UK Oil & Gas PLC (LON:UKOG) has released the latest extended production test results from the Horse Hill project, and, told investors that the date for ‘commercial production’ is now being brought forward by six months.
The AIM-listed majority stakeholder in Horse Hill, in a statement, said that it is presently expected that the HH-1 well will begin ‘commercial production’ operations during in spring 2020, followed by the addition of the HH-2z well once ‘test production’ concludes.
HH-2z is presently offline awaiting routine well intervention operations to shut off a water ingress, UKOG noted.
In the meantime, the HH-1 has been reopened and after a 16 January restart the well flowed at an initial rate of 435 barrels of oil per day (over a six hour period) and subsequently (over the past 24 hours) has averaged a rate of 293 bopd.
READ: UKOG confirms completion of Horse Hill’s first horizontal flow test
UKOG said that these test rates show that the HH-1 well’s Portland reservoir interval has remained in good condition following the June 2019 shut-in. Following a short, routine well intervention it is expected that HH-1 will be optimised for higher capacity production.
Chief executive Stephen Sanderson explained that the company has now determined that both the HH-1 and HH-2z wells can be produced from the Portland at the same time, without any detrimental effect to the reservoir's overall performance.
“This key finding means we can accelerate the start of up to 25 years of continuous Production via HH-1, whilst HH-2z continues to be tested.
“The immediate future therefore promises to be a hive of operational activity both at HH-1 and HH-2z, with each operation geared to deliver the best possible Production stream from the field as early as possible."
HH-2z update
On 23 December, UKOG revealed that the well would be shut-in for a scheduled long duration pressure build-up test, and, also, to enable a routine intervention in order to further optimise oil flow rates.
Today’s statement now confirms that the well intervention work will take place in February with progress held up due challenges securing suitable equipment for the programme - a ‘slim-hole production logging tool’ was needed so that the source of water can be identified.
"We are pleased that the necessary production logging tool equipment is now available and secured, enabling the HH-2z water shut-off intervention to proceed ahead in February,” Sanderson added.
Kimmeridge update
UKOG noted that the Kimmeridge intervals in the HH-1 well would now remain shut-in for a further long duration pressure build-up test.
There are plans in the future to install a dual completion to open up both the Portland and Kimmeridge for production.
Also, the company said that a future appraisal well would be planned to specifically target the Kimmeridge, but, only once full production from Portland is in place and the field is established as being cash flow positive.