TIDMUKOG
RNS Number : 8941C
UK Oil & Gas Investments PLC
21 October 2015
21 October 2015
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Nutech Assessment of UKOG Weald Basin Interests and Wider Weald,
Onshore UK
UK Oil & Gas Investments PLC (LSE AIM: UKOG) announces that
it has received an oil in place ("OIP") volumetric evaluation that
it commissioned Houston based Nutech, a leading specialist in the
evaluation of tight oil plays, to conduct over eight of the licence
areas in which the Company has an interest in the Weald Basin and
also over the wider Weald Basin, located in southern England (the
"Report").
Key Points:
-- A gross best estimate ("P50") OIP of 15.7 billion barrels
("BBO") is calculated to lie within three Jurassic shale and
interbedded limestone tight oil plays underlying the 8 licence
areas in the Weald Basin in which UKOG has an interest ("Licence
Areas", covering 151 sq miles see Table 2).
-- Within this gross best estimate, an aggregate net
attributable 3.9 BBO P50 OIP is calculated for UKOG's economic
interests in the Licence Areas.
-- The three Jurassic tight oil plays underlying the wider Weald
Basin's 1,261 sq mile area (the Area of Interest "AOI") are
calculated to contain a gross best estimate P50 OIP of 124 BBO.
Please note that other than UKOG's eight Licence Areas, in which it
is calculated UKOG has a net attributable 3.9 BBO P50 OIP, the
Company has no further economic interest in the AOI.
The gross P50 OIP for the Licence Areas stated above is the
aggregate OIP for all eight licences, in which UKOG has varying
economic interests. These eight licences represent the Company's
total licence interests within the AOI.
The Report's executive summary is available on the Company's
website (www.ukogplc.com).
Cautionary Statement
The Report's OIP numbers should be regarded as Total Petroleum
Initially in Place, as defined by the Society of Petroleum
Engineer's Petroleum Resource Management System of resource
reporting.
As previously stated by the Company, it is emphasised that the
above estimated OIP volumes should not be construed as recoverable
resources, contingent or prospective resources, or reserves and
also should not be construed in any way to reflect potential
producibility of hydrocarbons from the formations evaluated prior
to any successful flow tests and the assessment of an estimated
recovery factor to these OIP volumes.
Until further work is done there can be no current estimate of
the recovery rate for the Weald Basin or assurance that oil can be
recoverable at all.
The Report
The Report's calculated OIP volumes are derived from a 3D
geological and petrophysical static model containing analysis of 85
DECC/OGA released wells and one proprietary well over the wider
Weald Basin. The Calculated OIP for the Licence Areas and wider
Weald are shown in Table 1 below:
Table 1 - Nutech Calculated Jurassic Tight Oil OIP Under UKOG
Licence Areas and Wider Weald Basin (BBO)
Area UKOG's Licence Areas (2) Weald Basin AOI
(2)
(151 sq. miles) (1,261 sq. miles)
--------------- -------------------------------------------------------- ---------------------------
Gross Aggregate Net Attributable Gross OIP (BBO)
OIP (BBO) Aggregate OIP (BBO)
--------------- --------------------------- --------------------------- ---------------------------
Confidence P90 Low P50 Best P10 High P90 Low P50 Best P10 High P90 Low P50 Best P10 High
level
--------------- ------- -------- -------- ------- -------- -------- ------- -------- --------
Jurassic Tight
Oil (1) 8.1 15.7 29.4 2.0 3.9 7.2 61.8 124.3 229.9
--------------- ------- -------- -------- ------- -------- -------- ------- -------- --------
(1) Jurassic tight oil is defined as the plays contained within
the source rock shale sequences and interbedded tight conventional
limestones of the Kimmeridge Clay, Oxford Clay and Lias Shale
Formations. Conventional reservoirs of the Corallian and Great
Oolite and of the overlying Portland section are excluded, as
they were not the purpose of the study.
(2) Volumetric estimates by Nutech.
------------------------------------------------------------------------------------------------------
Kimmeridge Tight Oil Play OIP
The Report calculates that the most significant portion of the
reported OIP lies within the Kimmeridge Clay Formation, with a
calculated gross P50 OIP of 10.0 BBO in the Licence Areas (net
attributable to UKOG of 2.4 BBO) and a calculated gross P50 OIP of
81.9 BBO within the overall AOI.
Three tight limestones within the Kimmeridge Clay Formation
represent the Company's principal near-term tight oil exploration
and appraisal focus, and are calculated to contain a gross P50 OIP
of 2.1 BBO within the Licence Areas and a gross P50 OIP of 19.5 BBO
within the overall AOI.
