Angus Energy PLC (LON:ANGS) shares advanced in Tuesday’s early deals after revealing oil test results from a new test of a horizontal well at the Balcombe project, in southern England.
Having started as much as 10% higher, Angus shares were up 0.48p or 5.88%, changing hands at 8.6p each.
The AIM-quoted firm has a 25% stake the project, near the village of Balcome south of Crawley, where environmental protests made headlines in 2013, alongside operator Cuadrilla which is best known as a UK shale gas company - but, Balcombe is not a shale project nor does it involve fracking.
The Balcombe-2z well is, in fact, part of the increasingly high-profile Kimmeridge hydrocarbon play which also includes the Horse Hill oil discovery near London Gatwick airport along with other exploration and appraisal projects in the region.
READ: UKOG says Horse Hill’s Portland zone is “robustly commercial”
Angus today revealed that the Balcombe well flowed naturally at a rate equivalent to 853 barrels of oil per day plus 22.5% water.
A subsequent test, meanwhile, saw relative water volumes reduce. The second flow period measured a rate equivalent of 1,587 barrels of oil per day, with 6.6% water.
Paul Vonk, Angus chief executive, said: "We are obviously pleased with the results of the Balcombe-2z flow test and encouraged as we take our next steps towards producing from the Kimmeridge layers in the near future at the Brockham Field.”
Water flow was not expected
Significantly, perhaps, Angus said the water flows were unexpected but it believes they are the result of the well intersecting a small high-pressure water zone in the horizontal section and that would need to be isolated in the future.
It added that the technical team doesn’t believe that the water production comes from the main Kimmeridge reservoir. Unfortunately, an attempt to qualify this view with additional well logging was unsuccessful due to what Angus described as a third-party equipment failure.
The company noted that at one point during the initial flow testing, the overall flow rate hit a rate of 3,000 barrels per day though it had to be constrained due to equipment limitations (as it exceeded separator operating capacity).
Nonetheless, Angus claimed that it believes it can isolate the water producing zone and establish commercial production under normal pumped production conditions.
It also noted that the duration of the tests were limited and due to planning restrictions on the operations, the programme had to be curtailed after only two tests.
Angus said it anticipates that the oil quality will be similar to that seen elsewhere in Kimmeridge formations (samples from Balcombe were measured at 34 API though samples were potentially affected by the use of nitrogen in the well).
The company explained that nitrogen was used to ‘clean and prime’ the well prior to testing. It added that no carbon dioxide or hydrogen sulfide gases were observed or measured during the programme.