Investors in UK Oil & Gas PLC (LON:UKOG) were evidently unimpressed by Wednesday’s project update from the Horse Hill project, which revealed that production testing had passed a milestone of 25,000 barrel of oil.
Of the 25,000 barrels of oil produced since early July, some 21,000 barrels have come from the Kimmeridge.
Production rates since 7 January have ranged between 303 bopd and 525 bopd, the company said.
In Wednesday morning’s trading, UKOG shares fell more than 5% to 1.14p.
The company said that, based on the successful results to date, it has now been decided that this production phase will continue through to the expiry of the current permits in spring.
It then intends to advance immediately to the drilling of two horizontal wells, HH-2 and HH-3, which will also undergo a long term production test.
Planning applications were recently submitted for the proposed seven-well field development, and the company anticipates that all necessary permits will be in place by the autumn – which will enable the transition from test production into permanent production in winter 2019.
“UKOG aims to deliver near-continuous oil production throughout 2019 via a combination of long term testing of HH-1 and two new wells, followed by a smooth transition into permanent production in the winter,” said Stephen Sanderson, UKOG chief executive.
“The potentially transformative effect of a successful programme is an exciting prospect for 2019."
UKOG highlighted that the absence of the formation water in the oil flows continues to give support to the company’s geological concept that KL oil lies within a significant continuous oil deposit.
It owns a 46.735% beneficial interest in the Horse Hill project. It is the largest UK-listed stakeholder in the venture.