UKOG shares rise on Broadford Bridge statement

171016 BB flaring UKOG

Flare at UKOG’s Broadford Bridge site, published 16 October 2017. Photo: UKOG

UK Oil and Gas saw its shares rise in value by nearly 25% today following a statement on the company’s Broadford Bridge oil exploration site in West Sussex.

Last week, the company announced problems with the cement bond on sections of the well and said it would need to carry out a workover and cement squeeze.

Today it gave details of revised testing plans and released three short videos showing oil and gas said to be produced from the Broadford Bridge well.

In a statement, UKOG said:

“Light, sweet crude oil and hydrocarbon gas continues to flow from the Kimmeridge Limestones”.

There were, however, no details of flow rates.

Shares ended the day at 5.82p, up more than 23%. The afternoon saw large sales of shares. Some investors speculated that a share placing was imminent.

UKOG said in the statement the testing programme would now continue until mid-December. The programme would comprise:

  1. Isolation, acid wash and flow testing perforated zones in four zones of the Kimmeridge Limestones, KL1-KL4
  2. Perforate further zones in KL1-KL3, isolate, acid wash and flow test
  3. Cement squeeze in KL4 and KL5 zones, run a new cement bond log, re-perforate the newly cemented section, isolate, acid wash and flow test

The statement said the shrouded flare stack at the site had been operating daily. This, it said, showed a “clean burn of methane and wet gases delivered from the test separator”. Oil samples had been sent for analysis.

UKOG’s Executive Chairman, Stephen Sanderson, said the volume of oil and gas recovered so far “proved” that the Broadford Bridge well, called BB-1z, contained a continuous oil accumulation some 1,400ft thick.

“Our focus now moves to delivering further proof that BB-1z can deliver both commercially-viable rates and volumes of oil to surface.”

“The test results to date are technically significant and highly encouraging and I am confident that the more finely focussed and optimised testing plan can establish commercial viability.”

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18 replies »

  1. PR firm earning its wages here , the share was in freefall and needed help. The RNS said nothing new yet the punters fell for it , no news of how much flow, a few cleverly placed bottles of oil next to a tank and a UKOG safety helmet which someone should be wearing doesn’t make an ounce of difference. The geology is no good unless they frack .

    • I was deeply underwhelmed by the Professors response to my post, also wondering why he chose to put it up on his blog rather than Drill or Drop, until I found he’d also had it posted on several other websites – presumably so his website gets any extra hits rather than Dill or Drop.

      I’m not surprised that UKOG have never bothered to respond to him (although it would help if he actually wrote to them) as I certainly cannot. He is acting like a kid caught with his hand in the biscuit tin, because someone dared to call his bluff. He knows it and no amount of bluster, bigging up of his credentials or denigration of mine can hide it.

      I suppose I could follow up on his suggestion and take another Introduction to Geophysics course.. On the other hand, he certainly needs to take introductory courses on Drilling Engineering, Completions Engineering, Reservoir Engineering & Economics, while also taking the time to find out just how closely the G&G and Drilling Groups on a project work together these days..

      In the meantime, if he is so convinced that UKOG will fail, why doesn’t he short the UKOG shares on the AIM market?

  2. Too bad there’s no UK definition of an ‘acid wash’. A wash (as I have always understood a wash, well-bore-cleaning only) isn’t going to get them far. As Johnno says, they will need to acid frack at production stage, and then at some point high-volume hydraulically frack out into the surrounding shale. Not fracking at the moment, of course. OMG no. Altogether too contentious. Acid fracking this tight formation will require a very large number of wells. Expensive! Some people are gullible, IMO. And some sleepy locals are in for a nasty surprise. All that supposing that any worth-while oil flows. UKOG guy baht ‘at is clearly off on a cementing course. Poor OKOG, drilling through shale is shatteringly difficult.

    • You and Johnno are obviously such experts that maybe you should offer your services to UKOG .

      The purpose of an acid wash to dissolve carbonate particles which have blocked natural fractures or man-made perforations or even using hydrochloric acid to enlarge natural fractures would not be to push rock apart .

      These techniques and indeed hydraulic fracturing have been used to increase flow to water extraction bores in chalk .

      You are evidently not just anti hydraulic fracturing but anti-fossil fuel , anti-business , anti-energy security , anti-job .

    • Hi Kathryn,

      An acid wash is used to clear out the perforating debris, plus any LCM & cement remaining in the fracture(s) in the near wellbore zone. It is standard practice in fractured formations and has been used successfully in similar environments all over the World.

      They won’t need to frac at any point. In fact they couldn’t, even if they wanted to. You cannot frac a formation that is already naturally fractured – it’s like trying to fill a bucket that is already riddled with holes.

  3. The good news about all this it that time will tell. On the bulletin boards some think they will be millionaires by Xmas, others that there will be no oil in commercial quantities period, or without fracking the shale. They place their bets accordingly.
    All interesting opinion. Worth revisiting at Xmas I guess.

  4. If you read the technical procedure for work at Broadford bridge highlighted at the start of the flow tests, you will realise that the ‘acid wash’ in phase 3 is indeed a matrix acidizing process. The quantities of the Protekt 15 plus acid solution stored on site at the beginning of this phase are further evidence for this. This will require further relatively high pressure rig work of the sort which caused the problems earlier this month. The more acid solution has passed into the weak section, the less likely it is to be repaired successfully.

