Recent UKOG news
14th July 2017 RNS
UK Oil & Gas Investments PLC announces that the Oil and Gas Authority has granted final consent for the Company's forthcoming extended flow test programme at its 100% owned Broadford Bridge-1 ("BB-1") oil exploration well. As previously reported, given the multiple positive indications of oil-filled fractures throughout a vertical Kimmeridge section of more than 1100 vertical ft, the planned flow test programme has now been substantially increased. The programme will now test around 900 feet of naturally-fractured Kimmeridge section over multiple zones and is designed to establish if oil can flow at commercial rates and in commercial quantities from BB-1.
A comprehensive electric logging and fracture-imaging programme is now underway, the final two logging runs of which are scheduled to be run at the weekend. The Company will provide an update on preliminary log evaluation results in due course. Flow-testing will follow directly after the completion of electric logging and the setting of 7-inch steel casing.
Stephen Sanderson, UKOG's Executive Chairman, commented "I am confident that the logging and testing results will add further weight to the "proof of concept" that BB-1 lies within a regionally extensive continuous Kimmeridge oil deposit. The thickness and vertical extent of this deposit would be of national significance. More importantly, perhaps, the expanded testing programme will also determine whether BB-1 itself is commercially viable and provides the basis for the Company's first 100% owned Kimmeridge oil production site."
20th July 2017 RNS
Preliminary image log interpretations reveal a further, highly naturally-fractured Kimmeridge shale and limestone reservoir zone, designated "KL0", from 5,508-5,640 ft measured depth. Fractures on image logs coincide with lost circulation zones, oil in mud and wet gas shows.
· Gross possible Kimmeridge fractured oil-bearing zone increased by 132 ft to 1,622 ft MD, a true vertical section of around 1,200 ft; spans five entire naturally fractured Kimmeridge Limestone and shale zones (KL0-KL4) from 4,018-5,640 ft MD. Zone may extend further upwards into fractured zones above 3,800 ft MD.
· Schlumberger electric logging and fracture imaging completed, cement plug in deeper Corallian sandstone set and 7-inch steel casing currently being run in the hole. Flow testing of multiple zones over an aggregate 900 ft total perforated section to commence following setting of remaining 7-inch steel casing to TD and well completion.
Third party specialists at P-Ten (UK), and Premier Oilfield Laboratories ("POL"), USA, have examined image logs and 13 cores from its 100% owned Broadford Bridge-1 ("BB-1") exploration well located in licence PEDL234. They report extensive natural fracturing throughout the entire Kimmeridge section, including a previously unidentified potential oil bearing fracture-zone below the lowest Kimmeridge Limestone, KL1. This new reservoir zone, designated as KL0, is intensely fractured and spans the interval 5,508-5,640 ft MD. These results accord with drilling data, observed oil and wet gas shows and extend the gross possible vertical thickness of the Kimmeridge Continuous Oil Deposit to around 1,200 ft. Further fractured zones were recorded on image logs above KL4 between 3,800-4,018 ft MD.
The Company is currently mobilising equipment to perforate and flow test a total combined 900 ft of the Kimmeridge section, beginning with the deepest reservoir zones. Permissions from the Oil and Gas Authority, Environmental Authority and West Sussex County Council are in place, final consent from the Health and Safety Executive is expected in due course.
The flow test programme is specifically designed to gather further supportive evidence that the Kimmeridge contains a Continuous Oil Deposit containing mobile light oil and which can flow to surface at commercial rates and in commercial volumes. Further updates on flow testing, set to commence following completion of 7-inch casing and well completion, will be provided in due course.
Schlumberger's comprehensive electric logging and fracture-imaging programme has now been successfully executed. This includes the first use in the Weald and Kimmeridge section of Schlumberger's Lithoscanner tool, used for elemental and total organic carbon analysis in shales and limestones.
Detailed log interpretations, calibrated to the 554 ft of BB-1 core data, are ongoing at COREX in Aberdeen, and at POL and Nutech in Houston, Texas. Further log interpretation updates and results will be announced in due course.
Stephen Sanderson, UKOG's Executive Chairman, commented: "BB-1, UKOG's new flagship asset, continues to provide a stream of data and ground-breaking technical insights into what we believe is a new and potentially highly significant oil resource. This comprehensive and extensive data set is a sound investment into the future of BB-1 and our corporate goal to establish first Kimmeridge production by the end of 2018/early 2019.
