20Mar 2016

The Horse Hill Sisters and Angus – The race is on!

The Unfolding Story of Horse Hill

A while back we looked at the story unfolding beneath Horse Hill. At the time we were curious to understand why Angus Energy had decided to depart from the Horse Hill Sisters and sell their stake to Regency. A simple answer would be that owning the rights to Brockham field meant they could benefit from the same oil that HH-1 discovered from only 2 miles away. And more so but we’ll get back to that. Before we do, let’s take a brief history trip!

Back in 2014, UKOG embarked on journey to target a massive payload of oil within the Upper Portland Sandstone. In October they found what they were after. Well, they almost did. From the start their intention was to find oil there and even though they did, it wasn’t the right spot. The figures that were released weren’t as big as some had anticipated.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/portland-oil-discovery–horse-hill- 1/201410240700121807V/

Even when they did reveal the discovery they only briefly mention that they hoped to discover gas in the Triassic.

Luck was on their side and when they drilled further they came across the two separate Kimmeridge discoveries. The HH-1 discovery well was now a success for all the wrong reasons, albeit a good one.

Suddenly UKOG started to understand what they were standing on and shortly afterwards, went for a bigger stake in HHDL. Next it was time to bring in a respected geologist, Stephen Sanderson, to the picture.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/new-ceo- appointment/201501271000022341D/

Many will remember when results of the drill became known in April 2015 and the media attention it generated.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/significant-upgrade-of-the-horse- hill-discovery/201504090700116742J/

At first it was discounted by some but further analysis of the results by reputed companies started to prove David Lenigas was right about its potential.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/schlumberger-independent- assessment-of-horse-hill/201508260705020849X/

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/markwells-wood-oil-field- competent-persons-report/201509140700078956Y/

Fast forward to 2016 and the flow tests started.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/final-flow-test- consent/201601040700126373K/

The two Kimmeridge results came first and they showed the enormous potential that could be reached there.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/update-on-flow- test/201602160700071444P/

When the last of the three results (Upper Portland) came back, it didn’t show as much as the previous results, but combined, the well could produce over 1,500 bopd. More importantly this was free flowing and no need for fracking or stimulation with only a one inch choke.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/further-update-on-horse-hill-1-flow- test/201603020700077074Q/

When Wytch farm originally started out, they were looking at less than 700 bopd. It later developed into the largest onshore oil field in not just the UK, but also in Western Europe. HH-1 has managed to outperform that first well and it’s only the start. Plans for multiple wells off singular pads are not far away. Not bad for what at first appeared to be a failure by missing the sweet spot in the Upper Portland Sandstone.

http://www.investegate.co.uk/uk-oil—38–gas-inv-plc–ukog-/rns/further-update-on-horse-hill-1-flow- test/201603090700084696R/

So why did Angus decide to leave? Brockham field lies just to the north west of HH-1. The company are experts at drilling since that’s their bread and butter. It has same geology beneath it and they already have 140 barrels coming out the ground. They know what they can achieve from the Kimmeridge, but they can improve what HH-1 did with the Upper Portland. It won’t be long before they’ll be hunting for the sweet spot that was originally missed and at the same time hitting the Kimmeridge zones over and over again. UKOG aren’t stupid either and rather than just watch a competitor take advantage, they have a 6% interest in Angus.

It also wouldn’t be unreal to expect 1 billion barrels or more coming out the region. This won’t be overnight of course, more a long term investments so one to consider for the ISAs and SIPPS. And when this happens,David Lenigas will be getting ready to say “I told you so!”

@ABMckinley

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