From earlier reports, the Kimmeridge limestones are interpreted
by Nutech and by Schlumberger to contain hydrocarbons within the
Company's Horse Hill-1 well, in which the Company has a 20.358% per
cent economic interest, and are known to have flowed oil from the
nearby Balcombe-1 well (in which the Company has no interest).
Possible Oil Producing Analogues
The Report also states that the Kimmeridge limestones are
analogous to the oil productive Austin Chalk and Eagle Ford
formations of the US. Furthermore, the analysed Kimmeridge section
is possibly analogous to the known oil productive tight oil
sections of the Bakken of the US Williston Basin, the Wolfcamp,
Bone Springs, Clearfork, Spraberry, and Dean Formations in the US
Permian Basin. These US analogues have estimated recovery factors
of between 3% and 8% and in a few cases up to 15% of contacted OIP
per well. These recovery factors are achieved with the use of well
stimulation techniques.
Until further work is done there can be no current estimate of
the recovery rate for the Weald Basin or assurance that any Oil in
Place can be recovered at all.
It should be noted that Nutech's report and estimates contain
judgements and assumptions that may differ from other prior
studies. For example a prior study on the wider Weald basin by the
British Geological Survey ("BGS") differs with Nutech's analysis
largely as a result of differing judgements regarding the likely
presence of oil in the Kimmeridge section as a result of different
assumptions on the thermal maturity of the Kimmeridge section
derived from the findings of the Horse Hill well.
Future Plans
As well as pursuing the appraisal and development of the
separate Horse Hill Portland sandstone oil discovery, the Company
will also focus on the appraisal of the Kimmeridge limestones at
Horse Hill, which it believes present the most viable near-term
objective for potential tight oil production in the basin, and
which could potentially be produced utilising conventional
limestone stimulation methods.
The planned Horse Hill-1 flow test, specifically designed to
test the Kimmeridge limestones along with the Portland sandstone,
is planned to be the next significant milestone in the Company's
Kimmeridge "proof of concept" process. The Company expects these
flow tests to be conducted within the next few months.
Following the expected approval of the Company's farm-in to the
PEDL143 Holmwood licence (originally announced on 29 June 2015),
the Company will participate in the drilling of the Holmwood-1
exploration well, which UKOG believe will provide a further
Kimmeridge limestone proof of concept step alongside testing the
conventional Portland and Corallian targets. This is planned for
2016 or 2017.
Stephen Sanderson, UKOG's Executive Chairman, commented:
"The first step in evaluating any tight oil play is to calculate
the overall OIP using all available data. Nutech's study has based
its OIP conclusions on its established well-by-well methodology
that also fully incorporates geological insights gained from the
Horse Hill-1 well.
These findings should now serve to give the market the Company's
up to date and science-based view of the estimated quantity of OIP
within UKOG's Licence Areas and in the wider Weald Basin.
The Company believes that the Report illuminates the wider Weald
Basin's significant potential and demonstrates how the Company's
interests fit within the overall geological picture. The calculated
OIP volumes provide us with the necessary encouragement to proceed
with our plans to prove the concept that oil may flow and possibly
be recovered in commercial quantities from these tight oil plays.
The planned activities in Horse Hill and Holmwood will therefore be
key steps.
Although we are only in the early stages of this proof of
concept process, the findings of our recently published Weald tight
oil conceptual development studies, demonstrate that, in the
success case, oil could be produced with sensitivity to the Weald
locality. This is a fundamental aspect of the company's business
philosophy."
Allen D Howard, Nutech's Chief Commercial Officer,
commented:
"This was a very rigorous study analysing the oil in place
measured in 86 wells calibrated by our own in-house core and
cuttings analyses, geochemical and legacy data. This, coupled with
the experience and knowledge Nutech brings from the majority of
proven producing tight oil and gas plays in the USA, gives us
confidence in the specific potential of the Weald's tight oil plays
and the Kimmeridge limestone play in particular."
Qualified Person's Statement:
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Stephen Sanderson, UKOG's Executive Chairman, who has over 30
years of relevant experience in the oil and gas industry, has
approved the information contained in this announcement. Mr
Sanderson is a Fellow of the Geological Society of London and is an
active member of the American Association of Petroleum
Geologists.
