Drilling rig goes up at Angus Energy's Lidsey Oil field

lidsey rig angus september 10th 2017

The BDF drilling rig 28 has arrived on location at the Lidsey Oil Field (PL241 production License), located onshore near Bognor Regis, West Sussex in the Weald Basin.

Lidsey Road , Lidsey ,Bognor Regis, West Sussex ,PO22 9PH

Lidsey Road , Lidsey ,Bognor Regis, West Sussex ,PO22 9PH

The field was discovered by the Lidsey-X1 well drilled by Carless Exploration in 1987 and is contained within a tilted fault block structure, dip closed to the north and fault sealed to the south.

The oil-bearing reservoir is the Middle Jurassic Great Oolite limestone similar to that of the Humbly Grove and Horndean fields which have been in production since the late 1980s

The current well is capable of producing c.40 bopd; it is currently shut in pending drilling of the new well, the Lidsey-X2 horizontal production well, which should increase this production rate several fold. The cost of the new well is around £2.3 million.

Lidsey oil field acreage and location

The Lidsey-X2 production well will target the upper crest of the producing Great Oolite reservoir. It passes through the Kimmeridge layers allowing for the detailed logging and sampling of drill cuttings. This data will be analysed and compared to the results Angus had at Brockham-X4Z.

The new well should be complete at the end of October and ready for production. On August 9th 2017, Angus received permission from the Oil and Gas Authority to drill and then produce the Lidsey-X2 horizontal.The only outstanding permit application is "Angus Energy Weald Basin No3 Limited: environmental permit application advertisement" with consultation due to close with the Environment Agency on September 29th 2017. All other approvals from the OGA etc. have been received.

UKOG and Angus Energy update September 9th 2017

Quite a week for the Weald Basin on-shore oil players, UKOG and Angus Energy with flow testing underway for the former at Broadford Bridge near Billingshurst and the latter starting drilling at Lidsey near Bognor Regis. The excitement relating to the potential of the basin grows as we await the crucial initial flow rates from the 8 zones of the Broadford Bridge bb-1-z side track well. 

angus share price sep 9th 2017

Angus Energy shareholders had a great week with a 44% share price increase (22% for UKOG). With these volatile AIM stocks, its a case of follow the money and news. So punters cashed in on some of the UKOG gains on Wednesday and Thursday and piled into ANGS. Now with the ANGS RNS released Friday PM,  focus back to UKOG.

UKOG should have the next set of news within a week to ten days (happy to debate this timing with those technically qualified) and Angus will report the completion of the Lidsey-X2 horizontal well in 6 weeks or so. 

So given the initial flow test timing for UKOG, next week should be interesting as investors place their bets on a result. Will be be 500-5000 bopd? I myself, am hoping for around 2500 bopd as a very good result demonstrating commerciality at Broadford Bridge and really opening up the Weald basin play. A good result will get the majors thinking that's for sure with so much oil in the basin and allaying fears about recovery following the Gatwick Gusher in 2016. 

nutech report oip weald basin

The other question is who has been mopping up UKOG shares, especially the stake hold by Regency Mines (RGM). Will a TR1 be imminent? On 31st July it was reported that SCDM Energy Ltd had acquired just over 5% of UKOG or 174,954,179 shares. Have the French been topping up further. Andrew Bell, Chairman and CEO of Regency confirmed that that they were hanging on to their remaining stake in UKOG for now, having sold 61% of their holding at around 7p. An expensive error, given the latest RNS from UKOG but I guess Bell was being prudent as RGM shareholders have already multi-bagged and the money was needed to pay off loans and meet operational expenses. Still a gutter for RGM with the shares up 20% since the sale.

UKOG

Flow testing at Broadford Bridge

UKOG+flare+stack.png

Another volatile week for UKOG shares this week, as low as 6.3p and as high as 9.75p intraday as the long awaited operational update RNS finally came on Thursday just before the market close. The shares closed the week at 8.4p.

ukog shares sep 9th 2017

The UKOG RNS on September 6th stated "Rig-less extended flow testing phase now underway. Flow testing over multiple Kimmeridge reservoir zones to commence following rig-up of well test equipment. All necessary regulatory permissions for flow testing in place". Executive Chairman Stephen Sanderson said "I thank all the many staff and contractors involved for their professionalism and dedication in delivering the well in optimal condition for the extensive flow testing programme, which is now underway.".

