HH-2 Pilot Completed & HH-2z Horizontal Underway

UK Oil & Gas PLC

("UKOG" or the "Company")

 

Horse Hill Oil Field: HH-2 Pilot Completed, HH-2z Horizontal Trajectory Underway

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that, following the successful completion of the Horse Hill-2 ("HH-2") Portland pilot well, Horse Hill-2z ("HH-2z") horizontal drilling operations are now underway (UKOG 85.635% net controlling interest). HH-2z aims to deliver a circa 3,200 ft horizontal section wholly within the Portland reservoir's most oil productive zone or "sweet spot", the presence and quality of which has been further defined by the pilot well's highly successful coring and electric logging programmes.

 

The significant oil saturations and high permeabilities observed in HH-2 core and logs, indicate that the "sweet spot" has likely contributed the lion's share of the 29,568 barrels of Brent quality oil produced to date from Portland extended well testing ("EWT") operations at HH-1.

 

HH-2/2z, the first horizontal well in the field's Portland oil pool, is designed to be retained as a future production well, capable of delivering flow rates significantly higher than the previously reported 362 barrels of oil per day from the HH-1 vertical Portland discovery well. Following a planned extensive HH-2z EWT campaign, both HH-2z Portland and the HH-1 Kimmeridge well are expected to be put into long term production by the end of 2019.

 

HH-2z Operations

 

HH-2z operations were initiated through the pilot well's 9⅝" casing at the planned "kick-off" point
1320 ft below rig floor, immediately above cement plugs isolating the Portland reservoir below. The well is now building angle towards the horizontal within 8½" diameter hole and will continue down to a drilled depth of around 2300 ft, just above the Portland target zone. This section will then be cased and cemented with a 7" liner.

 

The well's trajectory will then continue within 6" diameter hole, entering the Portland target zone approximately 850 ft to the southeast of the HH-2 surface location. HH-2z's expected total measured depth is around 5900 ft from rig floor, of which c. 3200 ft is planned within the reservoir's sweet-spot. The well is expected to reach its total depth around mid-November.

 

To ensure the borehole remains wholly within the Portland sweet spot, HH-2z will be actively "geo-steered" during drilling to keep within a series of core and electric log-derived diagnostic geological markers delineating the zone's upper and lower boundaries. The successful delivery of such an optimally placed horizontal trajectory is designed to optimise flow rates and oil recoveries from the Portland reservoir.

 

UKOG holds a controlling 85.635% interest in the Horse Hill oil field and surrounding highly prospective PEDL137 and PEDL246 licences, which are operated by UKOG's subsidiary company, Horse Hill Developments Ltd.

 

Stephen Sanderson, UKOG's Chief Executive, commented:

 

"Our confidence in the HH-2z horizontal's ability to deliver significant flow rates has been further boosted by the pilot well's better than expected geological results. Our subsurface team's focus is now firmly upon steering the well wholly within the target zone, the Portland sweet spot , demonstrably the most oil productive part of the reservoir. I have every confidence we can deliver the desired positive result."

 

Qualified Person's Statement

 

Matt Cartwright, UKOG's Commercial Director, who has over 36 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

 

 

Coring	a drilling technique that involves using a doughnut-shaped drilling bit to capture or "cut" a continuous cylinder-shaped sample of in-situ rock. The core is captured in a steel pipe or "core barrel" above the bit. Core is normally cut in 30 feet lengths, or multiples of 30 feet, and with a diameter of 3-4.5 inches. Core is taken in petroleum reservoir rocks for detailed laboratory analyses of geological, geochemical petrophysical and geomechanical properties
horizontal well	a well that during drilling is steered so as to follow and remain within a particular geological stratum or reservoir unit having a trajectory that runs  approximately parallel to the top and or base of the target horizon
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 and volumes.

 

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, HH-2/2z drilling
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.  Portland and Kimmeridge Oil field with productive and commercially viable zones, EWT ongoing, production planning consent granted in September 2019, appraisal/development drilling campaign underway. Long term production start expected late 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