Turkey operational update

RNS Number : 7334Q

UK Oil & Gas PLC

30 June 2022

 

UK Oil & Gas PLC

("UKOG" or the "Company")

Turkey operational update

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has been advised by Aladdin Middle East ("AME"), the operator of the Company's 50% interest in the Resan Licence, that their field crew has discovered a live, light, 41.7˚API oil seep in an unused seismic drill-hole (drilled during this year's seismic programme), approximately 4 km north of the recent Basur-3 ("B-3") location.

The seep's API gravity is close to the 43˚ API gravity of AME's nearby producing East Sadak oil field and provides evidence of an active light oil petroleum system in the central area of the licence, lying to the north of the joint venture's ("JV") focus on appraising the Basur-1 oil discovery. This has positive implications for future exploration in the licence.

The oil was discovered when inspecting unused drilled seismic dynamite shot holes for potential future use. Oil was initially recovered on successive days from a sandstone layer at approximately 4m from surface using a bailer on a cable. Two new drill holes located 8m to the east and west were completed several days later and also recovered light oil to surface from the same depth. Videos of the oil recovery will be placed on the Company's website.

Oil samples have now gone for analysis in T ü rkiye and the UK. The JV is also evaluating the potential acquisition of a new seismic line over the seep to help determine if the oil could be derived from a deeper subsurface oil accumulation.

Drilling and seismic update:

Interpretation of the new 2D seismic programme has now been completed and demonstrates that the Basur closure, within which in 1964 Basur-1 ("B-1") is reported to have recovered 500 barrels of light 35˚API oil to surface over a 6-hour period, looks to extend much further to the west than originally mapped, with a possible culmination up to 200m shallower than at B-1. The new seismic also clearly demonstrates the presence of a major backthrust fault to the south of Basur-3 ("B-3"), something not evident on the original legacy seismic. This interpretation helps explain why the reservoir section was not encountered in the B-3 well.

It was always UKOG's view that, due to the uncertainty of fault placements near B-3, if a well were not targeted to directly intersect the reservoir in the vicinity of the B-1 subsurface location, the possibility of coming in lower than prognosis remained a material risk. This is why the Company insisted on a B-3S sidetrack contingency as part of the B-3 operation.

Consideration is, therefore, being given by the JV to the acquisition of a small infill phase 2 seismic programme, designed  to define a further Basur drilling location up-dip and to the northwest of B-1 and B-3. This location would be designed to offer the ability to test the Garzan and Mardin reservoirs within the Basur structure via a less complex vertical well, a potentially lower risk lower cost option than the envisaged B-3 sidetrack ("B-3S").

Whilst B-3S still remains a solid and low geological risk option, the new seismic clearly indicates that it would require a longer and higher angle trajectory than previously envisaged, involving drilling through the major backthrust fault at a high angle within potentially heavily fractured limestone rocks. This situation potentially adds to the risks of losing mud circulation and becoming stuck in hole. Whilst this can be mitigated against by detailed operational planning and the correct rig and equipment choices, it could increase the drilling risk, complexity and cost.

Analysis of further geological information obtained from legacy wells in the Resan area indicated that, whilst oil shows were encountered at similar levels to B-1, questions arose as to reservoir quality and the increased chance of fractures acting as conduits for underlying formation water ingress. Consequently, at this time, plans for a vertical Resan-6 ("R-6") well have been put on hold and the partnership will focus on the Basur area, where oil has flowed to surface at reported good rates. 

Consequently, the JV will carefully consider its next step in the Resan Licence to ensure it maximises its chances for a successful outcome.

The Company's new depth map plus a pre and post drill seismic line through the B-1 and B-3 location will be made available on its web site.

Stephen Sanderson, UKOG's Chief Executive commented:

"The discovery of the light oil seep is positive and encouraging as it confirms the prospectivity of the central area of the licence to the north of the Basur oil discovery. The new seismic acquisition has also proved its worth in helping to explain the B-3 drilling result and to demonstrate that the B-1 discovery could extend further west and significantly further updip than previously recognised. Careful consideration will now be given to further seismic acquisition combined with plans to drill both B-3S and a new updip B-4 well. " 

Qualified Person's Statement

Matt Cartwright, UKOG's Commercial Director, who has 39 years of relevant experience in the global 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 / Matt Gormley / Allen D Howard		Tel: [phone]
WH Ireland Ltd  (Nominated Adviser and Broker)
James Joyce / Andrew de Andrade		Tel: [phone]
Communications
Brian Alexander		Tel: [phone]

Glossary of Terms:

° API	A measure of the density of crude oil, as defined by the American Petroleum Institute
bbl	Barrels
bopd	Barrels of oil per day
discovery	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.
prospect	A project associated with a potential accumulation that is sufficiently well defined to represent a viable drilling target
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 sand
sidetrack	Re-entry of a well from the well's surface location with drilling equipment for the purpose of deviating from the existing well bore to achieve production or well data from an alternative zone or bottom hole location, or to remedy an engineering problem encountered in the existing well bore.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the “UK MAR”) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company’s obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

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