The West Sussex planning committee based in Horsham is due to consider a proposal from UKOG to "enable the completion of phase 3 testing and phase 4 restoration or retention Woodbarn Farm, Adversane Lane, Broadford Bridge, Billingshurst" on September 12th. The recommendation is for the planning extension to proceed, much to the annoyance of the local environmental protesters.. 

What does flow testing entail? Well UKOG have quite a lot of information on this particular subject on their web site in relation to Horse Hill. The principles are similar but the flare stack will be enclosed at Broadford Bridge and the flow test will continue for 14 weeks in total. 

As we found out from the well completion and perforation phase of the Broadford Bridge dril, the project is complex. The perforated section now spans eight naturally fractured Kimmeridge Limestone and interbedded shale reservoir units (up from five zone previously), with a total aggregate perforated section of 1,064 ft. There are some obserations in the last RNS which are encouraging:

"Further to previous announcements, the perforated section as increased to include a further naturally fractured reservoir zone, designated KL5, where mobile, light oil was recovered to surface from core. Following each of four tubing conveyed perforating (TCP) runs, a pressure increase was observed in the well's annulus, indicating likely flow of reservoir fluids into the wellbore. Additionally, reverse circulation, immediately following perforating, saw significant mobile, light oil shows returned to surface, further confirming the presence of light oil within the full completed Kimmeridge section."

The principles of the flow test (based on Horse Hill, Gatwick):

Schematic of a typical flow testing equipment arrangement

UKOG flow test
UKOK overview of well
UKOG overview of well

Flow testing will be used to determine the flow capacity of the Broadford bridge oil reservoir. During the 14 week test, reservoir fluids enter the wellbore and are safely conveyed to surface where they are metered, analysed and sampled. The data will be used as part of a CPR (Competent Persons Report) to assess the recoverable oil and hence reserves of the Broadford Bridge site. This report will be likely in early 2018 and in the meantime UKOG will apply for a production licence for the well to allow continuous oil production once the Extended Well Test (EWT) is finished.

The flow test is the critical piece of information for Broadford Bridge and the Weald oil basin as Nutech have already confirmed potential resources of 10-15 billion barrels of oil. The question is does it flow and how much can be recovered. The Horse Hill well flowed at around 1300 bopd. If oil can be flowed at BB, at 2500 bopd upwards from the zones identified during perforation, and a recovery rate of 10-20% can be achieved, UKOG will have a monster on their hands.

There will be several pieces of data which are of interest to shareholders:

1. Initial flow rates from the eight naturally fractured Kimmeridge Limestone and interbedded shale reservoir units.

2. Longer term flow data from the Extented Well Test (EWT)

Over the last couple of weeks, four tubing conveyed perforating (TCP) runs were done on the BB well, and the eight zones which have been perforated will be allowed to flow into the wellbore. Flow will pass up the well through a valve arrangement, known as a “Christmas tree”, then on into the flow testing equipment at the surface.

During each flow test a stable flow rate will be metered, sample reservoir fluids will be taken and then the well will be shut in to record pressure. 

Let's not beat around the bush, the next 1-2 weeks or so will provide the most pivotal data for shareholders to confirm or otherwise the commerciality of Broadford Bridge and the wider Weald basin. The side track well bb-1-z has been successfully drilled and perforated using TCP. But how well does it flow iniitially? 500 bopd disappointing, 1000-2500 good/very good, 2500+ bopd amazing. Could be expect some results next week? Perhaps.

The Christmas Tree will be fitted over this weekend and accompanying equipment early next week. The rig vacated the site on Friday. Then we have the recording of flows, pressure shut in 24-48 hours and then analysis. The complexity of the project, technical issues with cementing of the side track well pushed back well completion to last week. Stephen Sanderson will not want to rush things but initial flows shouldn't be far off. Very exciting!

Horse Hill update

An RNS was issued first thing on September 8th confirming that extended flow Testing, Oil Storage and further drilling permits have been granted by Environment Agency for the Horse Hill Oil Discovery (HH-1), Weald Basin, Horley, 3km from Gatwick Airport. 

The EA  has allowed UKOG to drill and test both a side-track from the existing HH-1 well and new borehole HH-2. The Company has a 32.435% interest in the Licences.

The RNS confirmed "An application for long term production testing and further appraisal drilling was submitted to Surrey County Council in October 2016 and is now confirmed to be decided at the Council's planning committee meeting on October 18th, 2017. Members of the planning committee completed a scheduled visit to the Horse Hill site yesterday, 7 September, in preparation for the October meeting.

The Company therefore envisages that these operations will commence in the fourth quarter of 2017 upon grant of the necessary remaining regulatory permissions."