For further information please contact:
UK Oil & Gas Investments PLC
Stephen Sanderson / Jason Berry Tel: 020 7440 0640
WH Ireland (Nominated Adviser and Broker)
James Joyce / Mark Leonard Tel: 020 7220 1666
Square 1 Consulting (Public Relations)
David Bick / Mark Longson / Brian Alexander Tel: 020 7929
5599
Glossary:
contingent resources contingent resources are 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
categorized 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
---------------------- ------------------------------------------------------
core a continuous cylindrical sample of rock from
the wellbore normally taken in 30 ft sections
---------------------- ------------------------------------------------------
cuttings small rock fragments of less than a few millimetres
diameter removed from a borehole drilled by
rotary drilling an conveyed to the surface
in drilling mud
---------------------- ------------------------------------------------------
DECC UK Government Department of Energy and Climate
Change
---------------------- ------------------------------------------------------
electric logs tools used within the wellbore to measure the
rock and fluid properties of surrounding rock
formations
---------------------- ------------------------------------------------------
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 a commercial flow rate
---------------------- ------------------------------------------------------
gross oil in place 100% of oil in place, without taking into account
the Company's ownership interest
---------------------- ------------------------------------------------------
Jurassic Tight the three plays, or petroleum systems, contained
Oil within the source rock shale sequences and
interbedded tight limestones of the Kimmeridge
Clay, Oxford Clay and Lias Formations
---------------------- ------------------------------------------------------
moveable oil oil that can flow and potentially be extracted
via wells
---------------------- ------------------------------------------------------
limestone a sedimentary rock predominantly composed of
calcite (a crystalline mineral form of calcium
carbonate) of organic, chemical or detrital
origin. Minor amounts of dolomite, chert and
clay are common in limestones. Chalk is a form
of fine-grained limestone
---------------------- ------------------------------------------------------
net oil in place the Company's economic interest in oil in place,
taking account of the Company's ownership interest
in each of the eight licences located in the
AOI
---------------------- ------------------------------------------------------
OGA UK Oil & Gas Authority
---------------------- ------------------------------------------------------
oil in place or the quantity of oil or petroleum that is estimated
stock tank oil to exist originally in naturally occurring
in place accumulations before any extraction or production
---------------------- ------------------------------------------------------
P10 ("high estimate") a 10% probability that a stated volume will
be equalled or exceeded
---------------------- ------------------------------------------------------
P50 ("best estimate") a 50% probability that a stated volume will
be equalled or exceeded
---------------------- ------------------------------------------------------
P90 ("low estimate") a 90% probability that a stated volume will
be equalled or exceeded
---------------------- ------------------------------------------------------
play a set of known or postulated oil and or gas
accumulations sharing similar geologic, geographic,
and temporal properties, such as source rock,
migration pathways, timing, trapping mechanism,
and hydrocarbon type
---------------------- ------------------------------------------------------
petrophysics the study of physical and chemical rock properties
and their interactions with fluids utilising
electric logs, physical rock and fluid measurements
---------------------- ------------------------------------------------------
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
---------------------- ------------------------------------------------------
recoverable resources those quantities of petroleum (oil in this
case) estimated, as of a given date, to be
potentially recoverable from known accumulations
---------------------- ------------------------------------------------------
reserves those quantities of petroleum anticipated to
be commercially recoverable by application
of development projects to known accumulations
from a given date forward under defined conditions;
reserves must further satisfy four criteria:
they must be discovered, recoverable, commercial
and remaining (as of the evaluation date) based
on the development project(s) applied; reserves
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 characterised by development
and production status
---------------------- ------------------------------------------------------
reservoir a subsurface rock formation containing an individual
natural accumulation of moveable petroleum
---------------------- ------------------------------------------------------
shale a laminated and fissile very fine-grained sedimentary
rock, consisting of compacted silt and clay-size
mineral particles. Can contain high proportions
of organic material, which if subjected to
heat and pressure over geological time can
generate petroleum (a petroleum source rock)
---------------------- ------------------------------------------------------
source rock a rock rich in organic matter which, if subjected
to sufficient heat and pressure over geological
time, will generate oil or gas. Typical source
rocks, usually shale or limestone, contain
above an initial 1% organic matter by weight
---------------------- ------------------------------------------------------
stochastic an analysis of a dataset that uses a large
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number of randomly determined observations,
each of which conforms to the overall probability
distribution of the dataset
---------------------- ------------------------------------------------------
tight reservoir a term normally applied to reservoirs, either
or tight rock sandstones, limestones, shales or mudstones,
with a measured average permeability of less
than 1 milliDarcy
---------------------- ------------------------------------------------------
tight oil oil found or expected to be present within
a reservoir with low permeability, i.e. a tight
reservoir. The term, in the case of the Weald
Tight Oil Plays, is applied to a play where
trapped petroleum accumulations are expected
to be pervasive throughout a large area and
that are not significantly affected by hydrodynamic
influences (also called "continuous-type deposits")
---------------------- ------------------------------------------------------
Thermal Measure of the combined effects of heating
maturity (generally due to burial) and geological time,
and which controls the conversion of organic
matter in a source rock into oil and/or gas
---------------------- ------------------------------------------------------
Total Petroleum the quantity of petroleum which is estimated
Initially In Place to exist originally in naturally occurring
accumulations. Therefore, the quantity of petroleum
that is estimated, on a given date, to be contained
in known accumulations, plus those quantities
already produced from those accumulations,
plus those estimated quantities in accumulations
yet to be discovered
---------------------- ------------------------------------------------------
total organic the weight percent amount of organic carbon
carbon (TOC) within the rock which is a commonly used measure
of hydrocarbon source rock richness
---------------------- ------------------------------------------------------
well stimulation a well intervention performed on an oil or
gas well to increase production by improving
the flow of hydrocarbons from the drainage
area into the well bore.