With the technical data from drilling, core and logs continuing to provide mutually supportive evidence of "proof of geological concept", we will now move on very shortly, via a comprehensive extended flow testing programme, to test the concept that oil can flow to surface from the KL0-KL4 at commercial rates and volumes, the litmus test for any oil company. Whilst there is always uncertainty in any new well and testing outcome, the technical results from BB-1 to date continue to remain both positive and most encouraging."
19 May 2017
Successful placing triggers important next phase of Weald Basin activities
UK Oil & Gas Investments PLC announces that it has today raised gross proceeds of £6.5 million through the placing of 812,500,000 new ordinary shares in the Company at 0.8 pence per New Share largely with institutional funds.
The net proceeds of the placing will be used to supplement the Company's existing cash balances and to fund UKOG's near-term growth strategy to further develop its leading position in the Kimmeridge Limestone oil play and five conventional oil and gas discoveries in the Weald.
Further Placing Details: The Company will apply for the admission of the New Shares to trading on AIM and such trading is expected to take place on or around 24 May 2017. Following Admission, the Company's issued share capital will consist of 3,410,134,099 Ordinary Shares with no Ordinary Shares held in treasury.
Recent share price action and forthcoming news
On Wednesday 26th July, UKOG's shares went as high as 10.5p after the news from BB-1. On Friday 28th they closed at 6.6p, up 33% on the week. The shares have attracted considerable interest on social media and bulletin boards and the shares have shown extreme volatility driven by small investors.
If Broadford Bridge as well as Horse Hill are confirmed as commercially viable than the current £230 million market cap will seem cheap. The question remains of the potential Oil in Place, how much can be commercially extracted using current technology and will protests from environmental groups derail future production. Around Gatwick Airport there was considerable protests after UKOG's last drilling campaign near Horley and this sort of activity could delay exploitation of resources.
UKOG's shares are certainly a rollercoaster, but for those buying sub 1p in May 2017, they are sitting pretty, with a ten bagger achieved this week if they sold at the highs. Plenty of news flow to come in the weeks ahead will continue to make this a hot share on the Bulletin Boards.
The rise to over 10p and a market cap of around £0.5 billion was probably unwarranted as the forthcoming flow tests will be critical.
Flow testing at BB-1 is likely to start in the coming days as the rig is demobilised and it would be expected that these initial results would be available in the next 7-10 days. Further into 2017 UKOG shareholders will get updates from other wells and a Competent Persons Report (CPR) on the resources would be expected in late 2017 or early 2018.
From the year end accounts September 2016 (released February 2017), the company said:
"Our planning permission also includes the ability to flow test the well for up to 14 weeks. If successful and and provided the tests are encouraging, KOGL would aim to apply for permanent production status from BB-1 by the end of 2018. Due to our 100% ownership, if BB‐1 is a discovery of similar nature to HH‐1, it could result in three times the overall net oil production impact to the Company compared to Horse Hill. Furthermore, should BB‐1 ultimately prove our hypothesis that KL oil lies within a wider resource deposit, the licence’s 300 km² area could hold around three times the recoverable resources of the Horse Hill licences.
Consequently, it is our view that a successful outcome from the BB-1 programme could have a highly material and transformational impact on the company."
I'm not in UKOG at the moment, but will be watching with extreme interest in coming days as the volatility is interesting for trading. BB-1 could be a game changer should the initial technical aspects of the well meet expectations and the press coverage, as demonstrated by Horse Hill, could drive a lot of investor demand. There is still a little while to go to test the well as the company said it could flow test for several months, but the initial RNS will nevertheless be interesting. The well will not be full producer until 2019 so the news of an imminent change in the company's financial fortunes are off the mark.
Horse Hill is also another good prospect, but further testing in Horley is needed and all depends on Surrey County Council in September or later. Again a full production licence won't be available until late 2018, with oil flowing in 2019. However the OIP from the Competent Persons Report in early 2018 will be enlightening to the prospects.
Sanderson seems adept at feeding the media and like the "Gatwick Gusher" this could be the "Billingshurst Bonanza" for small investors with a bit of fortune on the testing front! Be careful out there though, don't buy on the spikes, watch for entry opportunities over the next week to 2 weeks pre-initial flow test results and then as the longer term data comes in (reminder - up to 14 weeks).
Remember also that the May institutional placing was at 0.8p and that further fund raising will be necessary over and above the £6.5 million raised at some point to do production testing at Horse Hill. The market cap needs to be at reasonable levels given where the company is with appraisal drilling and oil production will not be possible until 2019 from these new assets. Talk of 20p share price on the bulletin boards soon equates to a mcap of £682 million or nearly $900 million which seems optimisitic at this stage of the game.
ContrarianUK declaration: No holding in UKOG.