16th Feb 2016 08:16
LONDON (Alliance News) - The string of AIM-listed companies involved in the Horse Hill project in southern England on Tuesday said sweet oil has flowed naturally to the surface under flowtest conditions, with the initial results beating expectations.
The initial flow from the Horse Hill-1 well was at a rate of 700 barrels per day using a 1-inch choke, producing a 50:50 mix of oil and water.
However, the well was then choked back to 32/64 inches and that flow rate fell to around 463 barrels of oil per day over a seven-hour period, but the mix improved to 99% oil and only 1% water, the companies said.
The sweet oil that has flowed naturally to surface so far has come from an 80-foot zone within the Lower Kimmeridge limestone interval, which lies around 900 metres below the surface.
The flowtest on the Lower Kimmeridge section was suspended overnight but will resume Tuesday. Once completed, the companies will focus on testing the shallower Upper Kimmeridge limestone and the Portland sandstone zones.
Horse Hill Developments Ltd owns a 65% stake in the Horse Hill prospect and the remaining 35% of the prospect is held by Magellan Petroleum Corp.
UK Oil and Gas Investments holds a 30% stake in Horse Hill Developments, whilst Doriemus PLC, Stellar Resources PLC, Solo Oil PLC and Alba Mineral Resources PLC each hold 10% stakes in Horse Hill Developments, with Evocutis PLC holding a 2% stake and the balance is owned by Angus Energy, in which UK Oil & Gas has a 6% stake.
"This is a very significant event for the company and for oil and gas activity in the Weald basin of southern England. Importantly, tests so far show oil has flowed to the surface under its own pressure and has not, so far, required artificial lift," said Stephen Sanderson, chairman of UK Oil & Gas.
"While these flow rates are significant and in excess of management's expectations, it should be borne in mind that the planned future use of a horizontal well and appropriate conventional reservoir stimulation techniques could likely increase flow rates even further," he added.
The initial results sent shares soaring on Tuesday morning. UK Oil & Gas shares were up 47% to 2.051 pence whilst Solo Oil shares were trading up 32% to 0.36279p. Alba Mineral shares were up 85% to 0.5p, Evocutis was trading up 33% to 0.1p and Stellar Resources shares were up 36% to 0.32p.
All the companies were among the best performers in the AIM All-Share in early trade.
By Joshua Warner; [email protected]; @JoshAlliance
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