Hopes of establishing a substantial oilfield in the deep-lying reaches of the Weald Basin in southern England rest on the upcoming wells at Horse Hill, says analyst Barney Gray.
Shares in Angus dropped more than 20% on the news and Gray said the results were well below what he and others had hoped for.
Brockham is 20 miles from Horse Hill and part of a clutch of prospects in the Weald Basin that spans Surrey, Sussex and Hampshire.
Angus is the operator and has a 65% stake while it holds 25% in Balcombe and 60% in Lidsey, two other Weald Basin prospects.
In October, two tests on Balcombe flowed at rates equivalent to 853 barrels and 1,587 barrels of oil per day respectively.
However, both of those tests also produced water and Gray says none of the developers have yet been able to produce sustained flows.
“What we are seeing is big flow rates for small periods but no one has really go on top of it technically.”
The shallower portion of the Weald Basin, known as the Portland, is already in production at Brockham and has been declared a commercial discovery at Horse Hill.
KImmeridge the big prize
The big prize, however, has always been the deeper Kimmeridge levels where it was hoped that huge amounts of oil might be released from a naturally fracked geology.
Angus says it remains quietly optimistic that it can make a commercial success of the deeper layers, but it is having to re-draw its plans.
A workover rig is coming back to the flow test site to isolate the cause of the water.
That has shifted attention back onto Horse Hill where UK Oil & Gas PLC (LON:UKOG) is the operator and major shareholder.
Plans are in place for two wells to start in the spring.
HH-2 will be a horizontal well to target the Portland section, while there will be a sidetrack from the original HH-1 aimed at new sections of the Kimmeridge Clay.
UKOG’s is targeting production of 720-1,080 barrels of oil per day from HH-2, which is seemingly more than enough to generate healthy revenues.
Gray though believes it will take oil to flow strongly and over a sustained period from the deeper Kimmeridge prospects to reinvigorate interest in a project at risk of going off the boil.
Shares in Angus dropped 21% to 5.53p.