TIDMUKOG
RNS Number : 8956Y
UK Oil & Gas Investments PLC
14 September 2015
14 September 2015
UK Oil & Gas Investments PLC
("UKOG" or the "Company")
Markwells Wood Oil Field Competent Persons Report
UK Oil & Gas Investments PLC (LSE AIM: UKOG) is pleased to
announce that a Competent Persons Report ("CPR") by Xodus Group
("Xodus") of the Company's onshore Markwells Wood oil field
calculates that the field's Jurassic Great Oolite limestone
reservoir contains a 2C or P50 potentially recoverable Contingent
Resource of 1.25 million barrels ("MMbbl") net to the Company. The
Markwells Wood oil field, in which the Company has a 100% interest,
is located in UK licence PEDL126 in the west of the Weald Basin
immediately to the east of the producing Horndean Field, in which
the company has a 10% production interest, and approximately 12 km
northeast of Portsmouth on the south coast of England. The field
lies approximately 60 km to the southeast of the Company's Horse
Hill oil discovery.
The Markwells Wood Contingent Resources ranges estimated by
Xodus are shown in Table 1 below.
Table 1: Xodus' Estimated Markwells Wood Contingent
Resources
Oil Contingent Gross Volumes Net UKOG Volumes Risk Operator
Resources Factor
*
---------------- ------------------------------------- ------------------------------------- -------- ---------
(MMbbl) 1C 2C 3C 1C 2C 3C
(low (best (high (low (best (high
estimate) estimate) estimate) estimate) estimate) estimate)
---------------- ----------- ----------- ----------- ----------- ----------- ----------- -------- ---------
UKOG
Markwells (GB)
Wood 0.63 1.25 2.71 0.63 1.25 2.71 75% Limited
---------------- ----------- ----------- ----------- ----------- ----------- ----------- -------- ---------
*The Risk Factor (or estimated chance, or probability, that the
volumes will be commercially extracted) was determined by Xodus to
be 75% for these Contingent Resources, to reflect the remaining
subsurface, operational, commercial and socio-economical risks
related to the development and implementation of the full field,
which will likely be significantly influenced by the results from
the first horizontal production well
The CPR is based on Xodus' review and audit of the Company's
recent subsurface evaluations of all available data over the
Markwells Wood-1 ("MW-1") discovery and the surrounding field area.
Importantly the Company has analysed all core, electric logs, and
production data from wells in the adjacent Horndean field's
producing Great Oolite limestone reservoir. It is the Company's
view that Horndean provides the closest and best model for the
likely performance of the Markwells Wood field. In addition to the
Company's studies, Xodus constructed a reservoir simulation model
of the field calibrated to the MW-1 2012 extended production flow
test and core data to derive an alternative viewpoint of the likely
range of recoverable volumes.
Xodus has classified the volumes in Table 1 as Contingent
Resources, being those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations,
and where the project is not yet considered mature enough for
commercial development due to one or more contingencies. In the
case of Markwells Wood the development is contingent on UKOG
achieving both internal and external approvals for a Field
Development Plan ("FDP") and upon the development being shown to be
commercial.
The Company's conceptual field development case evaluated by
Xodus assumes a phased development commencing with the drilling of
a horizontal sidetrack well, designated MW-1ST. Importantly, Xodus'
reservoir simulation results for MW-1ST show that well performance
is similar to the performance of nearby Horndean producing wells
and the Best Case has a recoverable volume of approximately 400,000
barrels of oil after 20 years and 600,000 barrels after 40 years.
The adjacent Horndean field has been producing oil since 1987. The
CPR also notes that given the significant Best Case or P50 Stock
Tank Oil in Place ("STOIP") of 45.6 MMbbl, further recoverable
upside may exist in the field's 3C case once production data is
obtained.
Although no economic analysis was conducted by Xodus, the CPR
concludes that the expected MW-1ST well performance gives
confidence that production from a new well is likely to be
commercial. The CPR's 1C volume estimate is, therefore, based on a
field development of two new horizontal wells (to include the
MW-1ST), whereas the 2C and 3C volume estimates are based on 5 new
horizontal wells in the field.
The CPR is available on UKOG's website (see
www.ukogplc.com).
Reporting Standards:
The STOIP volumes and Contingent Resources in Xodus' CPR have
been prepared in accordance with the 2007 Petroleum Resources
Management System prepared by the Oil and Gas Reserves Committee of
the Society of Petroleum Engineers (SPE), reviewed, and jointly
sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG) and the Society of
Petroleum Evaluation Engineers (SPEE).
Markwells Wood Future Work and Plans:
The Company is now well advanced with its application to vary
the planning permission at the MW-1 well site by extending it for a
further 18 months. This planning variation was submitted to the
South Downs National Park Authority ("SDNPA") on 16 March 2015 and
final signature of the required Deed of Variation to the existing
planning consent is expected shortly.
The Company has also commenced work on the Markwells Wood FDP to
submit to the Oil and Gas Authority ("OGA") to seek their approval
to move the PEDL126 Licence from its current exploration phase into
an 18-year production period.
The Markwells Wood FDP will also form the basis of a new
planning application to the SDNPA to seek their consent for the
proposed Markwells Wood field development. Applications for further
regulatory consents from the Environment Agency and Health and
Safety Executive will follow upon grant of the SDNPA planning
consent.
As part of the FDP, the Company has also commissioned related
engineering studies which will draw upon some of the findings of
the Horse Hill Portland and tight Jurassic oil play conceptual
development study currently being prepared by Xodus and Barton
Willmore. These studies will focus on how the field can be
developed with minimal footprint and impact to the locality.
