UKOG has confirmed it has abandoned its Markwells Wood site in the South Downs National Park. It has also given details of plans to drill nine new wells in southern England in the next two years.
The statement to investors yesterday was the first formal information from the company that it had pulled out of Markwells Wood, on the West Sussex-Hampshire border.
DrillOrDrop reported in November 2018 that abandonment work was underway at the site. This followed the loss of access rights and objections from the Environment Agency and Portsmouth Water to production plans, both in 2017.
UKOG said following a strategic review it had decided to make no further investment in Markwells Wood. It said:
“The project’s technical and regulatory risks are considered to far outweigh the modest success case potential, particularly when compared with the robust metrics of UKOG’s other Kimmeridge and Portland projects. Consequently, the Markwells Wood-1 well has been plugged and abandoned.”
The site is in PEDL126, which is wholly owned by UKOG.
Drilling and production plans
UKOG also said it had finalised plans to drill up to nine production, appraisal and exploration wells in 2019-2020 in Surrey, the Isle of Wight and West Sussex.
Stephen Sanderson, UKOG’s chief executive, said:
“If successful, this comprehensive plan aims to add significant value to the Company and shareholders via transforming UKOG from an exploration and appraisal company into a fully-fledged producing oil company by the end of 2019.”
Horse Hill, PEDL137
The company said it would move the Horse Hill site, in Surrey (PEDL137) to permanent production by the end of 2019.
DrillOrDrop has already reported that UKOG plans to drill another six wells at the site, where flow testing is currently underway on the single well.
The UKOG statement said the company would drill two new horizontal production wells – HH-1z and HH-2 – in spring 2019. Planning permission and environmental permits are in place for this work.
The HH-2 well, expected first, would target the Portland, UKOG said. HH-1z, a horizontal sidetrack of the existing HH-1 well, would target the Kimmeridge limestone. UKOG said these wells each had targets of 720-1,080 barrels of oil per day (bopd).
In December 2018, the company submitted a planning application for another four oil wells, a water reinjection well and long-term production to Surrey County Council. A public consultation on the plans continues until 18 February 2019. UKOG said it expected permissions to be in place by autumn 2019 and drilling to start in early 2020.
These wells would boost gross production to over 2,000 bopd, UKOG said, putting the company in the UK’s top three onshore oil producers. It predicted that Horse Hill would become the largest single oil producing field in the Weald Basin.
UKOG is the largest single investor in Horse Hill, operated by Horse Hill Developments Ltd
UKOG said it expected to submit application in the first quarter of 2019 to Isle of Wight Council to drill, core and test a pilot hole and horizontal wellbore. This would be in what the company called the Arreton Main Oil discovery. The statement did not identify the site.
Shortly afterwards, UKOG said, it planned to submit a further application to drill, core and test a well in Arreton South. Again, no site was identified in the statement.
Drilling the Arreton Main well was expected in the winter of 2019, UKOG said.
UKOG has a 95% interest in PED331 after buying Solo Oil’s 30% stake, completed on 22 January 2019. The deal was funded through the issue of 17,989,326 shares and cash payment of £90,450.
UKOG said PEDL331 had a net recoverable resource of 14.9m barrels of oil.
Godley Bridge and Broadford Bridge PEDL234
UKOG said it would submit an application to Surrey County Council in spring 2019 to drill, core and test the Godley Bridge Portland gas discovery and the underlying Kimmeridge. No site was identified for the well in the statement.
The company said following completion of this well, it planned to return to Broadford Bridge, near Billingshurst, in West Sussex, to drill a Kimmeridge sidetrack off the existing well.
Broadford Bridge has been suspended since March 2018 after UKOG announced observed oil flows were “sub-commercial”. West Sussex County Council extended planning permission for the site for 18 months in September 2018.
UKOG had previously announced plans for another wellsite in PEDL234. The statement confirmed the company would drill a Kimmeridge exploration well, at an unidentified site between Godley Bridge and Broadford Bridge. This was planned for late 2020, the company said.
UKOG owns 100% of PEDL234.