Arreton - Planning Application Submitted

UK Oil & Gas PLC

("UKOG" or the "Company")

 

Arreton oil discovery planning application submitted to Isle of Wight council

 

 

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that it has filed a planning application ("Application") with the Isle of Wight Council for the appraisal drilling and flow testing of the Arreton oil discovery. Following a one-week statutory notice period, the application is expected to go "live" on 27 March 2020.

 

The Application details the planned construction, operation and eventual decommissioning of a well site for the appraisal of hydrocarbons via a deviated borehole (Arreton-3 or "A-3") plus a possible horizontal sidetrack off the "mother" borehole (Arreton-3z or "A-3z"), all to be undertaken within a temporary period of three years.

 

UKOG has spent considerable time and undertaken much research to minimise the potential noise and visual impact of the site, which will be largely screened from public view. The Company has chosen a site adjacent to land which already supports non-agricultural commercial uses. The land immediately to the east supports the Wight Farm Anaerobic Digestion Energy Power Station and to the west supports the Blackwater Quarry and ancillary operations connected to the working of aggregates.

 

As reported in the Company's July 2018 AIM admission document, the Arreton conventional oil discovery, a geological analogue of the Company's Horse Hill oil field (UKOG net 85.635%), contains three stacked Jurassic oil pools containing a third party (Xodus) calculated aggregate gross P50 oil in place of 127 million barrels ("mmbbl"). UKOG's net share of associated mid case recoverable Contingent Resource volumes were stated by Xodus to be a material 14.9 mmbbl.

 

The A-3 well is envisaged  to duplicate or "twin" the A-1 and A-2 discovery wells drilled by BP and the Gas Council (now Spirit Energy) in 1952 and 1974, respectively. Should short term flow testing of A-3 indicate likely commercial viability, it is envisaged that an A-3z horizontal sidetrack would be drilled and put on extended well test to assess longer-term flow performance.

 

UKOG holds a 95% operated interest in Petroleum Exploration Development Licence 331, which extends over a 200 km² area covering most of the southern half of the Isle of Wight.

 

Stephen Sanderson, UKOG's Chief Executive, commented:

 

"Whilst UKOG's primary focus will remain on maintaining continued long-term stable and profitable oil production at Horse Hill, our efforts will also continue with those actions necessary to ensure  that both the Arreton oil and Loxley gas appraisal projects move forwards as swiftly as the current UK situation permits."

 

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 941493

 

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: 020 7397 8919

 

Novum Securities (Joint Broker)                                                                                                              

John Bellis                                                                                                     Tel: 020 7399 9400

 

Public Relations

Brian Alexander                                                                                           Tel: 01483 941493

 

Glossary

 

appraisal well	a borehole designed to determine the lateral and or vertical extent of a discovered hydrocarbon accumulation
Contingent Resource(s)	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 are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status
deviated well	a well whose bottom hole location does not directly underlie its surface location. Such wells are common as a surface location cannot always be directly located over the subsurface target zone.
discovery	a discovery is 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 all zones of greater than 96 hours and up to 90 days per zone
flow test	a flow test or well 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 commercial flow rates and overall volumes.
oil field	an accumulation, pool or group of pools of oil in the subsurface that produces oil to surface. An oil field consists of a reservoir in a shape that will trap hydrocarbons and that is covered by an impermeable or sealing rock
oil in place	the quantity of oil or petroleum that is estimated to exist in naturally occurring accumulations in the ground before any extraction to surface.
P50 or best estimate	a 50% probability that a stated volume will be equalled or exceeded
recoverable volumes or resources	those quantities of petroleum (i.e. oil in this case) estimated, as of a given date, to be potentially recoverable to surface from known accumulations
sidetrack	to re-enter an existing wellbore and to drill out of one side in order to reach a different bottom hole location or target. In the case of A-3 the near vertical deviated mother borehole will be used as a pilot hole and a horizontal sidetrack will be drilled out entirely within the oil-bearing reservoir with the aim of increasing overall exposure to reservoir rock and thus potentially increasing flow rates.

 

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 completed
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 oil appraisal well and Godshill 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, HH-1 in stable oil production, HH-2z EWT ongoing, production planning consent granted in September 2019, long term Production consent granted March 2020.

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