17th Dec 2015 13:05
LONDON (Alliance News) - UK Oil and Gas Investments PLC Thursday said its application for a licence on the Isle of Wight has been successful and the company will make a decision on whether to acquire the licence shortly.
Eyes will turn to the new year, when the company plans to release an oil in place estimate for the new licence.
The successful application for the onshore licence was made through the UK's 14th onshore licensing round and the regulator, the Oil and Gas Authority, has now offered the licence to UK Oil and Gas Investments.
The company said it will confirm whether it will accept the licence shortly, adding it would hold a 65% stake in the licence.
The licence holds the undeveloped Arreton discovery, with analysis of historic electric logs suggesting there could be a total oil pay of 63 feet in the Portland sandstone, with a further 127 feet of oil pay expected to be found in the limestones. UK Oil and Gas also thinks there is a "look-alike" prospect lying to the south of the Arreton discovery.
However, the main attraction of the licence is most likely to be the M prospect, which lies on one of UK Oil and Gas' offshore licences. Although the majority of that prospect lies offshore, it does extend into the new licence which would allow the company and its partners to drill the M prospect onshore rather than offshore - which is easier and cheaper to do.
That offshore licence that holds most of the M prospect is licence P1916, in which the company holds a 77.5% stake.
"In addition to the Arreton discovery and M prospect, the Licence also contains further undrilled oil prospects and substantial calculated oil in place per square mile within tight limestones and shales of the Kimmeridge Clay, Oxford Clay and Lias Formations," said the company.
However, UK Oil and Gas will need to secure regulatory approvals to allow drilling of the two prospects in 2016, and the company will also acquire 3D seismic over the Arreton discovery and the "look-alike" prospect.
UK Oil shares were up 9.4% to 1.34 pence per share on Thursday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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