UKOG status update August 19th 2017

It has been a week since I visited UKOG’s  Broadford Bridge drilling site and all is quiet on the RNS front since the last operational update on the 10th August. Everyone is hungry for news and getting a little impatient, especially as the shares are stuck in a 7-8p zone.

But with evidence of some hefty trades all week (evidence seems to suggest buys and perhaps more stake building by French owned SCDM Energy Ltd. who hit a 5% holding on 26th July).

The French are coming! SCDM Energy, Bouygues family take 5.03% UKOG

The company said on 10th August that “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.”

Looking at Twitter, Bulletin boards, Anti-fracking web sites etc. the rig still seems to be up on the site.  So what is going on? Cement and a term called Cement Squeeze seems to be the issue of the day.

First some technical stuff on cementing during the completion of a well. As Schlumberger, who are currently on site at BB, say on their web site, “A primary reason for cement casing is to prevent communication between producing zones, hence engineers run a cement bond log to ascertain that the cement sheath between the casing and the borehole wall is without flaws. If gaps exist, engineers remedy the problem by injecting cement through holes made in the casing at the appropriate depths. This is known as a CEMENT SQUEEZE JOB”

[idz_button color=”default” size=”medium” label=” Learn More: Intro to well completions” icon=”” link=”http://www.slb.com/-/media/Files/resources/oilfield_review/defining_series/Defining-Completion.pdf?la=en&hash=94F9321E81460492FA37F864C424E9F18A173C80″ target=”_blank” type=”square_shape” class=””]

As a reminder from the last RNS, 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.”

My take on things at the moment is this is a technically challenging onshore well and rushing the completion and testing of such as well would not be prudent to meet the needs of us shareholders. The technical guys on site, Schlumberger etc. are competent well engineers and they will take the time to make sure that the well is not compromised in any  way. The vertical well was plugged and the new BB-1z sidetrack was successfully drilled and “in optimal condition for flow testing”.

If a Cement Squeeze job is the explanation for the lack of news, lets not panic, its not uncommon and this highly fractured rock looks like a tricky beast to deal with. It looks like flow testing may have been delayed by something as the rig hasn’t left and there has been no RNS confirming the rig has departed Broadford Bridge. But the company planned for 14 weeks of testing from the well and the planning permission doesn’t run out until October when the next council meeting is scheduled. The chances of the well being abandoned due to technical problems looks extremely unlikely given the experts on site including Stephen Sandersen which is what the anti-drilling brigade dearly want.

Again from last RNS:

“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.”

As a reminder when things do go wrong when a well and cement job are rushed, watch the great Deepwater Horizon movie, if you’re into oil well worth a watch.

BB is not going to be a “duster” even with any technical challenges facing the team at the well site given what we know from the last RNS. The question is 1500 barrels a day, or 5000 barrels a day? Horse Hill near Gatwick flowed at 1,300 barrels a day and the 1,400 ft vertical thickness of BB-1z Kimmeridge section is much longer than the HH well. The side track well offers an opportunity for higher flows than a vertical well as it will intersect more of the pay zone. Frustrating to wait for news but it looks promising.

Hopefully another site visit in coming days to see whether the rig is on its way. Watch this space!

ContrarianInvestorUK: Twitter @ContrarianUK

Source: contrarianuk.com

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