Results of well testing at the Horse Hill oil exploration site in Surrey have exceeded expectations, the leading investor said this afternoon.
In a statement to investors, UK Oil & Gas plc (UKOG) forecast that the Portland formation could achieve a production rate of 362 barrels of oil per day (bopd). This would put it in the top five onshore oil wells in the UK.
UKOG said plans were being made to extract oil from the Portland using a sidetrack to the existing well (HH-1) or a new horizontal appraisal well (HH-2). The target production rate of the new well would be 720-1,080 bopd, the statement said.
Horse Hill has all the necessary planning permissions and environmental permits for the new wells. A planning application to Surrey County Council for long-term production was expected soon, UKOG added.
The statement said the HH-1 Portland formation was “robustly commercial” at 140 bopd and oil prices below $60 per barrel.
The tests re-perforated the Portland section of the HH-1 well, resulting in an increase in productivity of up to 65%, the statement added.
Stephen Sanderson, UKOG’s chief executive, said:
“We are delighted that the HH-1 re-perforation and optimisation programme has resulted in the forecast sustainable Portland production rate of 362 bopd, which significantly exceeds our initial test programme expectations.
“This high rate, together with our economic modelling, strongly indicates that the HH-1 Portland vertical well is commercially viable and robustly economic at the lowest observed sustainable test rates and the predicted future sustainable production rates.
“We also look forward to the near-term prospect of a new Portland horizontal appraisal well attaining a sustainable test rate in early 2019. This commercial result would make the Portland a significant asset and would underpin both the Horse Hill oil discovery’s and the Company’s future.”
The UKOG statement said Portland production after perforation had been restricted to what it described as a sustainable 24/7 rate of 140-160 bopd. It added that this did not reflect the Portland’s full flow potential from “further optimisation” of the HH-1 well or a new horizontal production well.
UKOG said preparation was now underway for extended well tests on what the company regards as the primary target at Horse Hill, the Kimmeridge Limestone (KL) formation.
The tests aim to establish whether the KL3 and KL4 zones of the vertical well are commercial.