Licence Extensions on PEDL331 and PEDL143

 UK Oil & Gas PLC

("UKOG" or the "Company")

 

Licence Extensions on PEDL331 Arreton and PEDL143 "A24" Prospect

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that the Oil and Gas Authority ("OGA") has granted two-year extensions to the initial terms of the Company's operated PEDL331 (UKOG 95%, Isle of Wight, Arreton oil discovery) and PEDL143 (UKOG 67.5%, northern Weald, "A24" prospect) licences. The initial terms will now end on 20 July 2023 (PEDL331) and 30 September 2022 (PEDL143), respectively. The Company expects that these extensions will permit its previously reported multiple well appraisal and exploration drilling campaign to be conducted and completed fully within both licences' initial term.

 

Isle of Wight PEDL331 "Arreton Oil Discovery"

 

The Isle of Wight PEDL331 Arreton licence is, in the Company's view, one of UKOG's premier appraisal stage assets, which, as per the Company's 2018 Competent Person's Report ("CPR"), contains 14.9 million barrels ("mmbbl") of UKOG net P50 case recoverable Contingent Resources within the Arreton oil discovery, plus a further 10 mmbbl of net recoverable Prospective Resources in the geological look-alike Arreton South and North prospects.  Drilling of the Arreton-3/3z appraisal well and extended flow test is now scheduled to commence in Autumn 2020, subject to the grant of necessary regulatory consents. 

 

As further set out in the Company's 2018 Re-Admission document, the Arreton South and North prospects contain aggregate P50 Portland oil in place of 77.2 mmbbl, more than twice as much as the Company's flagship Horse Hill Portland oil field (UKOG 85.635% interest). Further significant upside in both prospects is calculated to lie within the underlying Inferior Oolite sequence.

 

UKOG's subsurface team have also recently identified a further large undrilled anticlinal structure, the Arreton East Prospect, another look-alike to the Arreton discovery and lying further to the east along the same geological trend. Initial mapping shows this feature to be many times larger than both the Arreton oil discovery and Arreton South prospect combined. Further work and potential recoverable resources will be reported in due course.

 

Following completion of Arreton-3/3z, the Company currently plans to proceed directly to drill Arreton South, and if regulatory permissions are in place, to proceed directly to drill Arreton East in the winter of 2020/21. Autumn/Winter drilling is designed deliberately to avoid the island's tourist season.

 

PEDL143 "A24" Prospect

 

The licence lies immediately to the west of the Company's Horse Hill licences (UKOG 85.635%) and contains the significant "A24" Portland and Kimmeridge oil prospect, a direct geological look-alike to the Company's Horse Hill oil field, situated on-trend some 8km to the east. Several smaller prospects of similar size to the nearby Brockham Portland oil field have also been identified. Multiple potential new drilling sites outside the nearby Area of Outstanding Natural Beauty are under evaluation and drilling is now scheduled to follow directly after the completion of the Company's 9-well 2019/2020 drilling programme, subject to the grant of necessary regulatory approvals.

 

Stephen Sanderson, UKOG's Chief Executive, commented:

 

"These extensions, on key appraisal and exploration assets, will permit UKOG to carry out its stated multi-well drilling campaign within the initial term of both licences. The identification of a further large undrilled Portland structure on trend with the Arreton oil discovery makes the Isle of Wight asset even more attractive than before and fully justifies our increase in ownership of PEDL331."

 

Qualified Person's Statement

Matt Cartwright, UKOG's Commercial Director, who has over 35 years of relevant experience in the global oil industry, has approved the information contained in this announcement. Mr Cartwright is a Chartered Engineer and member of the Society of Petroleum Engineers.

 

 

For further information, please contact:

 

UK Oil & Gas PLC

Stephen Sanderson / Kiran Morzaria                                                      Tel: 01483 900582

 

WH Ireland Ltd (Nominated Adviser and Broker)

James Joyce / James Sinclair-Ford                                                           Tel: 020 7220 1666

 

Cenkos Securities PLC (Joint Broker)

Joe Nally / Neil McDonald                                                                         Tel: 0207 397 8919

 

Novum Securities (Joint Broker)                                                                                                              

John Bellis                                                                                                     Tel: 020 7399 9400

 

Public Relations

Brian Alexander                                                                                               Tel: 01483 900582

 

Glossary

 

 

Contingent Resources	those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status
discovery	a petroleum accumulation for which one or several exploratory wells have established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons
extended well test	a well test, as per the permission granted by the Oil and Gas Authority, with an aggregate flow period duration over each zone of greater than 96 hours; the objective being to establish whether a discovery is commercially viable and the optimal methods of future production and recovery
oil in place	the quantity of oil or petroleum that is estimated to exist originally in naturally occurring accumulations before any extraction or production
P50	a 50% probability that a stated volume will be equalled or exceeded
prospect	a project associated with a potential accumulation that is sufficiently well defined to represent a viable drilling target
Prospective Resources	those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and chance of development
oil field	an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface
well test	or flow test involves testing a well by flowing hydrocarbons to surface, typically through a test separator; key measured parameters are oil and 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.

 

UKOG Licence Interests

 

The Company has interests in the following UK licences:

 

Asset	Licence	UKOG Interest	Licence Holder	Operator	Area (km2)	Status
Avington 1	PEDL070	5%	UKOG (GB) Limited	IGas Energy Plc	18.3	Field currently temporarily shut in
Broadford Bridge/Loxley/Godley Bridge 2, 3, 8	PEDL234	100%	UKOG (234) Ltd 4	UKOG (234) Ltd 4	300.0	BB-1/1z oil discovery, Loxley-1 gas appraisal well planning application submitted
A24 3	PEDL143	67.5%	UKOG	UKOG 7	91.8	Finalising new site selection to drill Portland and Kimmeridge prospects
Horndean 1	PL211	10%	UKOG (GB) Limited	IGas Energy Plc	27.3	Field in stable production
Horse Hill 5	PEDL137	85.635%	Horse Hill Developments Ltd ⁶	Horse Hill Developments Ltd ⁶	99.3	Production tests ongoing, two further appraisal wells scheduled for 2019
Horse Hill 5	PEDL246	85.635%	Horse Hill Developments Ltd ⁶	Horse Hill Developments Ltd ⁶	43.6	As above
Isle of Wight (Onshore) 2, 3	PEDL331	95%	UKOG	UKOG	200.0	Preparing planning submission for Arreton-3 oil appraisal well and Arreton South exploration well
Markwells Wood	PEDL126	100%	UKOG (GB) Limited	UKOG (GB) Limited	11.2	MW-1 P&A

               

Notes:

 

1.  Oil field currently in stable production.

2.  Oil discovery pending development and/or appraisal drilling.

3.  Exploration asset with drillable prospects and leads.

4.  Contains the Broadford Bridge-1/1z Kimmeridge oil discovery, the eastern extension of the Godley Bridge Portland gas discovery plus further undrilled Kimmeridge exploration prospects.

5.  Oil field with three productive and commercially viable zones, EWT ongoing, further drilling campaign scheduled, development underway subject to grant of planning consent expected in Q3 2019.

6.  UKOG has a direct 77.9% interest in HHDL, which has a 65% interest in PEDL137 and PEDL246.

7.  OGA consent received for the transfer of operatorship from Europa to UKOG

8.  Gas discovery pending appraisal drilling and development with underlying Kimmeridge potential

 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014