UK Oil & Gas Investments PLC (London AIM and ISDX: UKOG) announces that as the HSE have consented to the revised and expanded flow test programme, all necessary regulatory permits are now in place to commence flow testing at its 100% owned Broadford Bridge-1 (“BB-1”) exploration well located in licence PEDL234.
· All flow test regulatory permissions now in place following review by the Health and Safety Executive (“HSE”). Work continues to “complete” the well as a potential oil producer to be followed by a rig-less flow-test, encompassing multiple Kimmeridge zones over a total aggregate perforated section of 926 ft.
· Preliminary log interpretations indicate that the extensively naturally-fractured Kimmeridge section is oil bearing from around 3,800 ft to below 5,640 ft measured depth (“MD”) a vertical section of around 1,330 ft. This observation is in accord with the mobile light oil recovered to surface in cores and recovered from drilling fluid, together with wet gas shows.
· An application to extend the exploration/testing phase for a further year to 15 September 2018 has been submitted to West Sussex County Council (“WSCC”) with a decision expected in September 2017.
Operations at site continue to prepare and complete BB-1 as a potential oil producing well from multiple zones over a gross perforated interval of 926 feet. Flow testing will commence after the rig has vacated the site.
Specialists at Premier Oilfield Laboratories (“POL”) and Nutech, both located in Houston, USA, have examined electric logs from BB-1 and their preliminary evaluations calculate that the Kimmeridge is oil bearing from around 3,800 ft to below 5,640 ft MD. These results accord with core data, drilling data and observed oil and wet gas shows. They extend the gross possible vertical thickness of the Kimmeridge Continuous Oil Deposit to around 1,330 ft. Final log evaluation results integrating core and rock cutting measurement and fluid data will be reported in due course.
The flow test programme is specifically designed to gather further supportive evidence that the Kimmeridge contains a continuous oil deposit, with mobile light oil and which can flow to surface at commercial rates and in commercial volumes.
The Company has submitted an application to WSCC to extend the current BB-1 exploration and testing phase planning permission for a further year. The extension will enable a fully comprehensive extended flow test programme to be conducted. A decision from the WSCC Planning Committee is expected in September 2017.
BB-1, an exploration step-out, is located south of Billingshurst, West Sussex, within the 300 km² PEDL234 licence, in which the Company has a 100% interest via its ownership of the licence’s operator, Kimmeridge Oil & Gas Limited (“KOGL”).
As previously reported, in the Company’s opinion, the multiple positive indications of mobile light oil observed throughout the entire naturally fractured Kimmeridge Limestone 0 (“KL0”) to KL4 and shale target section are supportive that a significant continuous oil deposit, with a vertical extent of around 1,330 ft has been demonstrated at BB-1. The uppermost two units of this zone, KL4 and KL3, flowed oil at a stable aggregate rate of 1,365 barrels per day in the Horse Hill-1 discovery near Gatwick Airport in 2016.
This continuous oil deposit therefore likely underlies the entire PEDL234 licence and a significant area of the wider Weald Basin, including the Horse Hill-1 Kimmeridge oil discovery some 27 km to the north east. The Company has the largest licence holding in the Weald Basin and within the prospective area of the Kimmeridge play.
The Company notes that SCDM Energy, the French owned oil and gas exploration and production company, has increased its holding in the Company to 174,954,179 ordinary voting shares, representing 5.03% of the issued share capital as of 25th July 2017.
The Company has also received notice of the exercise of warrants to subscribe for a total of 40,625,000 new ordinary shares in the Company (the “New Ordinary Shares”). The Company has received £325,000 in respect of this exercise. Application has been made for these New Ordinary Shares to be admitted to trading on AIM and it is anticipated that trading in such shares will commence on or around 4 August 2017.
Following Admission, the Company’s enlarged issued share capital will comprise 3,520,759,100 ordinary shares. The Company does not hold any shares in treasury. This figure of 3,520,759,100 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.
Stephen Sanderson, UKOG’s Executive Chairman, commented:
” Whilst the delivery and completion of the well as a potential oil-producer is not as swift a process as a simple rig-based drill stem test (or DST), this configuration is designed to provide significant future cost and potential test performance benefits. This is a sound investment in the future of BB-1 and is a key necessary step to help us achieve our corporate goal to establish first Kimmeridge production by the end of 2018/early 2019. Operations at BB-1 remain on track.”
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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