Highlights:
- 150-day production flow-test and new drilling programme set to commence in late winter 2017/18
- Programme aims to confirm commerciality of Portland and Kimmeridge oil discoveries and gear-up for first permanent oil production targeted for early 2019.
- Drilling of HH-2 appraisal well as future producer to directly follow flow testing programme
- Permanent production consent application underway, submission to SCC expected in spring 2018
- Swift and successful eviction of protesters completed at Horse Hill site on 02 December
AIM-listed UK Oil & Gas Investments (UKOG) announced December 19 that it has been advised by Horse Hill Developments Ltd ('HHDL'), the operator of the Horse Hill-1 ('HH-1') oil discovery, in which the Company holds a 32.435% interest, that key contracts and the requisite funding commitments from all participants are in place to undertake the production flow testing and drilling campaign approved by Surrey County Council ('SCC') in October 2017. The 2018 programme is planned to commence directly upon the discharge of SCC's pre-commencement planning conditions, expected by the end of winter 2017/18. Environment Agency approval for the full programme was granted in September 2017.
Horse Hill Oil Discovery
The HH-1 Portland sandstone and Kimmeridge Limestone oil discoveries lie within onshore Weald Basin licences PEDL137 and PEDL246 covering an area of 55 square miles (143 km2) north of Gatwick Airport. As previously reported on 21 March 2016, HH-1 flow tested at a significant commercial aggregate stable dry oil rate of 1,688 barrels of oil per day ('bopd') from the Portland, Kimmeridge Limestone 3 ('KL3') and Kimmeridge Limestone 4 ('KL4') reservoir horizons.
2018 Horse Hill Flow Test Programme
Following a short period of civil works to upgrade site facilities, a 150-day production testing programme focused upon the Portland, KL3 and KL4 reservoirs will commence. As commercially viable initial flow rates were established by the 2016 flow tests, the 2018 testing programme's goal is to confirm that HH-1's reservoirs are each connected to a commercially viable oil volume, thus enabling a declaration of commerciality to be made.
The Portland, KL3 and KL4 flow tests, each planned for around 30-40 days duration, will consist of a sequence of stabilised steady state flow and shut in periods to establish the oil in place ("OIP") directly connected to the well. A short maximum flow-rate test will also be included for each reservoir. If time permits, a further short-term test of a deeper untested Kimmeridge reservoir may be undertaken.
Testing will commence with the Portland reservoir, which in the Company's opinion, given the 323 bopd stable pumped rate achieved in 2016 and the 32 million barrels most likely OIP calculated by Xodus in 2017, is a strong candidate for commercial viability. Subject to a successful test, a Portland commercial declaration is expected to be made by mid-2018. A Kimmeridge commerciality declaration would follow programme completion and analysis of reservoir engineering data.
2018 Horse Hill Drilling Programme
Subject to a successful testing outcome in the Kimmeridge and Portland, the HH-2 well is planned as a future Portland producer, with an expected spud towards the end of Summer 2018. Drilling plans include optionality to deepen HH-2 into the Kimmeridge to gather core and image log data, together with a possible northwards deviation to access the adjacent oil bearing Collendean Farm fault block's significant Portland OIP.
The HH-1z Kimmeridge sidetrack spud is now planned for 2019 following construction of a Kimmeridge reservoir model utilising HH-1 Kimmeridge production data, reservoir data from the Company's 100% owned Broadford Bridge-1 & 1z Kimmeridge discovery and any future HH-2 Kimmeridge core.
Production Planning Application
To achieve its goal of stable, long-term Horse Hill oil production by Spring 2019, HHDL now plans to submit a further production planning application to SCC in late Spring 2018. This application will seek consent to produce oil initially from HH-1 & 1z, and HH-2, together with further production wells in a second contingent drilling phase.
Horse Hill Eviction
On Saturday 2 December 2017, a 42-person team, including High Court bailiffs and the UK's pre-eminent specialist protester removal contractor, successfully removed around 20 activists who had illegally occupied part of the Horse Hill site since Thursday 30 November 2017. These activists intimidated, jostled and verbally abused HHDL's security staff and caused criminal damage during their illegal occupation.
An increased security presence will now remain on the site until completion of the 2018 programme.
The Company is rigorously pursuing all available legal means to seek recourse for this and any future events that prevent or obstruct its right to conduct its lawful business.
Stephen Sanderson, UKOG's Executive Chairman, commented:
'The 2018 Horse Hill programme is a key step towards delivering UKOG's goal of commercial production and significant cash flow by early 2019. The programme, geared to provide data to support a declaration of commerciality, will benefit greatly from the many significant Kimmeridge and operational learnings gained at our Broadford Bridge discovery.
'Horse Hill remains a fundamental part of the Company's core portfolio and we therefore look forward to returning to the birthplace of the Kimmeridge Limestone oil play.'
Source: UKOG