    I have not seen the flare in use yet and the lack of activity at the site indicates that there is little, if any oil flowing. I would be very suspicious of any announcements of oil quantity or quality at the moment. While it is possible that a small amount may have reached the surface during the abortive nitrogen lifting attempt, I cannot see how this is evidence of the oft repeated ‘continuous deposit’ or any assurance that this company are capable of achieving production from it at this site.

    One cement bond failure is indicative that there may be more in the pipeline so to speak. I think UKOG need to get more money in in order to do the workovers necessary to achieve any viable oil flow. These tightly focussed little vignettes we are being shown are entirely for that purpose and really should be disregarded as a desperate P.R. stunt.

    I would not pour any more money down this ill-conceived and poorly executed exploration.

    • Hi Twf,

      Actually, it’s not. It’s exactly what it says on the tin. Cement squeese to get zonal isolation behind the casing, perforate and then acid wash to get rid of the perforation debris, and any LCM & cement remaining in the fractures. A matrix acidisation would require a lot more equipment and tank storage than is currently on location.

      I don’t know what you are referring to by high pressure rig work causing problems, but the amount of acid used to clear the perforations deeper in the Well (i.e. KL1, 2 & 3) has no effect on the section (between KL4 &5) which lacks zonal isolation.

      The flare is shrouded (as can be seen in the video), so you wouldn’t see it from offsite. They can’t make any announcements of flow rates / quantities etc until the formal DST program has started and the Well is under steady state flow conditions. They could make a formal announcement on the oil API, but it doesn’t tell you much without the rest of the data.

  5. There talks a person who could simply be trying to manipulate the share price, so DYOR. The term ill-conceived and poorly executed has no factual basis, so “buyer beware.”

    Until the tests are completed simply speculation and fabrication.

  6. I was asked again by Paul Seaman to comment on this RNS.

    I was late getting to the first one, so if you haven’t read my response yet, it’s here:

    Firstly, let me comment on two of the videos.

    In the second video where the chap is pouring oil into a bottle in front of the storage tanks, if you freeze the video right at the start you can see a guage on each of the tanks. These are the tank level gauges and the one on tank 3 indicates it’s about 75% full. The one on tank 4 is a bit more difficult to see, but looks about 50% full. The valve to tank 3 is open (the handle is in line with the pipework), so it’s the live tank. The tanks look to be standard size, in which case they hold around 60,000 lts of fluid.

    Since these tanks are covered at the top, they will be the tanks for the produced oil after it goes through the separator. The gas will have been directed to the flare and the water (primarily spent acid and water cushion from the acid wash) will have gone into a different set of tanks.

    These levels indicate that they have already produced substantial quantities of oil during the well clean up. Since the well isn’t in a steady state flow condition, they cannot quote any rates or volumes for an RNS – that will have to come later.

    In the third video of the gas flare, it is the colour and cleanness I’d expect to see from Methane plus some light end hydrocarbons (i.e. C1, C2 and maybe some C3’s).

    I’m a bit surprised at the volume and pressure – it’s more than I would have expected from a Weald Well, but good news in the event of the site being converted over to production, as there is enough gas there to use in a Generator to power the onsite equipment and have enough left over to sell to the National Grid. Incidentally, by pressure, it looks to be 10 – 20 psi, certainly not in the 100’s or 1,000’s. I’ve been on well tests where the actual flame doesn’t start for around 3m from the end of the flare, the flare is covered in ice (from the gas expansion) and it sounds like you are standing right next to a jet engine.

    Anyway, the flare and ease of pouring the oil indicates it’s of a similar quality to that on HH, which was 35 – 40 Deg API (basically the higher the API number, the better the crude quality). This is classified as ‘light, sweet’ crude and will get the highest price from the refineries.

    With respect to the RNS itself, the Kimmeridge Limestones are numbered from the bottom upwards, so the KL4 / KL5 are at the top of the sequence.

    Since a Well is tested from the bottom upwards, then what they are doing by testing the deeper zones first is fine.

    I’m also curious that I don’t think they have mentioned testing either the Corallian or Portland on BB-1z so far. The Corallian is deeper, so would normally be tested first and this implies that they don’t see anything worthwhile there.

    Since they lack zonal isolation between KL4 & KL5, I suspect they don’t have zonal isolation over the Portland either, but are focused on the KL and might come back to the Portland during the work-over & DST program – their work-program doesn’t give enough details in that respect to be for me to be confident which way they will go.

    My guess now is they did indeed loose more cement into the bottom fractures than anticipated. This is good and bad – good, in that the fractures must be relatively large, but bad in that the cement penetrated deeper into them (possibly the reason for the additional perforating work – using deeper penetration charges). The effect of more cement loss than anticipated would have resulted in the top of the cement outside the Liner being lower than planned.

    The only way they can do all this work is with a work-over Rig (or Hydraulic pulling Unit [HPU]), so I presume this is what they are waiting for.

    This gives them the option to put a permanent Completion in the Well after the DST program, but does not give them the option to side-track.

    In that respect, they are taking a longer term view while at the same time hedging their bets; in that they have the option to run a permanent Completion (therefore focused on the most productive zones while isolating all the others) and put the Well onto production test while working on a longer term program.

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