As previously reported in February and March 2016, two naturally-fractured limestone members within the Kimmeridge section, known as KL3 and KL4, flowed dry, 40-degree API oil, at an aggregate stabilised natural flow rate of 1,365 barrels per day ("bopd") with no clear indication of depletion. The overlying Portland flowed dry, 35-degree API gravity oil at a stable pumped rate of 323 bopd. The Portland oil was produced at the rod-pump's maximum achievable rate and thus flow was constrained by the pump's mechanical capacity.

Angus Energy

Mobilisation of rig

Yesterday afternoon at 2pm, Angus Energy (ANGS) announced that the BDF drilling rig 28 has arrived on location at the Lidsey Oil Field and is in the process of rigging up prior to rig acceptance. The rig was used at UKOG's Broadford Bridge drill and ANGS has been having to wait an extra few weeks due to the drilling and completion of the BB-1-z sidetrack.

Angus own a 60% direct interest in the Lidsey Oil Field and a 50% economic interest in the Lidsey-X2 well which is held under Licence PL 241.

The RNS stated "Ancillary equipment and casing is already on site and equipment inspections continue. The plan is to spud (official start of the drilling process) the Lidsey-X2 horizontal production well early next week. Lidsey-X2 will be a conventional production well targeting the existing Great Oolite reservoir, in addition, the well will also pass through the Kimmeridge formation and enable Angus Energy to assess its potential in the Southern edge of the Weald basin.

The Kimmeridge formation will be logged thoroughly as part of the drilling process. The existing production well Lidsey-X1 has been temporarily suspended due to the site preparation works required for the drilling of Lidsey-X2, however design options are under consideration to turn it into a water injector or Kimmeridge producer depending on Lidsey-X2 drilling results. As previously announced, the Company expects an operating window of approximately six weeks from the spud date early next week to actual production from Lidsey-X2.

For more on Angus Energy, see previous post below:

 

 

UKOG update September 6th operational RNS

Well fellow shareholders after all the nerves of the last month and particularly the last few days, excellent news this evening. Since the last operational update RNS on August 10th the derampers have had a field day. The latest RNS,  some news we were all hoping for. Not the flow results just yet....but nevertheless excellent. Also clears up the confusion about the status of the flow tests...close but not quite yet. The enlarged oil pay zones are fabulous news though, eight zones!!

It was a tough start to the week with the drop back to 6.3p on all the fear about planning rejections and placings. But tonight UKOG shares sit at 9p and with the operational update RNS released late on the day at 15.47 the market didn't have much time to react. Still, a 19% rise after yesterdays gains is a good start. I had a lot of fun a couple of days ago battling Winnifrith and co slagging me off for me a penny share ramper with no intellect, punctuated by a few F words. But it's easy to gloat...vindicated that "buy and research" is the correct investment approach, not sell into every false rumour! Plenty were waiting for the fall to 5p or the 3p phantom placing....

Highlights of today's RNS:

·     1,064 ft of perforations over eight naturally fractured Kimmeridge zones, including a new uppermost reservoir zone, Kimmeridge Limestone 5 ("KL5"), where mobile light oil was recovered to surface in BB-1 cores. Compared to 926 feet and 5 zones before!

·      Following each of four extensive perforation runs, a pressure increase was observed in the well annulus together with live, mobile oil shows at surface.

·      Rig-less extended flow testing phase now underway. Flow testing over multiple Kimmeridge reservoir zones to commence following rig-up of well test equipment. All necessary regulatory permissions for flow testing in place.

Prior to rig departure, the well was successfully perforated and completed as a potential oil producer over a gross Kimmeridge reservoir interval spanning 3,920-5,657 ft MD. The perforated section spans eight naturally fractured Kimmeridge Limestone and interbedded shale reservoir units, with a total aggregate perforated section of 1,064 ft. Further to previous announcements, the perforated section was increased to include a further naturally fractured reservoir zone, designated KL5, where mobile, light oil was recovered to surface from core.

Following each of four tubing conveyed perforating (TCP) runs, a pressure increase was observed in the well's annulus, indicating likely flow of reservoir fluids into the wellbore. Additionally, reverse circulation, immediately following perforating, saw significant mobile, light oil shows returned to surface, further confirming the presence of light oil within the full completed Kimmeridge section.

Flow test results will be reported in due course.

Stephen Sanderson, UKOG's Executive Chairman, commented:

"I am delighted to report the safe and successful completion of the drilling and completion phase of the well at our flagship Broadford Bridge oil discovery.

