Shares in UK Oil and Gas dropped by more than 35% this afternoon following the company’s announcement of possible formation damage at its Broadford Bridge oil exploration well and the prospect of drilling another sidetrack.
On publication of a statement to shareholders, the price fell from 3.42p down to 1.87p at the close of trading. This represented a drop in the company’s market capitalisation of more than £50m.
UKOG has been carrying out flow testing in the Kimmeridge limestone zones at the well, near Billingshurst, in West Sussex.
In today’s statement, issued at 2.50pm, the company said a 96-hour near continuous test in zone KL5 – the first conducted in the Weald – had resulted in a flow of 10-72 barrels a day. Of that, between 30 and 50+% was oil. The rest was spent acid from an earlier acid wash treatment.
Previous core results and geochemical analysis from KL5 had reported live oil in the fractures, UKOG said.
The statement said investigations were underway into whether zones KL5 and KL6, perforated in summer 2017 and acidised during the original test programme, had been damaged by long residence times of spent acid in the reservoir and the perforating technique used.
A rod-pumping programme would continue on KL5 until further notice, the company said, with the aim of achieving 100% oil to surface.
Earlier tests on the Kimmeridge limestone zones, KL3 and KL4, had recovered oil and associated gas to the surface but produced no sustained flow, UKOG said (more details).
The company added:
“It is now thought that both fractures and perforated channels around the wellbore of KL3 and KL4 could be partially blocked by released clay particles and cement-related debris, thus preventing sustainable fluid inflow.
“Serious consideration is being given to a possible future short sidetrack and selective re-test of KL3 and KL4 which electric logs show as oil saturated.”
UKOG announced in August 2017 that it had drilled a longer sidetrack, apparently bypassing the entire Kimmeridge Limestone section of the original wellbore after regions became washed out.
Last week, Angus Energy’s Managing Director, Paul Vonk, suggested that sections of the Broadford Bridge well had been blocked by bentonite. This was strongly rejected by UKOG’s Executive Chairman, Stephen Sanderson.
Today, Mr Sanderson described the results from KL5 as “positive and encouraging”. He said:
“[They] provide further supporting evidence for the presence and significant spatial extent of a viable Kimmeridge continuous oil deposit within the PEDL234 licence.
“The KL5 test results, plus the many strands of technical evidence gathered from the well, now also indicate that the BB-1 location lies towards the southern edge of a thick, naturally-fractured, oil-saturated Kimmeridge “wedge”, stretching around 30 kms to the north of BB-1 across the Weald. UKOG, as the largest licence holder in the thickest part of this “wedge”, is therefore ideally placed to exploit the potentially commercially viable recoverable resources that now likely underlie our Licences.”
The statement said UKOG now planned to test the KL1 zone:
“Existing planning consent time permitting, following completion of KL5 testing, the plan remains to test a 40 ft thick limestone zone in KL1 which, as per KL5, was not perforated or acid-washed in 2017.”
The current stage of the PEDL234, which includes Broadford Bridge, expires on 30 June 2018 and the site’s planning permission on 15 September 2018.
Oh dear , I guess there were those who knew this before now but didn’t want to say anything , I guess Steve Sanderson isn’t God after all . Isnt this what Paul Vonk suggested and Mr Sanderson denied earlier ?
So Angus Energy’s Managing Director, Paul Vonk was not wrong after all?
I trust all those various posters on Drill Or Drop will apologise to Paul Vonk for their insults? Perhaps UKOG’s Executive Chairman, Stephen Sanderson, will also apologise to Paul Vonk?
There is something else here also? Did i recall that posters supporting acid fracking sayinf that there is no residue from acid fracking? Read below and see what that says?
“In today’s statement, issued at 2.50pm, the company said a 96-hour near continuous test in zone KL5 – the first conducted in the Weald – had resulted in a flow of 10-72 barrels a day. Of that, between 30 and 50+% was oil. The rest was spent acid from an earlier acid wash treatment.”
“The rest was spent acid from an earlier acid wash treatment.” Sounds like residue to me? What precisely did that residue consist of?
That is interesting, isn’t it?
