17:00 Wed 14 Oct 2020
UK Oil & Gas PLC - Turkey Resan licence update

UK Oil & Gas PLC
("UKOG" or the "Company")
Turkey Resan licence update
UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that further to its 23 July release, it has now successfully executed the participation agreement (i.e. farmin agreement) and the joint operating agreement with Aladdin Middle East Ltd ("AME") for its 50% interest in the 305 km² Turkish
Further to its successful 02 October equity raise, UKOG will now fund its agreed share of key initial preparatory operations so that the first oil appraisal well, currently planned as Basur-3, a surface location for which has now been chosen, can be drilled as soon as practicable in early 2021.
As reported on 23 July, Xodus Group Ltd's ("Xodus")
Table 1: Total Licence aggregate discovered and undiscovered prospective resources (mmbbl)
Total | Low Case (P90) | Mid Case (P50) | Mean Case (average) | High Case (P10) |
Gross recoverable | 18.9 | 39.2 | 43.4 | 84 ² |
UKOG net recoverable (50% WI) | 9.45 | 19.6 | 21.7 | 42 ² |
Gross oil in place | 142 | 275 | 321 | 607 |
Notes: 1. Table 1 shows an arithmetic sum of Xodus'
Of the total resources shown in Table 1, the majority lies within the known Basur-Resan accumulation which is estimated to contain aggregate mean and high case discovered recoverable volumes of 37.2 mmbbl (UKOG net 18.6 mmbbl) and 67 mmbbl (UKOG net 33.5 mmbbl), respectively. The remainder, classified as undiscovered prospective resources, lies within undrilled prospect A.
The following summarises the key points made in the Company's
· Overlooked material discovered resource and "oil-play":
The Licence holds the significant 50 km² Basur-Resan geological feature tested at its western end by the 1964 Basur-1 oil discovery. Basur-1 flowed 500 bbl to surface over a 6-hour period from naturally fractured and dolomitised Cretaceous age Mardin limestones, an extrapolated rate equivalent to 2,000 bbl of oil per day. Basur-Resan is a geological lookalike to AME's proven producing
· Rapid success case monetisation possible - months versus years in
· Greater recoverable resources than current
(see table 1 above and tables 1 and 2 on page 15 of UKOG's 2019 Annual Report).
· Similar chance of success to
Moveable hydrocarbons to surface have been demonstrated by the Basur-1 flow test, as is the case for UKOG's Loxley gas discovery. Greatest geological uncertainty in all UKOG's appraisal projects is, therefore, the respective reservoir's ability to deliver sustained commercial rates and volumes, a typical appraisal stage uncertainty.
· Significantly lower cost operations than
Basur-3 well and flow test gross costs are estimated by AME at
· Modest project and country entry cost:
UKOG pays first
· AME are a highly credible and successful Turkish operator with a 60-year in-country history. Possess key strategic knowledge as operator of first producing Mardin field,
· Good benchmark crude price and guaranteed oil sales:
Produced crude is expected to be of Arab medium to light quality, which currently realises prices of c.
· Prime geological address, overlooked petroleum system:
AME's nearby
Stephen Sanderson UKOG's Chief Executive commented:
"When compared to our material Loxley and Arreton appraisal projects, Resan offers even greater upside for similar risk, significantly lower operational costs and, more critically, given success, a far quicker route to production and cash flow. Resan is therefore a compelling and material growth opportunity that could provide potentially transformational reserves growth in the short term. It is a valuable addition to UKOG's portfolio.
We look forward to the imminent start of preparations to drill the first Basur-Resan appraisal well and to a long and successful relationship with our new partner AME."
Qualified Person's Statement
For further information, please contact:
UK Oil & Gas PLC
WH Ireland Ltd (Nominated Adviser and Broker)
Communications
Brian Alexander Tel: 01483 941493
Glossary
discovered resources | are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from known (i.e. discovered) accumulations, but whose commerciality is dependent upon a contingency e.g. further appraisal/production testing, increased oil price, technology application, government sanction etc. |
dolomite/dolomitisation | a crystalline form of calcium carbonate or lime. The geological process of turning the more common calcite crystalline form of calcium carbonate into dolomite . increases the pore space in the rock by approximately 13% thus improving the rocks ability to store oil and improve potential oil flow. |
limestone | a sedimentary rock predominantly composed of calcite (a crystalline mineral form of calcium carbonate or lime) of organic, chemical or detrital origin. Minor amounts of dolomite, chert and clay are common in limestones. Chalk is a form of fine-grained limestone |
mean value | the expected or average outcome of a defined probability distribution, in this case the calculated distribution of oil in place |
oil discovery | an oil accumulation for which one or several exploratory wells have established through testing, sampling and/or electric logging the existence of a significant quantity of potentially moveable hydrocarbons |
oil field | an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface |
OIP or oil in place | the quantity of oil that is estimated to exist in naturally occurring accumulations within the ground before any extraction to surface via production |
prospect | a project associated with a potential accumulation that is sufficiently well defined to represent a viable drilling target |
prospective resources/undiscovered resources | are defined as those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from Undiscovered accumulations. |
P10, P50, P90 values | High, mid and low case scenarios with a 10%, 50%, 90% probability respectively, that a stated volume will be equalled or exceeded |
recoverable volumes & recovery factor | those quantities of petroleum (oil in this case) estimated, as of a given date, to be potentially recoverable from known accumulations. The recovery factor represents the percentage of the OIP that can be recovered to surface via production and normally ranges from 10-50% |
well test, flow test | involves testing a well by flowing hydrocarbons to surface, typically through a test separator over a flowing period. Key measured parameters are gas flow rates, downhole pressure and surface pressure. The overall objective is to identify the well's capacity to produce hydrocarbons at a commercial flow rate and volumes. |
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