Shares in the partners involved in the much-hyped Horse Hill discovery in the southeast of England got a boost on Wednesday from news the long-awaited next phase of flow testing has begun, with all of the equipment needed to carry out the 150-day long-term campaign at the HH-1 well now on site.
Among them, Alba Mineral Resources PLC (LON:ALBA), which owns an 11.8% interest, saw its shares add nearly 4% at 0.26p, while Solo Oil PLC (LON:SOLO), owner of a 9.8% stake, rose 2.3% at 2.25p, and UK Oil & Gas Investments PLC (LON:UKOG), which has a 32.4% stake in the project, gained 8% at 1.35p.
The latest programme at Horse Hill is a follow up to the 2016 testing, which saw aggregate oil flows at a rate of 1,688 barrels of oil per day (bopd) over short periods (three 30-90 hour tests).
The plan is to first re-establish flows from the Portland sandstone oil pool, with testing of the Kimmeridge Limestone 4 (KL4) and Kimmeridge Limestone 3 (KL3) oil pools to follow shortly after.
The purpose of the programme is to demonstrate the commercial viability from one, possibly two, wells.
In the best-case scenario, investors will want to see wells drilled and testing, yielding oil flows somewhere between 1,000 and 2,000 bopd.
If it is successful and assuming Horse Hill Developments (HHDL) – comprising a handful of small-cap companies – can secure the necessary funding, the plan is to move HH-1 into long-term commercial production in 2019.
More immediately, the intention is to follow up the longer term well test programme with new drilling – with the proposed Horse Hill 2 (HH-2) well designed as both an appraisal and future production well.
Similarly, if the upcoming tests prove successful, it is also anticipated that the existing Horse Hill well could be extended via a sidetrack.
What the bosses are saying?
George Frangeskides, Alba Minerals' executive chairman, commented: "We are very pleased that, following receipt of all regulatory approvals, HHDL has now confirmed that it has mobilised equipment to site and intends to commence the extended well test programme shortly.
"This test programme is designed to provide the necessary data to assess the commerciality of the Portland and the Kimmeridge zones at Horse Hill and, as such, clearly represents a key phase in the Project."
Solo chief executive Neil Ritson added: “We are extremely pleased to see that, following receipt of all regulatory approvals, HHDL has moved quickly to mobilise the necessary equipment and is now due to start the extended well tests in the immediate future.
“These tests, aimed at establishing commerciality, are a critical part of the pre-development phase and we remain enthusiastic about the potential outcome for our investors.”
And UKOG executive chairman Stephen Sanderson said: “UKOG remains confident that the comprehensive long-term production testing campaign will provide the necessary data to fully assess Horse Hill's Portland and Kimmeridge commerciality and help move the project towards timely production and positive cash flow.”
-- Updates with share prices --