It seems that the actual operation of these untried processes are far more…..unexpectedly difficult and potentially disastrous than we have been led to believe? Or rather not believe in our case?
I wonder if the EA would like to look at this “spent acid”? Maybe we could get a better idea of precisely what this “acid wash” process does achieve, or not achieve, in actual fact?
and again, it says here:
“The statement said investigations were underway into whether zones KL5 and KL6, perforated in summer 2017 and acidised during the original test programme, had been damaged by long residence times of spent acid in the reservoir and the perforating technique used.”
“had been damaged by long residence times of spent acid in the reservoir and the perforating technique used.” Really? additional damage caused by “long residence times of spent acid and the perforating technique (unspecified) used”? Additional damage? Are we not told that the reaction happens and then stops, all used up? Then what causes this “additional damage” from “long residence times of spent acid”? Sounds to me like there is a long term ongoing process of reactions involved?
Does that sound like the longer the acid is there, the longer it reacts to…….whatever?
Spent acid is pretty much mostly water. If that spent acid isn’t circulated out of the well for some reason, that uninhibited water(ie without sufficient dissolved KCl salt) reacts with clays over time on the walls of the well, causing them to swell and lose their physical strength, ie mud rock turns back to mud, with obvious repercussions for the flow of fluids around the well as the loose clay particulates flow around.
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Ha! Ha! Spherical objects are back on the menu again!
Dear oh dear oh dear, sad, sadder, saddest!
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Perhaps the EA will get a chemical analysis then and publish it for all to see. But we will not hold our breath, but if I were to live nearby, that is exactly what I would do?
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Thanks, Martin. Good to seem some science based posts on here
No thanks Martin, try again perhaps without the redacted bit? Then maybe i will do the same.
This is Ian R Cranes contribution for today on the subject, if you were fooled enough to invest in these rotting zombie frauds, watch, listen and learn!
( https://www.youtube.com/watch?v=Fh5pFvZn-xI&feature=em-lbcastemail )
It looks like 2018 is the year we will finally see the shale hit the fan, they are tearing each other apart, struggling, no doubt to be the one on the ever dwindling list that the screaming punters will not immediately cut and run before it all sinks into the swamp.
UKOG, LordLieALot (Lenigas) & Angus Energy, Game Over…..Protect the Weald!!! https://guerillainvesting.co.uk/2018/02/21/ukog-lordliealot-lenigas-angus-energy-game/
How will they afford to do additional work?
A very good point Phil , this must have been a difficult RNS to write for Mr Sanderson , maybe he just wanted to overlap this with returning to Horse Hill where the flow tests were left until pressure built up in the well ? I wouldn’t bet against the extended flow tests showing a far more accurate and realistic figure far less than the ” Gusher ” hyped results.
They have funding in place to crack on with whatever they intend to do, but the may go play with the Gatwick gusher for some cash flow. If not a bit more dilution.
Historically it’s no great shakes. Wearmouth Colliery had fun sinking their first shaft on the concealed coalfield, and nearer to fracking home ( not oil home ) Blidworth sank two shafts and hit a fault. Big trouble, the building of the pit village suspended and short commons all round.
She’ll chickened out of forties and BG only found found the prolific Morecambe has field after others had missed it. No one was quite sure if gas could be found under the N.Sea even though it was in the Netherlands, and few though West of Shetland and the ‘Blue Zone’ was rubbish. Indeed BP has sunk a fair amount of cash into the Carboniferous in the Souther N Sea ( maybe half a billion ) and its a duster. Ho hum, small beer compared to the Weald.
The key think is, it’s exploration, and most fail. See Cornish tin ( esp St Just for failures vs success ) Welsh Glold, Scottish Gold for trouble.
Nothing ventured, nothing gained.
Re Vonk and SS, time will tell. There is nothing here new to those involved in the extraction industries, but it’s amusing to see what those who are not think about it, esp on the share chat.
Vonk may wish to divert attention from poor flow elsewhere, but that is my own opinion and DYOR as they say.
Ruth, you are once again missing the point.
