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Horse Hill operator UK Oil & Gas (LON:UKOG) is to push ahead with development of the ‘Gatwick Gusher’ and expects to conduct a flow test within the next few months.
The test will be a key milestone for the controversial project and be specifically designed to test the Kimmeridge limestone and Portland sandstone formations.
UKOG caused a furore in April after it claimed the Weald Basin may contain twice as much oil as already produced from the North Sea.
It made the claim after drilling one well at Horse Hill near Gatwick.
The company said it had been encouraged by a new study that also suggested its licences potentially held billions of barrels of oil.
The new study, from Nutech, a US shale field expert that drafted that original report, used data from Horse Hill-1 and previous wells to estimate a best gross figure for 15.7bn barrels within the Kimmeridge clay-based Jurassic and limestone tight formations deep under the Basin.
That equates to a p50 (50% probability) oil in place number of 3.9bn barrels attributable to UKOG.
The study assessed the potential over a 151 sq km area where UKOG has an interest. In June, Schlumberger estimated a smaller area of 55 sq km contained 9.2bn barrels.
Nutech estimates the Weald Basin overall may hold 124bn barrels.
UKOG said in April that the oil had not been discovered before because previous drills had not gone deep enough.
How much oil is eventually extracted depends on recovery and how much it costs, data on which is not yet available and could see estimates dramatically scaled back, but Stephen Sanderson, UKOG’s chief executive, said that the latest OIP numbers had offered the “necessary encouragement” to proceed.
UKOG and its partners have also stated that they would not need to frack to extract any oil.
“The company expects these flow tests to be conducted within the next few months,” today’s statement said.
WH Ireland said that the report was comprehensive with data from 86 wells being incorporated along with core analysis, geochemical and legacy data.
Unlike the prior reports, today’s report was far more expansive in scope, covering eight of its eleven licence areas, but the OIP volumes mentioned are based on petrophysical analysis. Its target price is 5p/share.
Shares fell 3% to 1.23p.