Stockbroker WH Ireland has described the findings of UK Oil & Gas Investments PLC’s (LON:UKOG) Broadford Bridge well as “exceedingly positive”.
UKOG, on Monday afternoon, told investors that a very large continuous oil deposit, totalling 1,490 feet, has now been measured in the Broadford Bridge well in southern England. The deposit spans a number of sequences of the naturally fractured Kimmeridge oil play, at a depth of 4,018 to 5,508 feet.
Multiple examples of hydrocarbons have been observed during the Broadford Bridge-1 programme to date – including mobile oil in drilling mud, oil shows in drill-cuttings, and wet gas readings – and a flow testing programme is planned.
WH Ireland only last week put its recommendations under review as the initial well reports surpassed the broker’s expectations and the AIM-quoted share prices moved beyond its price target.
The upcoming flow test will now be the focus, according to WH Ireland analyst Brendan Long.
“This programme is designed to establish if oil can flow at commercial rates and in commercial quantities from the well,” Long said in a note.
“In our opinion, the indications are exceedingly positive. We will be interested in the stabilised production rates (with stable bottom hole pressure) and the decline rates.
“The more permeability, the better, as this will provide fluid flow and pressure support from deep within the reservoir. If the shales too contribute to production and pressure support the wells may be prolific producers in our opinion.”
Long added: “The company is clearly applying an approach of letting science do the talking as the resource presents itself.
“So far, the data has been very supportive, more analysis from the cores will require extensive lab work, but with the cores in hand that is just a matter of time. With an extended production test forthcoming, which will provide another robust data point, perhaps the most important of all, this will add further to the growing understanding of the resource.”
READ:UKOG unveils “ground breaking” results from Broadford Bridge well
“Ground breaking” results
On Monday, UKOG explained to investors that the flow testing programme will be designed to establish whether or not oil can flow at commercial rates and in commercial quantities.
Stephen Sanderson, UKOG chief executive, has described the well findings to date as “ground breaking” and added that Broadford Bridge is now set to supplant its stake in Horse Hill as the company’s most significant asset.
“In the company's view, these highly positive and ground-breaking drilling results support our concept that a continuous oil deposit, some 1100 feet vertical thickness, underlies the BB-1 well location and the wider Weald Basin,” Sanderson said in a statement.
“UKOG as the largest licence holder in the prospective area of the Kimmeridge oil deposit is ideally positioned to take full advantage of this position.”
He added: “The major technical learning from BB-1 to date is that the Kimmeridge oil deposit now spans both fractured limestones and shales over almost the entire Kimmeridge section and that natural fracturing is more pervasive than expected.
“This bodes very well for the forthcoming flow test programme, which will commence following electric logging and well completion.
“The forthcoming extensive flow testing phase will now hopefully move us even further from proof of geological concept towards demonstrating that BB-1 itself is commercially viable."