Angus Energy announced this morning that part of the target Kimmeridge oil interval at its well at Brockham in Surrey is producing water.
In a statement to shareholders, the company said it was putting together what it called a “further engineering program” to isolate the water zone. A workover rig is expected to return to the site, Angus said.
The company said “small quantities of oil” also returned to the surface and were confirmed as Kimmeridge oil. But it said:
“It has become apparent that a part of the perforated interval is producing water, which is inhibiting significant oil flow and therefore has not allowed for sustainable flow rates of oil to be reported at this time.”
The Angus share price fell on the news. At the time of writing, it was down 24% at 5.50p.
This is the second well tested by Angus in the Weald region to have been shown to produce water. A statement in October 2018 on the Balcombe site, now operated by Angus, said that the well test had encountered unexpected water. This was later explained as “unrecovered brine from previous activities at the site”.
This is also the company’s second test to have suffered from delays and equipment problems. Today’s statement said:
“During operations several key completion components failed for a variety of reasons beyond the Company’s control.
“This also led to delays over the December and early January periods.
“These long-lead items have not been re-installed but rather engineering work-arounds have been implemented, including a resort to lifting by injection of N2 [nitrogen].”
At Balcombe, the company reported that coiled tubing equipment failed after the second test, resulting in a delay. The company ran out of time allowed by its planning permission and no further tests were carried out.
Today’s statement said the tested interval at Brockham – from 960m-1155m – had been identified as the best for perforation, based on the Tmax measure. This is the temperature at which the maximum rate of hydrocarbon generation occurs in a kerogen sample.
The former chairman, Jonathan Tidswell-Pretorius, who remains operations director, tweeted this morning:
Today’s announcement is the first operational statement by Angus Energy’s interim managing director, George Lucan. He took over last week from Paul Vonk, who resigned after a board room power struggle at the company.
Lord Lucan said today:
“I am very pleased with the oil analysis clearly confirming Kimmeridge oil at Brockham. The water zone is obviously an unexpected hindrance but, with natural flow to surface and evidence of oil, we remain quietly optimistic of achieving commercial success at Brockham. Brockham in combination with Balcombe could be transformational for the Company and oil production in the Weald.”