UK Oil & Gas PLC (LON:UKOG) HorseHill 2z Horizontal Drilling Completed

Stephen Sanderson, UKOG’s Chief Executive, commented: We are delighted to have safely and successfully delivered a significant 2,500 ft of horizontal section within the Portland reservoir’s sweet-spot, the prime 35 ft zone containing the reservoir’s most oil productive sandstones.

Horse Hill Oil Field: HH-2z Horizontal Drilling Completed

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce the successful completion of its Horse Hill-2z (“HH-2z”) Portland horizontal drilling campaign (UKOG 85.635% net controlling interest). A total of approximately 2,500 ft of horizontal trajectory was drilled wholly within the Portland reservoir’s most oil productive zone or “sweet spot”, around 70 times greater exposure to the sweet-spot than seen in the HH-1 Portland vertical discovery well. The campaign’s key technical objectives have now all been successfully delivered.

The significantly increased exposure to the sweet-spot within HH-2z, the first horizontal well in the field’s Portland oil pool, is the prime technical enabler for HH-2z to be capable of delivering significantly greater flow rates than those seen in the HH-1 vertical well.

The good, clean horizontal trajectory, together with the continued indications of possible improved reservoir quality and significantly lower pressure-depletion than expected, led the Company to decide that there was little technical or economic benefit in pursuing drilling to the maximum planned c. 3,000 ft horizontal trajectory.

Following yesterday’s completion of a comprehensive electric logging programme, HH-2z is now being prepared for an extensive extended well test (“EWT”) programme, expected to commence in the coming weeks. The EWT, which will include the use of a British designed high-capacity/high-rate downhole electric pump or “ESP”, is planned over a minimum 90-day flow period, following which HH-2z and HH-1 will be retained and converted into long-term oil production wells.

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Oil production from the HH-1 EWT has continued throughout HH-2/2z drilling and will also continue in parallel with the HH-2z EWT. Total HH-1 test production now stands at over 77,200 barrels.

Analysis and integration of the 240 ft of core, cuttings and electric log data suites acquired in both the HH-2 pilot and HH-2z horizontal continues. Any impactful results will be reported in due course.

UKOG holds a controlling 85.635% interest in the Horse Hill oil field and surrounding highly prospective PEDL137 and PEDL246 licences, which are operated by UKOG’s subsidiary company, Horse Hill Developments Ltd.

Stephen Sanderson, UKOG’s Chief Executive, commented:

“We are delighted to have safely and successfully delivered a significant 2,500 ft of horizontal section within the Portland reservoir’s sweet-spot, the prime 35 ft zone containing the reservoir’s most oil productive sandstones.

The significant horizontal trajectory, combined with the continued positive indications of increased reservoir quality and lower pressure-depletion, effectively negated any technical or economic need to attain the maximum planned c. 3,000 ft horizontal section. As a result, HH-2z remains optimally placed to be able to deliver its goal of significantly higher flow rates than the highly productive HH-1 vertical discovery.

We now look forward to the imminent flow test campaign, a key step towards delivering significant long-term production at Horse Hill.”

Qualified Person’s Statement

Matt Cartwright, UKOG’s Commercial Director, who has over 36 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.

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