Europa Oil & Gas (LON:EOG) and Egdon Resources (LON:EDR) have revealed to investors that Kiln Lane, the latest onshore UK drilling project, has not been a success.
The Kiln Lane exploration well, located about 25 kilometres from the Wressle discovery, encountered significant oil and gas shows during drilling, but subsequent analysis has shown the reservoirs to be water wet.
Europa has 50% of the well which will now be plugged and abandoned, while Egdon owns 25% of the project. The drilling site will be restored for agricultural use.
"While we are disappointed with the outcome, Kiln Lane was drilled on schedule, on budget and safely," said Europa chief executive Hugh Mackay.
“This is testament to the performance of both our own technical team and the engineering crew on the ground."
Kiln Lane was the first well to be drilled on this large licence where multiple leads have been identified. The presence of hydrocarbon shows is encouraging and the quality of data recovered will enable clear decision making going forwards.
“Over the coming weeks and months more technical work will be conducted on all the data and geological samples recovered from the well as we refine our hydrocarbon system model and plan our next steps for the licence.”
Mackay added that, despite the Kiln Lane result, Europa will not be short of potentially high impact news flow in the weeks and months ahead.
He highlights that testing operations are ongoing at the Wressle discovery, where further analysis is due shortly and an extended well test is planned later this year.
“Perhaps most importantly, we have commissioned a competent person's report on our Irish licences in the South Porcupine Basin where gross mean unrisked prospective resources of up to 1.5 billion barrels of oil have already been identified by our partner Kosmos Energy,” he added.
The Irish competent person's report (CPR) is expected to be complete during the first half of the year, according to Mackay.