Because there are so many listed stakeholders in the Horse Hill project, it might be easier for some people to simply follow David Lenigas on Twitter rather than dissect a multitude of regulatory news service (RNS) announcements.
He may no longer sit on the boards of the companies involved, but David Lenigas’s finger prints are all over the Horse Hill oil project that has sparked excitement in the market and caught the imaginations of investors.
Lenigas was formerly a director of, or has had close ties to, five of the seven listed companies that have stakes in the project (UKOG, Solo Oil, Stellar Resources, Evocutis, Doriemus).
And he seemingly played a pivotal role in bringing together the stable of companies that formed a syndicate in Spring 2014 to step in and fund the Horse Hill well.
Lenigas has since stepped down from his board positions, but via social media and his own blog (https://www.davidlenigas.com) he remains an outspoken supporter of all things Horse Hill.
Here, we take a look at five key points raised by Lenigas following today's latest update from the project.
1) He's very happy about it
Perhaps unsurprisingly, the Australian deal maker was not backwards in coming forwards about the latest news from Horse Hill.
Absolutely fantabulous news on flow rates from #gatwickgusher this morning. Lesson. Some bloggers speak bollocks. Listen to company instead.
— David Lenigas (@DavidLenigas) March 1, 2016
#gatwickgusher is better than Wytch Farm discovery well. That flowed 600 bopd and look what happened there.
— David Lenigas (@DavidLenigas) March 1, 2016
FYI – Wytch Farm, on the south coast of England, is the UK’s best onshore oil field to date. It had been operated by BP since the 1980’s, currently produces some 18,000 barrels oil equivalent per day (boepd) and was sold to Perenco for $600mln in 2011.
2) He doesn't think UKOG is ‘doing a placing’
Whenever any small cap resource firm sees success, speculation can quickly turn to cash-burn and funding needs.
Generally speaking, equity funding is an unavoidable fact of life for pre-revenue junior oil firms. At some point or another someone has to stump up cash if smaller companies are to capitalise on their early successes – unfortunately for existing shareholders that often means equity dilution.
Nevertheless, Lenigas appears to suggest it won’t be a problem for UKOG.
I think bloggers saying UKOG doing a placing are blowing smoke out their backsides!
— David Lenigas (@DavidLenigas) March 1, 2016
@axessurf thanks for having faith and UKOG is so well funded. Next funding may well be a major. Let's see.
— David Lenigas (@DavidLenigas) March 1, 2016
3) More oil could flow
The impressive flow test results to date have come from two zones, in the deeper parts of the well.
These are the Lower Kimmeridge and Upper Kimmeridge limestones, and the initial tests yielded rates of over 450 bopd and now 900 bopd respectively.
So, the well has so far seen aggregate rates in excess of 1,360 bopd.
A further test is ongoing on the Upper Kimmeridge and, after that the current programmes final test will be carried out on the shallower Portland oil reservoir.
I'm really excited now to see the potential of the Portland test at #gatwickgusher. Who said there was no oil at Gatwick? Garbage!
— David Lenigas (@DavidLenigas) March 1, 2016
Aside from the three zones being tested, Lenigas also highlighted further potential in other formations observed in the well (these are known as the Oolite and Lias).
#gatwickgusher still has more to test yet. I wanted to do the Oolite and Lias, but it would have taken too long!!!!!!
— David Lenigas (@DavidLenigas) March 1, 2016
In the longer term, the appraisal and development planning is expected to see a horizontal well which in theory will open up the well to more of the Kimmeridge limestones and could therefore yield greater flow rates.
4) UKOG has more than one Horse in the race
The exploration concept that brought the Horse Hill project to pass is based on assumptions that the Kimmeridge zones seen in the well span large areas of the UK’s Weald basin.
UKOG and other companies have other licences in the region.
Notably, UKOG recently did a deal with Egdon and Europa to partner in the nearby Holmwood project. That deal, in late 2015, saw UKOG agree to pay for 40% of the cost of drilling a new well.
Given the new findings at Horse Hill it will be fascinating to see what the drill schedule may have in store at the neighbouring project.
Also significant is the recently acquired acreage on the Isle of Wight. UKOG secured some 200 square kilometres via last year’s onshore licensing round.
Located in the Weald and a jet-ski ride from Wytch Farm the company sees great potential on the island. UKOG, in January 2016, highlighted the already identified Arreton prospect and said it could contain over 200mln barrels of oil.
I rate some of @UKOGlistedonAIM other Weald and Isle of Wight assets as good as Horse Hill. So much for SS to do. Poor him.
— David Lenigas (@DavidLenigas) March 1, 2016
Steven Sanderson - or SS - now runs UKOG and in a statement today he said: “This result is therefore very significant for the company and the Weald Basin of the UK. The Kimmeridge play has moved from science project into the zone of commercial reality.
“The well's natural aggregate flow rate from the Kimmeridge limestones of 1360 bopd looks to be one of the highest natural flow rates recorded in a UK onshore wildcat well since the Wytch Farm discovery in the 1970s. It should be noted that the planned use of horizontal appraisal and development wells may further significantly enhance production flow rates seen to date.
“Following the final flow test in the overlying Portland, HHDL now plan to move full speed ahead to obtain the necessary permissions to return to the well, drill a horizontal sidetrack and conduct long term production tests."