Industry

UKOG announces plan to boost production from “Gatwick Gusher”

200429 Horse Hill UWOC2

UKOG’s Horse Hill site in Surrey, 29 April 2020. Photo: Used with the owner’s consent

UK Oil & Gas said today it would reperforate the Portland section of its first well at the Horse Hill oil site in Surrey.

In a statement to investors, the company said the intervention on the HH-1 well, once nicknamed the Gatwick Gusher, was planned to “further improve oil production rates”.

UKOG has described flow tests and pressure data from the Horse Hill well site as “sub-commercial”.

Today’s statement said the full reperforation would use “larger and more deeply penetrating perforating guns, at twice the perforation density per foot compared to the current completion”.

“The reperforations are designed to materially increase the ability of oil to flow into the wellbore.

“The work will also reconfigure the well’s production tubing set-up and deepen the downhole pump to maximise pumping efficiency and hence maximise HH-1 production.”

Loan repayment

The statement also announced that UKOG had repaid the remaining £1.75m of the loan from Riverfort Global Opportunities PCC Limited and YA II PN (Ltd). This makes the company debt free, it said.

UKOG has been regularly paying off the loan through the allotment of new shares in the company. Two recent payments, totalling £175,000 were made on 28 May 2020 and 3 June 2020.

The statement said:

“The repayment eliminates the uncertainty attached to Loan Note conversion timings and pricing, something the Company feels was perceived to exert a negative influence on the Company’s share price.”

At the time of writing, the share price was down 14.23% at 0.2p. There were also two stock market price monitoring extensions, indicating increased trading.

Equipment purchase

UKOG said it had also agreed to buy all PW Well Test Ltd’s existing surface production equipment being used at Horse Hill for £1.65m in cash and shares.

The statement said this would reduce operating costs by $4 a barrel. The overall asset level operating costs would be cut to $13 a barrel at current production rates, “amongst the lowest in the UK oil sector”, the company said.

Share placing

UKOG said the well intervention, loan repayment and equipment purchase would be funded by £4.2m, raised through a placing of 2.1bn new ordinary shares at 0.2p per share.

The money would also fund preparations for work at the proposed Loxley gas site at Dunsfold, in Surrey, the company said. A decision on planning permission for this site is expected on 29 June 2020. Remaining funds would be spent on another proposed site, also yet to be decided, at Arreton on the Isle of Wight, UKOG said.

Following admission of the new shares, the total number of ordinary shares in UK will be 10,838,995,288.

UKOG’s chief executive, Stephen Sanderson, said:

“With the lockdown rules easing and encouraging signs of recovery in the Brent oil price, the Company has acted decisively to both strengthen its financial position, target further profitability of its flagship Horse Hill asset and start preparations for its next appraisal wells at Loxley and on the Isle of Wight.”

 

 

7 replies »

  1. Oil and gas wells in rural areas have been linked in report causing low birth weight babies.
    Staff on video smoking on site close to leaking tank.
    Finance in a mess
    What’s not to like

  2. Paula

    Can you provide the link to the studies showing the link between UK onshore oil and gas wells and low birth weight? I have seen a paper for the US, but that was for fracking wells and did not specify a rural areas link. Thanks.

    The smoking staff next to a leaking tank ( water tank maybe?) sounds interesting.I

    Financial mess? Maybe not making a profit but seems to attract investment. I will leave it to others to list simi!at companies.

  3. Not making a profit but seems to attract investment.

    You mean just like Tesla?!

    Staff smoking? (Pot.) You mean just like Mr. Musk!

    I think there was a paper about fracking sites in USA and an increase in sexual activity, but maybe better not to advertise that. (My theory is that is the classic disposable income connection. Dish washing paying $60k/year to high school drop outs-it’s either that, booze or drugs. The last two are sackable offences, so hey ho!

    Of course, you also find a high number of obese individuals close to oil sites in USA, fracking or conventional. As you can, close to anything in USA!

    Linkages to birth weights in rural areas strikes me as odd. How many babies are born in rural areas that are close to oil wells that would provide a statistical base? Low birth weights can be associated with alcohol intake. Maybe, again, increase in disposable income?

    Much better to encourage good UK on shore oil production rather than Arctic Russian oil production! Broadford Bridge with butterflies and buzzards. How’s the wildlife doing with all that pollution in the Russian Arctic?

    • “larger and more deeply penetrating perforating guns, at twice the perforation density per foot compared to the current completion”.

      Big guns and investor exciting wording. Could make for a ‘Super Gusher’ announcement. That could really get the investors money
      pouring in.

      • John P – UKOG could try one of the Russian techniques? Might not go down to well with the locals……

        https://www.theguardian.com/world/2020/jun/05/russia-anti-tank-shells-oilfield-fire-siberia

        “A Russian oil company has asked the military to bombard a wellhead fire with anti-tank artillery rounds in a last-ditch effort to extinguish the blaze after nearly a week.

        Russian troops will deploy to rural Siberia and fire shells from a 100mm anti-tank gun to cut off the wellhead and allow the oil well to be sealed, Russian state news agencies reported.”

        “The Soviet Union used underground nuclear tests to extinguish several gas and oil well fires in the 1960s and 1970s. It first detonated a nuclear bomb in 1966 to put out an oil well fire at the Urtabulak gas field in Uzbekistan, which was then part of the USSR.”

        The Soviet Union has also used nuclear detonations to enhance production but had a problem dealing with the post nuclear frack radiation in the oil.

  4. Why would UKOG investors make any different decisions to investors in other companies, jP?? Especially, as the majority of them will be investing in many other companies besides UKOG. Maybe even in alternative energy?

    You live in a strange fantasy. Seems you require to build that fantasy to explain your dogma. Try reality. You might like it.

    Just because you talk about mug punters doesn’t make it true. Remember, mug punter is a phrase coined by investment advisers who use it to promote how much better they are at managing clients money. Even then, research has shown that is fake too! And that was before Mr. Woodford.

    Speculating readers of DoD are so easily fooled may be an easy option, but I would speculate it is incorrect.

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