Horse Hill, near Gatwick Airport

The largest holder of oil and gas acreage in south-east England is seeking to add to its assets.

UK Oil & Gas Investments plc – the major investor in the Horse Hill oil site near Gatwick – said yesterday it was looking to acquire further prospective acreage in the Weald and Purbeck-Wight basins.

In the introduction to its annual accounts released yesterday, the company said its aim was to demonstrate that oil flows, recorded in short tests at Horse Hill, in Surrey, could be replicated at three other locations across the Weald Basin.

It said it was planning to drill two wells in 2017, at Broadford Bridge in West Sussex and Bury Hill Wood, also known as Holmwood, in Surrey. A third, unnamed site, was planned for the first half of 2018, the company said.

Executive Chairman, Stephen Sanderson, said UKOG’s goals also included:

“Demonstrate commercial production from one, possibly two wells, at Horse Hill by the end 2018

“Further consolidate our holdings, where possible, and acquire further prospective acreage”.

He said:

“Our interests in the new Kimmeridge Limestone oil play have the potential for exceptional growth in the near and foreseeable future”.

Key figures

The accounts, for the 12 months to September 2016, showed revenue was down and the loss before taxation was up on the previous year. But the company’s exploration and evaluation assets rose from £0.742m to £6,187m.

Revenue (from Horndean and Avington fields): £0.15m (2015: £0.24m)

Loss from operations: £2.89m (2015: £1.60m)

Loss before taxation: £1.97m (2015: £1.69m)

Expected tax credit: £0.394m (2015: £0.348m)

Tax paid: £0 (2015: £0)

Cash and cash equivalents: £2.44m (2015: 4.59m)

Exploration and evaluation assets: £6.187m (2015: £0.742m)

Finance raised: £4.41m

Total assets: £18.51m (2015: £11.58m)

Total current liabilities: £0.59m (2015: £0.44m)

Total liabilities: £0.95m (2015: £0.799m)

Total shareholders’ equity: £17.569m (2015: £10.782m)

People employed: 3 (as in 2015)

Directors’ remuneration: £1.066m (2015: £0.628m)

Stephen Sanderson’s remuneration: £607,000 (2015: £51,000)

Wages and salaries: £413,000 (2015: £34,000)

Consultancy fees: £76,000 (2015: £594,000)

Share based payments: £577,000 (2015: £0)

P50 reserves: 89,983 barrels of oil, largely unchanged from last year.

P50 contingent and prospective resources: 22.2 million barrels (not including Godley Bridge gas discovery or prospective resources from the Isle of Wight prospect)

During the year, UKOG acquired 100% of Celtique Energie Weald Ltd (PEDL234) for £3.5m (£1.25m in cash). This made it the largest acreage holder within the Kimmeridge Limestone play, the accounts said, with an estimated 20% of Kimmeridge oil in place over the Weald Basin. The company also increased its investment during the year in Horse Hill from 20-48% for £2.8m (£1.15m cash)

Site plans

This information has been extracted from the UKOG accounts

Avington, Hampshire (PL070)

UKOG has a 5% interest in this licence. It said oil production was stable averaging 47 barrels of oil per day.

Baxters Copse, West Sussex (PEDL233)

UKOG has a 50% interest in this site, operated by IGas, which plans an appraisal well for 2018-2019.

Broadford Bridge, West Sussex (PEDL234)

UKOG has 100% interest in PEDL234. Contains multiple look-alike geological features to Horse Hill Kimmeridge Limestone oil discoveries, the company said. The licence also contains an eastern extension of Godley Bridge-1 Portland gas discovery.

Drilling the Broadford Bridge-1 well is planned for Q2 2017. The company said this would be a deviated well, drilled at 45 degrees to vertical. It was designed to penetrate the entire Kimmeridge section, targeting four naturally-fractured Kimmeridge Limestones, to acquire coring, electric log and borehole imaging data. Planning permission included flow testing for up to 14 weeks.

UKOG said the operator, the wholly-owned subsidiary Kimmeridge Oil and Gas Ltd (KOGL), would apply for permission for permanent production by the end of 2018, if tests were encouraging

Brockham, Surrey (PL235)

UKOG has 1.41% interest in this licence. The accounts said a well intervention programme in BR-x1 encountered oil and gas shows in the Portland, Kimmeridge and Corallian. Production from the Portland had been shut in pending completion of site works and re-entry to Br-x1. The accounts said:

“A successful Kimmeridge test would be a very positive outcome for UKOG’s Horse Hill and Holmwood interests and the overall Kimmeridge Limestone play.”

Godley Bridge, Surrey (PEDL234)

(See Broadford Bridge above). UKOG aims for Kimmeridge Limestone oil production and Portland gas production by 2019. It has predicted that the Godley Bridge-1 Portland gas discovery extends into the north of PEDL234 and well analysts, Nutech, indicated significant Kimmeridge oil potential under the Portland gas accumulation.

KOGL has started work on selecting a well site, the accounts said. A planning application would be submitted to drill a well in first half of 2018.

Holmwood/Bury Hill Wood, Surrey (PEDL143)

At 30% interest, UKOG is the largest single participant. The company said it aimed to demonstrate the site has a Kimmeridge oil deposit and shallower Portland sandstone objective.

Horndean, Hampshire (PL211)

UKOG has a 10% interest in the licence. It said oil production from the field was stable oil, averaging 144 bopd.

Horse Hill, Surrey, PEDL137

UKOG has a 48% interest in Horse Hill, making it the largest investor. The company said it planned to demonstrate commercial oil production from one, possibly two wells, at Horse Hill by the end of 2018.

It said it expected to receive necessary consents for production testing and drilling activities by the end of July 2017.

The plans, if approved, include drilling a deviated wellbore, HH1z, from the HH-1 well. A new well, HH-2, would access the Portland and take core and image log data from the Kimmeridge.

HH-1 well test data had indicated fractures in the KL3 and KL4 Kimmeridge Limestones that could be vertically connected. Stephen Sanderson said:

“We believe that the well may have connected to a much larger fractured-reservoir “tank” than the two individual limestones tested. It is, therefore, possible that natural fractures within the shale may also have directly contributed to measured oil flow”.

UKOG said it had commissioned an enclosed flare for appraisal and well testing at Horse Hill. The company said the flare was “clean burning, without odour and produces low emissions”. It was described as “a first in the UK onshore oil & gas industry”.

Isle of Wight (PEDL331)

UKOG has a 65% interest in the onshore PEDL331 and 100% interest in offshore P1916. PEDL331 includes the Arreton-1 and Arreston-2 oil discovery. The accounts said oil production was planned at Arreton by 2019.

“We have selected a well site and are currently compiling a planning application to drill a deviated appraisal well in the Arreton-2 oil discovery.”

Lidsey, West Sussex (PL241)

UKOG’s interest is 1.2% interest. Production has been shut-in pending an infill well in 2017.

Markwells Wood, West Sussex (PEDL126)

UKOG has 100% interest in PEDL126. It expects a decision in Q2 2017 on its planning application for Markwells Wood to the South Downs National Park Authority. The application is for four horizontal wells drilled in the Great Oolite limestone reservoir, described as a geological look-alike to the neighbouring Horndean producing field.

Appointments

UKOG announced today (1 March 2017) the appointment of Allen Dee Howard as a non-executive director. He is a senior vice president of Premier Oilfield Laboratories in Houston and was previously chief operating officer at the well analysis company, Nutech.

UKOG has also appointed Cenkos Securities as joint broker.