UK Oil & Gas Investments PLC (UKOG) has been informed by its 100%-owned subsidiary Kimmeridge Oil & Gas Limited ("KOGL") announces that the most important technical goals of the drilling, coring and flow testing programme at its 100% owned BB-1/1z exploration discovery, located in licence PEDL234 were achieved, namely: further proof of the KL "geological concept", the determination of the deposit's lateral extent and the presence of a regional scale open natural-fracture network capable of flowing oil to surface from the KL without reservoir stimulation.
As previously reported on 20 February, the presence of KL5 oil flowing to surface, oil returned to surface from KL1-KL4 flow tests, together with mobile oil in cores and drilling fluids, presents further compelling evidence that the Upper Jurassic Kimmeridge of the central Weald Basin contains an extensive continuous oil accumulation. These live, mobile oil occurrences, together with corresponding rock and electric log data likely demonstrate an oil deposit of up to 1400 ft vertical extent.
Geochemical analyses further support this conclusion, as all oil samples from both BB-1z and HH-1 analysed to date are determined by Geomark Research to come from the same Upper Jurassic shale source, i.e. the oil lies within or immediately adjacent to the Upper Jurassic rocks where it was generated, one of the key aspects of a continuous oil accumulation.
The reservoir geology and geochemistry between HH-1 and BB-1z demonstrates that this continuous oil deposit has around a 30 km north-south extent, with BB-1z likely lying on the deposit's southernmost boundary. UKOG is the largest licence holder within the deposit's most prospective area or "sweet-spot", much of which resides in PEDL234.
Flow test inflows and pressure data, together with electric image log analyses, also demonstrate that the Kimmeridge contains both a local and regionally developed natural-fracture system, key to the future commercial viability of the KL deposit. Prior to testing, formation imaging logs and core showed the key fracture sets to be open.
The ability of these fractures to deliver hydrocarbons to surface at BB-1z without stimulation was demonstrated by both the KL5 test and by high initial instantaneous flow-back rates from the KL4 and KL3 test zones of 466 and 719 barrels of fluid per day respectively.
BB-1z Operational Update
Prior to the completion of testing on 20 March, the KL5 zone (test 7) continued to flow oil to surface at similar rates and oil-cuts as reported on 20 February. Although the continuous flow showed evidence of gradual cleaning and stabilisation over further days, due to planning permission time-constraints, the test was halted to test the deeper KL1 zone.
The KL1 test, over a newly perforated 40 ft naturally-fractured limestone section, showed encouraging initial fluid inflow rates of between 40-50 barrels per day post acidisation. However, no fluids were able to flow to surface due to a series of significant mechanical problems that could not be rectified within the remaining planning consent window. However, after the test halt, upon retrieving the uppermost packer and tubing, live mobile light oil was seen mixed with completion fluids.
As reported above, the testing programme, flowing oil from KL5 and oil to surface from the KL1-4 tests, played a significant part in achieving proof of KL geological concept and a key role in confirming the presence and flow capabilities of the regional KL natural fracture system.
The BB-1z well has been suspended for possible future re-entry and interventions.
Future BB-1/1z Plans
Whilst the KL flow rates observed are likely sub-commercial, given the multiple occurrences of mobile oil observed in the well and their correlation with good calculated oil saturations in electric logs and core analyses, we are exploring new methods and technologies that might enable us to achieve higher sustainable oil rates and commercial viability from the 1400 vertical feet of oil-saturated KL reservoir rock interpreted at BB-1z.
With this in mind, serious consideration is being given to a possible future short sidetrack, BB-1y. The sidetrack's objective would include a selective re-test of the main KL units, likely utilising an alternate completion methodology, new completion fluids, the possible use of small-bore radial drilling and other reservoir stimulation techniques. Any future work at BB-1/1z would likely take place after a successful trial of such alternate methods and technologies in the next PEDL234 exploration well.
Future PEDL234 Exploration Drilling Plans
Due to the significant positive technical learnings and understanding of the wider KL play gained from BB-1/1z, the Company has accelerated its plans to drill further wells within the PEDL234 licence. Two drilling sites have now been finalised, both located firmly within what the Company interprets to be the KL oil deposit's most prospective sweet-spot. UKOG, as the largest licence holder in this KL sweet-spot, is well positioned to exploit this extensive and likely commercially viable oil resource.
Both new locations lie within geological features in the central area of the 300 km² licence where the thickest, deepest buried and the most thermally mature (i.e. oil generative) KL section resides.
Lease terms on the first location have been agreed and a preliminary meeting with the Local Planning Authority is scheduled for this week. It is expected that a formal planning application will be submitted in Q3 2018, with drilling and testing in 2019 subject to obtaining necessary regulatory consents.
BB-1/1z, a KL exploration step-out, lies in the extreme south-eastern corner of the 300 km² PEDL234 licence, 100% owned and operated by KOGL, a wholly owned UKOG subsidiary.
Stephen Sanderson, UKOG's Executive Chairman, commented:
"Armed with the knowledge gained from BB-1/1z that the KL oil deposit's prime sweet-spot straddles the central sector of our extensive PEDL234 licence, the Company has accelerated its future KL drilling plans to include two new firm drilling sites. These will see the KL tested in the thickest, deepest and most oil generative areas of the play in PEDL234. We plan to submit a new planning application by Q3 this year and, subject to obtaining the necessary consent, our next PEDL234 well will be drilled in 2019, following the forthcoming testing and drilling campaign at our Horse Hill discovery.
As our understanding of the KL deposit progresses, we are exploring new methods and technologies that might enable us to achieve higher sustainable oil rates and commercial viability from the 1400 vertical feet of oil-saturated KL reservoir rock interpreted at BB-1z and our future KL wells. Consequently, BB-1/1z has been "suspended" to permit a future re-entry and/or sidetrack.
Our 2018 KL focus will now move firmly upon our Horse Hill Portland and KL discoveries where the forthcoming series of long term extended well tests and appraisal drilling will occupy the remainder of this year."
Qualified Person's Statement:
Stephen Sanderson, UKOG's Executive Chairman, who has over 35 years of relevant experience in the oil 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.