UK Oil & Gas reports sustained production from Horse Hill well test programme

UK Oil & Gas announced on Wednesday that Horse Hill Developments - its subsidiary and operator of the Horse Hill oil field - had informed it that sustained production continued to be maintained from the HH-1 extended well test programme, achieving a gross aggregate total of over 25,000 barrels to date - a “significant” production milestone.

The AIM-traded firm said that of the aggregate total, more than 21,000 barrels had been produced to date from the Kimmeridge Limestone oil pool, more than doubling November's reported Kimmeridge production total.

No formation water had been returned to surface during the entire EWT, with dry oil and solution gas production continuing from HH-1.

Based on the continued Kimmeridge EWT success and October's announcement of Portland commercial viability, HHDL said it planned to continue HH-1 EWT production until the expiry of current permits in spring 2019, and then to move directly into the drilling and long-term testing of two new horizontal wells, HH-2 and HH-1z, for which UKOG's internal funding, planning consent and environmental permits were in place.

HH-1 is located in licence PEDL137, in which UKOG holds a 46.735% beneficial interest.

UKOG said 114 tankers of crude had been successfully exported to Perenco's Hamble oil terminal.

The KL's 40 degree API Brent quality crude continued to be sold at prevailing Brent crude oil prices, minus a small deduction for handling and marketing.

UKOG also reported that KL4 production from a 103 foot perforated interval began during late November, yielding 2,192 barrels at a maximum half-hourly metered rate of 584 barrels of oil per day, and at an average sustained daily continuous rate of 300 bopd over the subsequent week.

Fluid and pressure build up data gathered from the KL4 test demonstrated that the KL3 and KL4 were one single oil pool of 358-foot vertical extent.

As a result, and as it had previously indicated, a decision was made to commingle both KL3 and KL4 production.

Commingled KL3 and KL4 production from an aggregate 187 foot perforated interval commenced on 4 December at a maximum half-hourly rate of 426 bopd, and continued throughout the Christmas and New Year period, producing 8,829 barrels of 40 degree API crude.

The programme included several pressure build-up tests, and testing of different pump configurations, settings and equipment.

Following the installation of a new downhole pump and an optimised surface hydraulic pump unit, stable commingled production resumed on 7 January at an increased initial rate of 525 bopd.

The sustained daily rate over the subsequent week averaged 303 bopd.

A de-waxing treatment applied on 14 January led to an increase in hourly rate to 351 bopd, UKOG said, with commingled production continuing.

To date, the company said the absence of produced formation water added continuing support to the firm’s geological concept that KL oil lay within a “significant” continuous oil deposit.

Planning and environmental permit applications for permanent oil production via a seven-well development were submitted to Surrey County Council and the Environment Agency on 7 December and 10 January, respectively.

It was anticipated that all necessary permits should be in place by autumn 2019, enabling a transition from EWT production into permanent production during winter.

“The continued EWT success supports the company's plans to establish permanent production at Horse Hill in 2019,” said UK Oil & Gas chief executive Stephen Sanderson.

“UKOG aims to deliver near-continuous oil production throughout 2019 via a combination of long term testing of HH-1 and two new wells, followed by a smooth transition into permanent production in the winter.

“The potentially transformative effect of a successful programme is an exciting prospect for 2019.”