The Company has also commissioned well completion studies with
Nutech Energy Ltd to investigate how flow from the proposed MW-1ST
well could be optimised. This analysis will include the evaluation
of new non-fracking well stimulation technology, which could
potentially help further reduce the footprint of the field
development and may have wider applications to the Company's other
interests in undeveloped Weald Basin oil discoveries in Horse Hill
and Baxters Copse. It should be noted that the Infrastructure Act
prohibits the use of well stimulation via hydraulic fracturing
within the South Downs National Park, only conventional well
stimulation techniques are permitted.
Additionally, Nutech and the Company will integrate the
learnings of the tight Jurassic oil plays gained from the Horse
Hill PEDL137 and PEDL246 Licences into the MW-1 well and the
PEDL126 licence area.
Stephen Sanderson, UKOG's Chairman, commented:
"The Markwells Wood CPR is an important milestone for the
Company.
The CPR has independently validated our internal viewpoint that
the Markwells Wood field can likely be developed successfully.
Excitingly, this means that, subject to the necessary regulatory
consents, the Company can now plan to develop this UK onshore
oilfield to add further oil production to its existing producing
portfolio.
Secondly, the CPR is the Company's first successful independent
audit of recoverable oil volumes that is underpinned by our own
internal technical evaluation.
I would like to reiterate that the prime objective of our
proposed Markwells Wood field development plan will be to respect
and preserve the rural beauty and way of life of the local area,
with minimal environmental impact, while at the same time providing
a valuable contribution to the area's economy. As previously
stated, this is fundamental to the Company's operating philosophy
and policy.
I now look forward to testing and refining our new view of
Markwells Wood's production potential with the proposed MW-1ST
development well as soon as the necessary regulatory consents are
in place."
Qualified Person's Statement:
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 Tel: 020 7929 5599
(MORE TO FOLLOW) Dow Jones Newswires
September 14, 2015 02:00 ET (06:00 GMT)
Glossary:
2D seismic seismic data collected using the
two-dimensional common depth point
method
----------------- ----------------------------------------------
1C resources denotes the low estimate scenario
of Contingent Resources
----------------- ----------------------------------------------
2C resources denotes the mid or best estimate
scenario of Contingent Resources
----------------- ----------------------------------------------
3C resources denotes the high estimate scenario
of Contingent Resources
----------------- ----------------------------------------------
Contingent Contingent Resources are those quantities
Resources 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
characterized by their economic
status
----------------- ----------------------------------------------
core a continuous cylindrical sample
of rock from the wellbore normally
taken in 30 ft sections
----------------- ----------------------------------------------
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
----------------- ----------------------------------------------
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
----------------- ----------------------------------------------
Horizontal a high-angle well (with an inclination
well of generally greater than 85deg)
drilled to enhance reservoir performance
by placing a long wellbore section
within the reservoir.
----------------- ----------------------------------------------
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
----------------- ----------------------------------------------
oil field an accumulation, pool or group of
pools of oil in the subsurface.
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
or stock tank that is estimated to exist originally
oil in place in naturally occurring accumulations
before any extraction or production
----------------- ----------------------------------------------
oolite oolite is a sedimentary rock formed
from ooids, being spherical grains
comprised of concentric layers of
calcium carbonate and of diameter
0.25-2 mm. Ooids are usually formed
in warm, supersaturated, shallow,
highly agitated marine water intertidal
environments such as the present
day Bahama Banks
----------------- ----------------------------------------------
P10 a 10% probability that a stated
volume will be equalled or exceeded
----------------- ----------------------------------------------
P50 a 50% probability that a stated
volume will be equalled or exceeded
----------------- ----------------------------------------------
P90 a 90% probability that a stated
volume will be equalled or exceeded
----------------- ----------------------------------------------
petrophysics the study of physical and chemical
rock properties and their interactions
with fluids utilising electric logs,
physical rock and fluid measurements
----------------- ----------------------------------------------
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
----------------- ----------------------------------------------
recoverable those quantities of petroleum (oil
resources in this case) estimated, as of a
given date, to be potentially recoverable
from known accumulations
----------------- ----------------------------------------------
reservoir a subsurface rock formation containing
an individual natural accumulation
of moveable petroleum
----------------- ----------------------------------------------
sidetrack re-entry of a well from the well's
surface location with drilling equipment
for the purpose of deviating from
the existing well bore to achieve
production or well data from an
alternative zone or bottom hole
location, or to remedy an engineering
problem encountered in the existing
well bore
----------------- ----------------------------------------------
tight oil a play where oil is found or expected
play to be present within a reservoir
with low permeability, i.e. a tight
reservoir. The term, in the case
of HH-1, 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")
----------------- ----------------------------------------------
well stimulation well stimulation is 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:
The Company has the following Production, Development, Appraisal
and Exploration Assets in the UK Onshore Sector:
Asset Licence UKOG Licence Operator Area Status
Interest Holder (km(2)
)
-------------- --------- ---------- --------------- ---------------- -------- -------------------------
Awaiting announcement
of 14th Round
awards. UKOG
has applied for
Offshore UKOG the adjacent
Isle Solent 200 km sq onshore
of Wight P1916 77.5% Limited UKOG 46.7 acreage.
(MORE TO FOLLOW) Dow Jones Newswires
September 14, 2015 02:00 ET (06:00 GMT)
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