The SP hasn’t collapsed because of formation damage. It’s cratered amongst share-holders because there’s no oil naturally flowing. Oil does not flow from clay.
The promised billions of barrels fantasy has now been laid bare for what it is. big fat Aussie Lenigas orchestrated [edited by moderator]. Perpetuated so that the corporates can off-load their hugely discounted shares into the manipulated rises, which provide the liquidity for the corporates to exit. These companies were never about oil. They were set up in-order to fleece UK mug punters.
UKOG BB should now be shut down. As should Lidsey and Brockham.
Maybe. Fleecing the public had long been a practice of shady operators. But then , no one asked anyone to buy above the placing price for UKOG. Do not confuse AIM gambling with getting anything out of the ground.
William Hill just pop fixed odds machines into the high st to do that, they have never drilled a well, nor tried to get anything of value out of it. Bonanza time for CEOs. Or build houses with ‘ help to buy, ant crapeam of millions to share holders and CEOs, invest in Amazon. Clog Avery road and pay zip tax … bonanza time for owners and Share holders, or the bloated fat cats and shysters in the EU cash cow or indeed any zombie company propped up by low interest rates and pork barrel politics.
At least UKOG drilled a well and are testing it. Gamble on AIM at you peril. Buyer beware as they say, no one forces anyone to buy their shares….ever.
Where are all the pro oil comments? #GottabeFibbing ?
All done above, but pro oil, pro gas, pro wind, pro tidal and pro solar, pro biodigestors, pro wood, pro GM, pro decarbonisation of transport, Anti biofuels and a few other things.
A chap one asked me …. who do you support, Celtic, or Rangers? The wrong answer was a need to fight, or maybe exit the Bar ( in Glasgow ). So, do any of us define our lives to just pro or anti hydrocarbons?
And apologies for the spelling on I Pad, although a poor workman blames his tools.
Still leapfrogging hewes?
Or is that acid leapfracking? That’s OK, after all, there is no toxic residue……..is there? Ha! Ha!
Just catching up after a day in the garden, plus some port.
Any port in a storm? I don’t blame you!
Hope the garden is looking good, it’s great to see the daffs popping up isn’t it?
Great time of year, nature shows us the way again.
I suspect you are correct hewes62 that a little more work on this site to get all the data they want, and then it will be on to HH as results there will be able to be fed back to what their next move is with BB.
I find it fascinating. Small companies trying to succeed where larger companies have failed.
Not all progress is driven by billionaires such as Elton Musk, or Steve Jobs. And not all investors do appropriate research.
As the bandit ( Eli Wallach) says in the Magnificent 7 ( of investors maybe) God would not have made them Sheep if they were not meant to be shorn’.
Hewes; you can have Elton John or Elon Musk…choose 😉
Aaaaargh. Well, I prefer Lemmy over Elton and and Brunel over Musk , tho Musk is fine but yet no reward for investors with profit, only share price ( unlike Jobs i guess ).
I have YBR on Vinyl as you do when old.
Yes , I’m sure HH will have had plenty of time to build up enough pressure to fool some back into the game , once bitten etc.
Ukog share price in last 12 months was a alway suspected as a pump and dump game. No clear oil flow result and Gatwick gusher hype was used as a pretext to distract attention on the lack of oil flow at BB. Even the Gatwick well result is questionable. The lack of transparency clearly show how shady some of the operator are.
This will clearly dampen investors appetite for Weald assets and bring disrepute to the company.
I thought they were returning to HH to conduct more drilling rather than to play around too much with the previous drill-but it was a long time ago so my memory could be playing tricks.
Not sure about your suggestion regarding pressure Jono. There did not seem to be any drop off in pressure when they were last there, if the reports were accurate, hence the media nonsense about a Gusher. But, they were not there for that long so time will tell on that one.
They are drilling up there? I thought they were building a new Wetherspoons Pub! Not a happy bunny right now. As a local resident they should really keep us up to date of what is “actually” going on up there.
I was looking forward to paying £5.89 for a beer and a burger deal, plus curry Thursdays! I,m selling up and moving back to Sellerfield. They have got a good hospital there.