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Horse Hill explorers fall sharply as well completes without finding gas

Last updated: 07:26 05 Nov 2014 GMT, First published: 08:26 05 Nov 2014 GMT

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A group of AIM quoted stocks fell sharply in early deals after it was revealed that the Horse Hill exploration well did not find gas in its deeper targets.

The closely followed exploration programme has now reached a conclusion, with the well reaching its total depth of 8,770 feet.

Having already made an oil discovery, estimated at 3mln barrels, the well tested deeper gas targets; however, the well did not observe any reservoir rocks or moveable gas.

Horse Hill Developments (HHDL), the well’s operator, now intends to apply to the Department of Energy and Climate Change (DECC) for permission to flow test the previously announced oil discovery.

The drilling rig and equipment will be demobilised from the site, pending a decision on future testing and production.

AIM quoted stakeholders in the project, via varied interests in HHDL, include UK Oil & Gas Investments (LON:UKOG), Stellar Resources (LON:STG), Solo Oil (LON:SOLO), Doriemus (LON:DOR), Alba Minerals (LON:ALBA) and Regency (LON:RGM).

UKOG, Doriemus and Alba Minerals were hit hardest as investors reached for their sell buttons with all three exploration shares falling more than 40% in early deals. They were followed lower by Stellar, Solo and Regency which lost 35%, 20% and 15% respectively.

"Whilst we are naturally disappointed that there was no gas discovery in the Triassic, we remain delighted that the well has made an oil discovery in the Jurassic Portland Sandstone and that further opportunities for additional oil potential have also been revealed by the well,” said David Lenigas, chairman of UKOG.

"All the data from the well will now be fully analysed and a decision taken on the work necessary to appraise and develop the Portland discovery."

Analysis of the oil discovery so far has revealed a gross oil column of 102 feet in the upper Portland, observed in the exploration well.

The discovery is currently estimated to contain 3.1mln barrels of gross in place oil, though a separate lower Portland target is thought to have a further 16.8mln barrels of ‘undiscovered’ oil in place.

Additionally, the well also encountered the Kimmeridge prospect, which is another area that could yield oil. Oil shows were seen in the Kimmeridge zones, immediately beneath Portland, which comprise multiple limestone intervals, clays and shale.

HHDL is investigating the conventional oil and gas potential of this area, which has been likened to the nearby Balcombe oil discovery. Samples have been taken from various parts of the Kimmeridge area.

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