UK Oil & Gas Investments PLC (LON:UKOG) is topping up its stake in Horse Hill, the so-called ‘Gatwick Gusher’ project, in Southern England, by acquiring a stake held by Regency Mines.
UKOG is picking up an extra 1.235% interest in the project, meaning it will have a beneficial interest of 32.435% in Horse Hill. It is acquiring Regency’s 1.9% stake in the HHDL vehicle which owns 65% of Horse Hill.
It is paying a total consideration of £323,000 for the acquisition, with £54,498 paid in cash and the remainder covered in shares.
"This acquisition fits perfectly within UKOG's stated strategy to further consolidate and increase its holdings in the Kimmeridge oil play in the Weald,” said Stephen Sanderson, UKOG executive chairman.
“The licences remain a significant part of UKOG's extensive Kimmeridge portfolio, containing both the HH-1 oil discovery and its likely continuation across much of the licenced area.”
Sanderson added: “In addition to HH-1 Kimmeridge oil, the Portland oil discovery remains a significant potential early monetisation asset, which, given the 323 bopd test rate, we believe has a high chance of commercial viability.
“Given a successful production test outcome, both the Kimmeridge and Portland remain on course for stable oil production by end 2018/early 2019."
Planning application goes in front of committee in August or September
UKOG also told investors that it now understands that the Horse Hill planning application will be determined by a planning committee meeting at Surrey County Council in either August or September.
The application seeks permission for an extended production test of the Horse Hill-1 discovery well, in addition to two further wells.
Broadford Bridge success
UKOG is anticipating starting the next phase of the Horse Hill programme directly after the completion of work at the Broadford Bridge project, where the company last week confirmed the presence of oil and investors eagerly await further results.
Last week, UKOG announced it had received the green-light for flow testing at Broadford Bridge.
READ:UKOG gets green-light for Broadford Bridge flow test
UKOG released, on Thursday, an update on the Broadford Bridge programme where the company has taken thirteen cores, totalling 554 feet, from the Kimmeridge oil play that was previously tested successfully at the nearby Horse Hill well.
It said that it recovered twelve continuous cores, totalling 493 feet, through the KL3 and KL4 fractured limestone and shale reservoir section, and one core of 61 feet was taken from the KL2 reservoir zone.
Drilling work is ongoing, and a section of the KL1 has not yet been reached. It is expected at around 5,100 feet. Electronic logging and flow testing is expected to follow shortly after the drilling completes.
The company noted that Horse Hill successfully tested the KL3 and and KL4 zones, flowing 1,365 barrels of oil per day. In the Broadford Bridge well, wet gas was observed in those zones during the programme.
There was also significant ‘lost circulation zones’ in the KL3 and KL4 which, according to UKOG, indicates a presence of well-developed and spatially connected natural-fracture system, and it added that there are abundant fractures in limestone and shale observed throughout cores.
Important milestone
Sanderson, on Thursday, said: "The highly successful coring programme continues to provide supporting evidence that BB-1 has possibly encountered an extensive oil-filled natural fracture network, sitting within both the Kimmeridge Limestones and oil generative Kimmeridge shales.
“The observed light mobile oil, together with the indications of a possible thick gross oil zone within a geological feature without any conventional oil trapping configuration, provides further ‘proof of concept’ that the Kimmeridge of the central Weald may contain an extensive, thick, continuous oil deposit.
“This is an important milestone for the company.
“I look forward to the following electric logging and flow test programmes, which will hopefully provide both further ‘proof of concept’ and demonstrate the commerciality of BB-1."