UK Oil & Gas PLC (LON:UKOG) has told investors that the Portland reservoir test in the Horse Hill well has been successfully completed - with analysis of flow results suggesting a rate of 362 barrels of oil per day would be possible when full-scale production starts.
Significantly, the company highlighted that the re-perforation of the Portland in the Horse Hill 1 well has demonstrated a 65% increase in productivity from the past testing programme.
It is now planned, in light of the new analysis regarding the Portland’s “true flow potential”, fresh plans are being formulated for either a side-track to HH-1 or a new HH-2 well as a horizontal appraisal well.
Such a well would target a production rate between 720 to 1,080 bopd, pitched some 2-3 times better than the calculated rate for the vertical HH-1 well.
That said, it clarified that there can be no guarantee that forecast, targeted or calculated rates of production will be achieved.
UKOG, the largest London-listed Horse Hill stakeholder with 46.7%, said that all the planning permissions, Environment Agency permits and the ‘well cellar’ are in place for a horizontal well.
The company added that would be envisaged that all future Portland wells will be horizontal, not vertical, and, that the reservoir at Horse Hill is “robustly commercial” at even the lowest observed sustainable daily rate”.
A formal declaration of Portland commerciality is expected shortly.
Operationally, the well testing programme will now continue on to its primary purpose, to evaluate the commerciality of the Kimmeridge zones.
"We are delighted that the HH-1 re-perforation and optimisation programme has resulted in the forecast sustainable Portland production rate of 362 bopd, which significantly exceeds our initial test programme expectations,” said Stephen Sanderson, UKOG chief executive.
“This high rate, together with our economic modelling, strongly indicates that the HH-1 Portland vertical well is commercially viable and robustly economic at the lowest observed sustainable test rates and the predicted future sustainable production rates.”
Sanderson added: “We also look forward to the near-term prospect of a new Portland horizontal appraisal well attaining a sustainable test rate in early 2019.
“This commercial result would make the Portland a significant asset and would underpin both the Horse Hill oil discovery's and the company's future.”
George Frangeskides, Alba’s executive chairman, in a separate statement, said: "We note the exciting plans which are now being formulated to drill either the HH-1z sidetrack or HH-2 new drill as a horizontal Portland appraisal well.
“The operator is to be congratulated on its foresight in applying for and obtaining all planning permissions and environment agency permits for a horizontal well, which will assist greatly in moving those plans forward at pace."
He added: "We now await the imminent start of the Kimmeridge test programme, the goal of which is to establish the commerciality of the underlying KL3 and KL4 oil pools which flowed so productively in the short 2016 test programme."
Horse Hill interests
Solo Oil PLC (LON:SOLO) last month has agreed sell its entire 15% interest in Horse Hill Developments Limited to UK Oil and Gas for a total cash consideration of £4.5mln together with a simultaneous purchase of 234,042,221 new ordinary share in UKOG equivalent to a 4.2% interest in the explorer.