UK Oil & Gas Investments Plc (AIM,NEX:UKOG) Operational update

UK Oil & Gas Investments PLC (London AIM and ISDX: UKOG) is pleased to announce that, to optimise well completion and subsequent flow test performance, it has successfully drilled, logged and cased a mechanical sidetrack, BB-1z, at its 100% owned Broadford Bridge-1 (“BB-1”) exploration well located in licence PEDL234.

The sidetrack has fulfilled its objective of replicating the geological success of BB-1, via a mirror-image borehole within the Kimmeridge. The new borehole delivers a fresh, identical section of heavily-fractured oil-bearing Kimmeridge reservoir, with minimal formation damage and an in-gauge, cased-off, 8.5-inch borehole optimal for well completion and flow testing.


· To deliver optimal Kimmeridge flow test potential, a sidetrack, designated Broadford Bridge-1z (“BB-1z”), has been successfully drilled, logged and cased over the entire 1,480 ft thick Kimmeridge reservoir section.

· BB-1z delivers a fresh, fractured oil-bearing Kimmeridge reservoir section identical to BB-1, with minimal formation damage and an in-gauge 8.5-inch borehole optimal for well completion and flow testing.

· The sidetrack, from 2,613-5,757 ft measured depth (“MD”), runs parallel to BB-1, some 200 ft to the south, mirroring the original BB-1 trajectory. All necessary regulatory permissions to drill BB-1z were obtained. BB-1 plugged and abandoned over entire Kimmeridge section.

· Significant oil traces in drilling fluid seen throughout 1,400 ft vertical thickness of BB-1z Kimmeridge section. Wet gas shows near identical to BB-1. Southerly trajectory aimed at possible more intensely natural fractured zones than BB-1.

· Completion of BB-1z as a potential oil producer is now underway and on track. All permissions in place for a comprehensive multiple zone extended flow test, comprising 926 ft total aggregate perforated section.

A mechanical sidetrack was included as a provision in the Oil and Gas Authority’s (“OGA”) permission to drill BB-1, being a normal contingency during drilling operations.

Following the month-long coring and electric logging programme it became apparent that the duration and difficulty of coring such highly-fractured rocks in an inclined well led to potential plugging of some intensely fractured Kimmeridge zones likely jeopardising flow test performance. Sections of the overlying Purbeck also exhibited washout zones making both optimal casing-setting in the full 8.5-inch open hole section and resultant Kimmeridge well completion problematic. Using lessons learnt from BB-1, the short-duration sidetrack was drilled using the same non-toxic drilling fluid but with a lower density and higher viscosity mixture to minimise reservoir formation damage via possible plugging of oil-filled fractures. The sidetrack’s in-gauge 8.5-inch borehole was cased-off successfully without problem and will now be completed for flow testing.

The sidetrack, drilled in five days, was drilled out from BB-1’s existing 9 ⅝-inch casing and extends from 2,613-5,757 ft measured depth (“MD”), from within the Purbeck Limestones to below the base of the Kimmeridge Limestone Zero (“KL0”) fracture zone. The sidetrack’s surface trace runs parallel to BB-1, some 200 ft to the south, mirroring the original BB-1 trajectory.

Significant oil traces were recovered from drilling fluid throughout the Kimmeridge section from 3,622 ft MD to below 5,562 ft MD, a vertical thickness of around 1,400 ft, greater than seen in BB-1. Wet gas shows were at near identical levels to that seen in the original BB-1 borehole.

The more southerly BB-1z trajectory was designed to encounter a potentially higher degree of natural fracturing associated with a nearby significant fault within the Kimmeridge. Initial CMI/MMI log quick-look interpretations indicate that this strategy was successful.

Additionally, BB-1z delivers a unique opportunity to map the lateral connectivity of the natural fracture system between BB-1 and BB-1z. This is a key piece of reservoir information, which along with the analysis of 554 ft of core and electric logs, will greatly aid the placement of future wells and ultimately help optimise any potential production from the reservoir at Broadford Bridge.

Prior to operations start, the original borehole, BB-1, was permanently abandoned with three continuous cement plugs over the entire oil-bearing Kimmeridge section, in full accordance with current required safety and well abandonment regulations.

All necessary regulatory permissions to drill the mechanical sidetrack, BB-1z, were obtained from the Environment Agency, Health and Safety Executive and OGA. The sidetrack’s surface trace also lies within the approved “zone of deviation” as specified under West Sussex County Council’s (“WSCC”) planning consent. The completion of the sidetrack as a potential oil-producing well will constitute the end of the permitted “well construction phase” as defined under WSCC’s planning consent.

Operations at site continue to prepare and complete BB-1z as a potential oil producing well from multiple zones over a gross perforated interval of 926 ft. Flow testing will commence after the rig has vacated the site, which will be announced in due course.

The extended flow test programme, to be conducted over a maximum 14-week period, 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 BB-1 and BB-1z technical learnings also have clear positive implications for the forthcoming Horse Hill flow test, which is now being technically reviewed to include further zones and an increased perforated section.

About BB-1

BB-1 and BB-1z, 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 1,400 ft has been demonstrated by BB-1 and 1z. 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.

Stephen Sanderson, UKOG’s Executive Chairman, commented:

“Although BB-1 drilling and coring results were highly successful, proving our geological concept, it became clear that the duration and difficulty of coring such highly-fractured rocks in an inclined hole put the borehole in a less than optimal condition, ultimately jeopardising Kimmeridge flow-test performance. Consequently, using the drilling knowledge gained from BB-1, we have delivered BB-1z, consisting of a fresh, undamaged, 1,480 ft thick, intensely fractured Kimmeridge oil-bearing reservoir in optimal condition for flow testing.

The sidetrack’s comprehensive image log data also presents an opportunity to unravel the extent and connectivity of natural fracturing within the Kimmeridge reservoir between BB-1 and BB-1z. This will greatly assist our understanding of flow test behaviour and the optimal placement of potential future Kimmeridge production wells at the site.

The sidetrack, BB-1z, is thus a solid investment in the future of the flagship Broadford Bridge discovery and the wider Kimmeridge play that underlies UKOG’s significant licence holdings.”

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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