UK Oil & Gas Inv PLC (AIM:UKOG) Production Flow Test Operations Commence

Horse Hill-1 Kimmeridge Limestone and Portland Oil Discovery, PEDL137, Weald Basin, UK

UK Oil & Gas Investments PLC (London AIM: UKOG) is pleased to announce that it has been informed by Horse Hill Developments Ltd (“HHDL”), the operator of the Horse Hill-1 (“HH-1”) Kimmeridge Limestone 3 (“KL3”), KL4 and Portland oil discovery,  that planned flow testing operations of HH-1 have commenced. All key equipment necessary to carry out a 150-day long-term extended flow test campaign at HH-1 is now on site. The Company holds a 32.435% beneficial interest in licence PEDL137 containing the HH-1 oil discovery.

Following final equipment set-up and the subsequent removal of three temporary suspension plugs in the wellbore, flow will first be re-established from the Portland sandstone oil pool. Testing of each of the KL4 and KL3 oil pools will follow completion of the Portland test sequence.

Stephen Sanderson, UKOG’s Executive Chairman commented:

“UKOG remains confident that the comprehensive long-term production testing campaign will provide the necessary data to fully assess Horse Hill’s Portland and Kimmeridge commerciality and help move the project towards timely production and positive cash flow. Horse Hill remains a fundamental and exciting part of the Company’s core portfolio and we look forward to a safe and positive test campaign.”

Extended Well Test (“EWT”) Overview

As the 2016 short flow test campaign established commercially viable initial flow rates for each of the Portland, KL4 and KL3 zones, the 2018 EWT’s prime goal is to confirm that the wellbore is connected to a commercially viable oil volume within one or more of the three zones.

The long term reservoir performance data is also expected to provide the necessary data to enable, for the first time, Petroleum Resources Management System compliant Kimmeridge and Portland reserve figures to be estimated at Horse Hill.

Each test sequence will include a short, optimised rate test, together with a sequence of “choked back”(i.e. reduced) steady-state flow periods necessary to obtain the data required to determine the connected oil volume within each zone. A series of associated long pressure build up tests are also planned. Oil produced from the EWT will be sold on the “spot” oil market and any revenues will be utilised to offset overall testing costs.

 In a move to further minimise environmental impact,  the EWT will utilise a new type of clean-burning enclosed flare, a UK onshore industry first. The flare utilises technology employed at UK landfill sites and was developed collaboratively by Landfill Systems, PW Well Test and UKOG. The use of an enclosed flare is regarded as the “best available practice” by the Environment Agency.

 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.

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