gas Limited, which has a 100% interest in PEDL234.

5. Oil discovery with recently completed flow testing.

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.

 

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