Angus Energy dropped over 50% earlier today and is currently down 36% to 17p after announcing disappointing flows of only 40 barrels of oil per day from its Lidsey X2 well (together with the expected 20 bpd from the older well x-1). This is turn has hurt UKOG, down 10% to 4p as fears grow about the productivity of the Weald Basin.
The problem was the following from the RNS "Initial start-up rates of production from the Great Oolite reservoir are coming in at forty barrels of 38.5 API of dry oil per day. The fluid column (oil) extends to 322m from surface (bottom hole depth of 1,009.3m) with a measured static bottom hole pressure of 764 psi. The Great Oolite is the first of three reservoirs with potential viability in Lidsey-X2 as per the Company RNS of 6 November 2017.
Compared to pre-drill assessments set forth in the Competent Person's Report ("CPR") of the 7 November 2016 Admission Document, flow rates from the Great Oolite reservoir are below expectations, and work is continuing to clean up the well. The Company is investigating the new geological and borehole information to update its understanding of the reservoir. In addition, the Company is currently examining evidence that suggests a partial flow reduction is the result of a hole in the production tubing, therefore not allowing the well to be fully drawn down. The Company is conducting further analysis and if confirmed, the Company will undertake operations to repair the tubing which will allow maximum draw from the reservoir. This is the priority for the Company over the coming weeks.".
Though the news is a big set back for the Weald dream it is important to reiterate that these are poor flows from the Great Oolite reservoir and not the Kimmeridge limestones found at UKOG's Broadford Bridge and Horse Hill developments. Angus " will submit an FDP Addendum to the Oil and Gas Authority to begin production appraisal of the Kimmeridge and Oxford layers at Lidsey."
Let's see what UKOG can come up with for KL2-5 in coming weeks. The drop in UKOG looks overdone given the reservoirs are not connected - Great Oolite for X2 and Kimmeridge Limestone for UKOG. 4p will be a bargain if KL2 shows any potential for unassisted lift. KL3-4, the same reservoirs as Horse Hill will make or break the story.
For Angus Energy they may well up the BOPD from Lidsey X2 but it won't be easy and will take time. The approval of the Field Development Plan Addendum for Kimm and Oxford also won't be overnight.