The well continues to deliver significant technical insights, this time via the extensive perforation programme, the results of which provides further encouraging confirmation of mobile, light oil within the target Kimmeridge reservoir zones.

I thank all the many staff and contractors involved for their professionalism and dedication in delivering the well in optimal condition for the extensive flow testing programme, which is now underway."

Next: Initial flows....early next week?? Tomorrow should see double figures. I'm enjoying that vino tonight! Have fun all genuine longs, we all deserve it! Lessons for private investors, don't believe every story on Twitter and LSE....hedge fund agendas. Hope Contrarian has been of service for those who have read this blog over the last few days and crack open a nice bottle of wine! Thanks to all who provided new pictures to me the last couple of days - really appeciated.

More rig demobilisation pics from UKOG Broadbridge Heath September 6th

Some nice pictures from UKOG's Broadbridge Heath drill site as the rig demobilisation continues at speed. Major traffic leaving the site this morning. Pics courtesy of Pete Boocock (Horse Hill Development FB). Rig on its way to Bognor Regis for Angus Energy drill. Big kit also arriving!

UKOG flare stack
Screen Shot 2017-09-06 at 14.57.11.png

Also interesting Tweet from Andrew Bell, Chairman of Regency Mines, who recently sold down 61% of his company's interest in UKOG following the issue of shares for their Horse Hill stake. Someone has sure been buying blocks of stock over the last few weeks, particularly noticeable when RGM were selling down.  Our French friends back in action?

Screen Shot 2017-09-06 at 14.22.51.png

UKOG update September 6th 2017

Broadford bridge crane

What do we know so far from Broadford Bridge?

  • Crane on site dismantling rig and inserting Christmas Tree onto well head
  • Flat beds and other trucks removing site equipment
  • West Sussex Planning committee meeting documents September 12th state that flow testing started end August
  • From waste management plan UKOG: If BB-1 drill stem test and extended well testing (EWT) operations proceed, they are planned in the Kimmeridge Limestones (KL). 2.3.1 Drill Stem Test of KL2 or KL1 For this test, the rig is on location. The test may be performed on zones KL2, KL1, or both. The tests will be performed on zones individually. a) Mobilise the well test spread b) Run test string c) Perforate KL2 / KL1 as appropriate d) Acidise perforated zone through test string e) Flow back the spent acid (calcium chloride) and initiate perforated zone flow by displacing the well to underbalanced fluids or swabbing operations f) Flow test the zone for up to 3 days g) Kill the flowing zone with fluids h) Pull the test string i) Isolate the perforated zone with a bridge plug in the casing j) Repeat for second zone if required Swabbing or a downhole pump may be deployed and used to produce each zone. 
broadford sep 5th 2017
Broadford bridge truck arriving

Implications and RNS expectations

  • Someone was buying all those Regency (RGM) shares this week, not an insignificant stake sale and the price did not collapse. Not private investors given the volume of shares and market makers don't hang onto stock for long. French? TR1 with increase from 5% to follow soon?
  • Initial flow test results, If deeper Kimmeridge Limestones zones (KL0, KL1 KL2) have been started end August but flows should be in by now and the data monkeys should be crunching. It is confusing because the last UKOG RNS said flow tests will start when rig leaves the site but seems clear in the Horsham planning meeting doc. I don't blame Stephen Sanderson for waiting to make sure this data is properly processed, assuming KL0-KL2 are complete, since a Desire Petroleum "water then oil, then water" cock-up is not required for shareholders! I believe Friday/next Monday seems a reasonable time frame. Certainly not weeks, especially as last operational update was 10th August 2017 and significant things are happening on site.
  • BB-1-z is a horizontal side track well with a 926 feet zone of interest with 5 limestone layers which have been perforated. Horse Hill, Gatwick, flowed at 1300 Bopd, given these factors I am expecting flow rates from BB as follows: 500-1000 bopd disappointing, 1000-2500 bopd good/very good, 2500+ amazing 3500+ blow the doors off!
  • Horsham West Sussex planning committee for an agreement to extend planning at Broadford Bridge is September 12th. Chairman has recommended approval for the committee with some caveats about site traffic out of hours etc. 

Finally...

Given all the abuse on Twitter by TW, BMD et al. news can't be far off. I may be accused of being a ramper, but the ridiculous falsehoods posted on the bulletin boards, Facebook and Twitter are crazy e.g. 3p placing, first results end December, planning permission failure etc. I prefer that I am stating facts, you make your choice whether to invest or not. I am a long, but take your choices based on your own investment instincts and advice. Remember small investors need to make their own decisions - buy and research, not buy and hold.