UK Oil & Gas Investments PLC (LON:UKOG) saw 25% wiped from its market value after the explorer said recent testing of one of the primary targets at the Broadford Bridge well suggested the zone was “not economically viable”.
The KL3 zone flowed at 300 barrels of flow per day initially, before tailing off to a steady of between 30-50 bfpd over several days.
“In the company's view this horizon, whilst containing moveable hydrocarbons, appears to be unproductive due to low reservoir permeability,” read Wednesday’s announcement.
That follows on from the disappointment of testing at KL1, which showed the zone could only produce a sustained commercial flow rate “via reservoir stimulation beyond the scope of its existing regulatory permissions”.
A test of the upper 100ft of KL3 will recommence in the New Year, with data so far suggesting 54ft of oil-bearing limestone - similar in thickness to the nearby Horse Hill discovery.
Depending on the remaining KL3 to KL5 results, another 40ft of naturally fractured limestone within the deeper KL-1 may also be perforated and flow tested.
Accelerates plans for further drilling
Elsewhere, UKOG said that given the “significant insights” gained from Broadford Bridge, it has accelerated plans for further drilling in the central and northern prime sector on the PEDL234 licence.
Planning consultants are “actively pursuing” the acquisition of two further drilling sites in the central sector of the licence area.
UKOG has begun the application for planning consent on the first of these planned locations and expects this to be submitted to the local council in mid-spring 2018, with drilling currently pencilled in for spring 2019.
“Although we still have many more questions than answers, the incoming stream of new analyses from our significant investment in BB-1 data acquisition has moved the company's understanding of the play to new levels,” said executive chairman Stephen Sanderson.
“Armed with this new-found knowledge, we have committed significant funds towards accelerating acquisition of two further drilling sites, located in what we now understand to be the prime ‘sweet spot’ of the Kimmeridge oil deposit within PEDL234.”
Sanderson added: “These data have also opened our eyes to the possible additional ways to extract oil at commercial rates from BB-1 and future wells elsewhere in the play.”
Shares fell 26.5% to 2.92p.