UKOG suspends Broadford Bridge and announces two new Weald drill sites

in #fracking3 years ago

From drillordrop.com - https://drillordrop.com/2018/03/29/ukog-suspends-broadford-bridge-and-announces-two-new-weald-drill-sites/

 The exploration company. UKOG, announced  this morning it had suspended its well at Broadford Bridge in West  Sussex, after describing observed oil flows as likely to be  “sub-commercial”. In a statement to shareholders, the company said it had also  finalised two new exploration sites in the Broadford Bridge licence area  and aimed to drill in 2019. The statement was followed nearly two hours later by the publication of UKOG’s annual accounts, which recorded a loss of £2.26m for the year to the end of September 2017. 

“New sidetrack and stimulation techniques considered for Broadford Bridge”

Earlier this month, UKOG announced  that flow testing had stopped at Broadford Bridge and equipment was  being removed from the site. In February shares dropped sharply on an  announcement of possible formation damage in the well and low flow  rates.  Broadford Bridge oil site this month. Photo: Weald Oil Watch Today the company said it was considering drilling another sidetrack  at Broadford Bridge and using other reservoir stimulation techniques. 

“Whilst the KL [Kimmeridge Limestone] flow rates observed  are likely sub-commercial … we are exploring new methods and  technologies that might enable us to achieve higher sustainable oil  rates and commercial viability from the 1400 vertical feet of  oil-saturated KL reservoir rock interpreted at BB-1z.”

The statement added: 

“Serious consideration is being given to a possible  future short sidetrack, BB-1y. The sidetrack’s objective would include a  selective re-test of the main KL units, likely utilising an alternate  completion methodology, new completion fluids, the possible use of  small-bore radial drilling and other reservoir stimulation techniques.”

The company added that this would happen after a trial of these  methods and technologies in the next exploration well in the Broadford  Bridge licence area, PEDL 234. 

Two new sites

The statement said: 

“Two drilling sites have now been finalised, both located  firmly within what the Company interprets to be the KL oil deposit’s  most prospective sweet-spot.”

The company said both were in the central area of the licence but it  did not identify them. Lease terms had been agreed on the first site,  the company said, and it was meeting local authority planners this week. Stephen Sanderson at Broadford Bridge. Photo: DrillOrDrop UKOG’s Executive Chairman, Stephen Sanderson, said: 

“The Company has accelerated its future KL drilling plans  to include two new firm drilling sites. These will see the KL tested in  the thickest, deepest and most oil generative areas of the play in  PEDL234. We plan to submit a new planning application by Q3 this year  and, subject to obtaining the necessary consent, our next PEDL234 well  will be drilled in 2019, following the forthcoming testing and drilling  campaign at our Horse Hill discovery. “As our understanding of the KL deposit progresses, we are exploring  new methods and technologies that might enable us to achieve higher  sustainable oil rates and commercial viability from the 1400 vertical  feet of oil-saturated KL reservoir rock interpreted at BB-1z and our  future KL wells.”

Horse Hill – production planned for 2019

Mr Sanderson said the company’s focus was now on extended well tests  in the Portland and Kimmeridge Limestone at Horse Hill, near Horley in  Surrey. The accounts said: 

“If the programme is successful it is planned that Horse  Hill will deliver stable oil production in 2019, subject to obtaining  the necessary regulatory consents. “Although the HH-1 well is not intended to be an immediate producer,  any oil produced from the tests will, of course, be sold. Sales volumes  are not incorporated into budgetary planning, but a successful testing  outcome would generate further oil sales revenues for the Company.”

Other plans – “batch applications”

UKOG said in the accounts its plans for 2018 included demonstrating the commercial viability of:  

  • Up to two wells at Horse Hill
  • The Kimmeridge Limestone sequence at Holmwood, near Dorking (also  known as Bury Hill Wood or Leith Hill), and the two new sites in  PEDL234.

The accounts also said the company aimed to: 

“Define and secure a batch of new drill sites, submit  ‘batch’ planning consent applications to ensure a “hopper” of ready to  drill locations. “Consider submitting production planning applications immediately  post-discovery and prior to commercial declaration. This will help  deliver production from each well as early as regulatory permitting  allows. “Further consolidate our holdings in discoveries and developments,  where possible, and acquire further prospective acreage and  opportunities.”

On the Isle of Wight, UKOG said: 

“At Arreton, a well site is being secured, and  planning/permit application prepared. In the success case, production  will be achieved as soon as the regulatory system allows, but it is  envisaged that Arreton will be drilled in 2019.”

Markwells Wood site in the South Downs National Park. Photo: Markwells Wood Watch In the statement to shareholders on the annual accounts, there is  only one reference to Markwells Wood in West Sussex.  Under the list of  assets, Markwells Wood is described as “Revised drilling and testing  planning application underway”. But in the annual report,  also published today, the company goes into more detail. It said it was  considering whether to resubmit  a revised planning application for the  site, after withdrawing its proposals in May 2017. It also commented on a breach of condition notice, issued earlier  this month by the South Downs National Park Authority, which ordered  UKOG to clear and restore Markwells Wood. The company said: 

“UKOG does not consider the notice to be valid and is considering its position on Markwells Wood in discussion with SDNPA”.

DrillOrDrop reported  this week that the company lost its access rights to the site in July  2017. There is no reference to this in the accounts or annual report,  nor to the injunction sought by UKOG at the High Court against protests  at three exploration sites. The case is expected to be heard in about  six weeks. 

New company

Earlier this month, a new company joined the UKOG group. UK Oil and  Gas was incorporated on 13 March 2018 with one director, Kiran Morzaria. This brings to seven, the number of companies in the group. Stephen  Sanderson is the sole director of four, including UKOG (GB) Ltd, the  operator of Markwells Wood. Mr Sanderson, Mr Morzaria and Allen Howard II are directors of UK Oil and Gas Investments plc. Mr Sanderson, Mr Morzaria and James Lorsong are the directors of Kimmeridge Oil & Gas Ltd, the operator of Broadford Bridge. 

Key figures from the accounts

Figures are for the year to the end of September 2017. Brackets indicate negatives or loss Revenue: £207,000; 2016: £151,000 Cost of sales: (£254,000); 2016: (£204,000) Operating (loss): (£2,395,000); 2016: (£2,895,000) Loss for the year: (£2,268,000); 2016: (£1,972,000) Exploration and evaluation assets: £15,110; 2016: £6,187,000 Non-current assets: £21,711,000; 2016: £13,182,000 (increased expenditure on exploration and evaluation assets) Net assets: £23,166,000; 2016: £17,569 Expenditure on exploration & evaluation assets: (£8,723,000); 2016: (£458,000) Total current liabilities: (£3,725,000); 2016: (£591,000) Total liabilities: (£4,084,000); 2016: (£950,000) Net cash outflow from investing activities: (£8,208,000); 2016: (£4,347,000) Cash and cash equivalents at the end of the year: £1,740,000; 2016: £2,440,000 Updated at 2.30pm with information from the annual report published after the initial accounts statement 

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