Could Gatwick become Britain’s Dallas? Well if a band of small, entrepreneurial exploration companies is successful, then this corner of rural Surrey and West Sussex could become the centre of the onshore industry here in the UK.
Amid little fanfare, work got underway earlier today on the Horse Hill-1 well, just two miles up the road from the airport.
What’s really made investors sit up and take notice is the size of the potential prize, for the Horse Hill prospect is estimated to contain an ‘unrisked’ 671mln barrels of oil and 456bn cubic feet of gas.
If those figures stand up – and remember at this stage they are nothing more than an educated guess – Horse Hill would be bigger than Wytch Farm, near Poole in Dorset, which at 480mln barrels is currently the nation’s biggest onshore find.
This means it could, according to Jason Robertson, analyst at Dowgate Capital, play a “key role in transforming the UK’s energy balance”.
The structure itself was drilled by in 1964 by Esso, which found some oil shows that weren’t deemed economic.
The current consensus among the crew working on this latest well is Esso placed the drill bit on the wrong side of the fault that acts as a trap for the oil and gas.
It is worth noting that the licence area, PEDL 137, which covers an area of 99 square kilometres, is on the central/northern side of the Weald Basin that stretches across Southern England from Dorset (near Wytch farm) in the west to Kent in the east.
The basin is a proven petroleum system containing many oil and gas fields. The Horse Hill drill site lies itself five miles from the producing Brockham oilfield. Celtique Energy, Cuadrilla and Igas also produce from wells in the Weald Basin.
Going down to over 8,600 feet it will test four stacked oil targets and one gas horizon and will be one of the deepest wells ever drilled in the UK.
It is worth emphasising these are conventional targets, so there is no need for fracking.
The licence is 65% owned by special purpose vehicle called Horse Hill Developments Ltd (HHDL), which is operator, while Magellan Petroleum Corporation has a 35% interest.
And they aren’t alone in the venture, which also features as HHDL stakeholders David Lenigas’s UK Oil & Gas Investments (LON:UKOG), Stellar Resources (LON:STG), Doriemus (LON:DOR) and Alba Minerals (LON:ALBA).
Solo director Neil Ritson said this morning: "We are very pleased that drilling operations are now underway on this exciting prospect that has both oil and gas targets that have proved to be productive for oil elsewhere in the basin.
“The next few weeks will be an exciting phase for this investment."
Solo led the pack with a 10% gain on the back of this morning's update, UK Oil & Gas was up 4%, while Stellar and Regency succumbed to profit taking following a strong run up ahead of the start of work.
Assessing the impact on Solo, Barney Gray, of Old Park Lane Capital, said: "With drilling operations now underway, we anticipate regular updates over the next few weeks as drilling progresses and various oil and gas targets are probed within the well.
"In the event of a successful outcome, we would expect to see significant upside to Solo’s current share price."
In his assessment of Horse Hill investor Alba last month, Dowgate’s Robertson quantified the potential impact of a successful well on the company’s share price, which currently stands at 0.73p. And it has 'multi-bag' potential.
He believes the stock could be worth 8.9p to 17p if the consortium does find significant quantities of commercial hydrocarbons; however, a dry well will give a valuation at 0.5p.
So the upside of this well could be huge, not just for Alba, but the others involved.
*Jason Robertson, analyst at Dowgate Capital, has produced this helpful timetable that gives his best guess at how the drilling will progress.
Day 1 (3rd Sept) – Spudding
Day 13 to 15 (15th -17th Sept) - Portland oil target
Day 25 to 27 (27th Sept - 29th Sept) - Corallian oil target
Day 33 to 34 (5th/6th Oct) - Gt. Oolite oil target
Day 49 to 60 (21 Oct to 1 Nov) - Triassic gas target