UK Oil & Gas’s (LON:UKOG) newly appointed chief executive Stephen Sanderson has described the Horse Hill oil discovery as a “key paradigm shift” for exploration in the UK’s Weald Basin.
Sanderson, author of the discovery’s technical appraisal report, was hired as the company’s chief executive today.
The executive appointment coincides with a 14% rally on AIM for UKOG, which advanced up to 0.41p per share on Tuesday.
The oil executive and geologist is credited as being highly experienced in creating and leading exploration-focussed businesses, and has a track record of managing exploration and new ventures for large companies as well as smaller start-ups.
Sanderson told investors that the Horse Hill partners are now seeking permissions to flow test the discovered conventional Upper Portland oil pool in the Horse Hill well, as well as investigating the possibility of adding a test within the conventional Kimmeridgian Limestone play.
Last year’s Horse Hill exploration well identified some 8.2mln barrels of ‘most likely’ oil in place (the range was estimated between 5.7mln to 12.1mln barrels) in Portland reservoirs. Upcoming flow-tests will be key to determining recoverability as well as the field’s potential economics.
The exploration well also encountered Kimmeridge, a formation that comprises porous limestone as well as intervals of shale and clay.
Whilst the Portland discovery represents a relatively low-risk, near-term production opportunity, Kimmeridge is potentially a more significant ‘blue sky’ play.
Sanderson, today, said: “The discovery that the Kimmeridge Clay is highly organically rich, within the early to peak mature oil window and has most likely charged the oil found within the Kimmeridgian Limestone is particularly exciting and has re-written the petroleum geology of this part of the basin.
“This key knowledge provides sound reasons for UKOG to be bullish about the full potential of the Kimmeridge play and to seek expansion into further acreage in the basin.”
The new UKOG chief also highlights that the Horse Hill findings are also positive for the company’s recently secured acreage on the Isle of Wight.
He added that prospects in the Triassic, which were unsuccessful at Horse Hill, will be followed up to the west and southwest in the coming year.
“With income from ongoing oil production UKOG is well placed to extract the full potential value of its core assets and to add stepwise growth in the new and emerging plays it has discovered within both the Weald and Wessex basins," Sanderson said.
UKOG chairman David Lenigas, meanwhile, said: "Having been the author of the technical appraisal of our recent Horse Hill discovery in the Weald Basin and for our 14th Round application, Stephen will add significant technical and commercial strength to the company's management team as we endeavour to add value to shareholders from our rapidly growing exploration and production acreage here in the UK.
UKOG is the largest UK listed stakeholder in the Horse Hill venture, and is speculated to be a potential consolidator of other smaller interests in the project.