---------------------- ------------------------------------------------------
Notes to Editors:
About Nutech
Nutech, one of the world's leading companies in petrophysical
analysis and reservoir intelligence, has played a major role in
guiding the development of the United States unconventional
resource revolution observed in the past 16 years. Nutech has
extensive experience in US tight oil and gas plays and many key
basins globally. Nutech are one of only four companies approved by
the UK Government (OGA) to handle the sale, release and further
analysis of the UK's onshore well database. Nutech's client base
includes the governments of Mexico, Bahrain, Pakistan, The
Netherlands, Poland, and Colombia, as well as oil and gas majors
and large independents, which include Petronas, Chevron, Repsol,
ConocoPhillips, BP, GDF, Devon, and SandRidge. Further information
is available at www.nutechenergy.com.
UKOG's Licence Interests
The Company's UK licence interests are shown below in Table 2.
The three licences outside the AOI are Lidsey, Offshore Isle of
Wight and Onshore Isle of Wight (pending OGA award).
Table 2 - UKOG's Licence Interests
Asset Licence UKOG's Licence Operator Area Status Current
Interest Holder (km(2) Licence
) Period Expiry
----------- --------- ------------ ------------ --------- ---------------------- --------------
Licences in the AOI
------------------------------------------------------------------------------------------------------------------
Field in
Avington UKOG (GB) IGas Energy stable 31 December
(1) PEDL070 5% Limited Plc 18.3 production. 2017
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Reviewing
economics
of appraisal/
Baxters UKOG Weald IGas Energy development
Copse (2) PEDL233 50% Limited Plc 89.6 well. 30 June 2016
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Drilling
Angus of sidetrack
Brockham Angus Energy Energy well being 27 October
(1) PL234 3.6% (5) (5) 8.9 considered. 2017
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Awaiting
Europa OGA consent
Oil & Gas to farm-in,
Holmwood (Holdings) exploration 30 September
(3) PEDL143 20% UKOG plc 91.8 well planned. 2016
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Field in
Horndean UKOG (GB) IGas Energy stable 31 December
(1) PL211 10% Limited Plc 27.3 production. 2015
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Flow testing
of HH-1
planned,
Horse Hill Horse Hill awaiting
Horse Hill Developments Developments regulatory 30 September
(4) PEDL137 20.358% Ltd (6) Ltd (6) 99.3 approvals. 2016
--------- ---------------------- --------------
Flow testing
of HH-1
planned,
Horse Hill Horse Hill awaiting
Horse Hill Developments Developments regulatory
(4) PEDL246 20.358% Ltd (6) Ltd (6) 43.6 approvals. 30 June 2019
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Compiling
Markwells UKOG (GB) UKOG (GB) Field Development 30 September
Wood (2) PEDL126 100% Limited Limited 11.2 Plan. 2016
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Licences Outside the AOI
------------------------------------------------------------------------------------------------------------------
Awaiting
Isle of 14th Round,
Wight UKOG adjacent
(Offshore) UKOG Solent UKOG Solent onshore 31 January
(3, 7) P1916 77.5% Limited Limited 46.7 acreage. 2017
-----------
Isle of 14th Round TBA TBA TBA 200.0 Subject TBA
Wight to 14th
(Onshore) Round awards.
(3, 7)
----------- ----------- --------- ------------ ------------ --------- ---------------------- --------------
Drilling
of infill
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