UK Oil & Gas upbeat on latest testing at Horse Hill

UK Oil & Gas announced on Friday that, following a successful week-long pressure build-up test (PBU), the aggregate total Portland oil production at the Horse Hill oil field now exceeded 20,500 barrels.

The AIM-traded firm holds a 50.635% majority interest in the Horse Hill project.

It said the Portland continued to produce at a stable rate of more than 220 barrels of dry oil per day (bopd), at a modest reservoir pressure drawdown.

No formation water had yet been produced to surface.

The latest PBU yielded “significantly better-than-expected” results, UKOG explained, with little or no apparent pressure depletion compared to the last PBU in early April.

It said the potential positive impact on connected oil in place would therefore be “thoroughly” evaluated and reported in due course.

The successful Portland and Kimmeridge extended well test (EWT) programme had now produced an aggregate volume of more than 45,500 barrels to date, with a landmark target of 50,000 barrels set to be achieved over the coming month and prior to the start of the forthcoming horizontal well campaign.

In order that the HH-2 Portland well could be drilled, the company said the current plan envisaged that once HH-1 Portland test production exceeded 25,000 barrels, production would be switched back to the Kimmeridge oil pool.

“For prudent Portland reservoir management purposes and to ensure there is no detriment to the expected high performance of the HH-2 Portland horizontal well, the average pumped rate from HH-1 continues to be maintained below the previously reported 362 bopd calculated sustainable rate,” the board said in its statement.

“As previously stated, based upon well-established reservoir engineering metrics, it is expected that HH-2 has the potential to achieve a rate of two-to-three or more times the HH-1's vertical rate of 362 bopd.”

Following a successful tender process, the company said it was now finalising contracts for the forthcoming drilling campaign, with preparations now well-advanced for simultaneous test production and horizontal drilling operations at Horse Hill.

The HH-1 well and the surrounding “highly prospective” PEDL137 and PEDL246 licences were being operated by UKOG's subsidiary Horse Hill Developments, in which the firm held a 77.9% direct interest.

“The Portland test programme continues to exceed our technical expectations with dry oil production now exceeding 20,500 barrels,” said UK Oil & Gas chief executive Stephen Sanderson.

“Our overall testing costs have also been significantly offset by the associated sales revenues.

“Moving forwards, we now expect to exceed 25,000 barrels Portland test production before the HH-1 test is switched back to the Kimmeridge to facilitate the drilling of HH-2.”

Sanderson said the recent extensive pressure build-up also indicated HH-1 was likely connected to a larger oil volume than previously recognised.

“Further Portland test data will now be collected and analysed before the HH-2 drilling campaign to confirm this important development.

“The Horse Hill oil field and its associated significant future cash flow stream is of paramount importance to UKOG and will, therefore, continue to be the company's prime short-term focus.

“In this respect, we remain on track to commence drilling HH-2 as previously reported.”