UK Oil & Gas Investments plc (UKOG) announced Wednesday that 15.7 billion barrels of gross best estimate oil in place (OIP) is calculated to lie within three Jurassic shale and interbedded limestone tight oil plays underlying the eight license areas in the Weald Basin in which UKOG has an interest, according to US-based Nutech.
Within this gross best estimate, an aggregate net attributable 3.9 billion barrels of oil in place is calculated for UKOG’s economic interests in the license areas, which include PEDL137, PEDL246 and PEDL070. The Nutech report calculates that the most significant portion of the reported OIP lies within the Kimmeridge Clay Formation, with a calculated gross best estimate OIP of 10 billion barrels in the license areas, 2.4 billion barrels of which is attributable to UKOG. Until further work is done, however, there can be no current estimate of the recovery rate for the Weald Basin or assurance that any OIP can be recovered at all.
Three tight limestones within the Kimmeridge Clay Formation will be the focus of the company’s principal near-term tight oil exploration and appraisal activities. A planned Horse Hill-1 flow test, which will be conducted in the next few months, specifically designed to test the Kimmeridge limestones along with the Portland sandstone, is planned to be the next significant milestone in the company’s Kimmeridge “proof of concept” process.
Following the expected approval of the company’s farm-in to the PEDL143 Holmwood license, which was originally announced on June 29, UKOG will participate in the drilling of the Holmwood-1 exploration well, which the company believes will provide a further Kimmeridge limestone “proof of concept” step. This is planned for 2016 or 2017, according to UKOG.
Stephen Sanderson, UKOG’s executive chairman, commented in a company statement:
“The first step in evaluating any tight oil play is to calculate the overall OIP using all available data. Nutech’s study has based its OIP conclusions on its established well-by-well methodology that also fully incorporates geological insights gained from the Horse Hill-1 well. These findings should now serve to give the market the company’s up to date and science-based view of the estimated quantity of OIP within UKOG’s licence areas and in the wider Weald Basin.
“The calculated OIP volumes provide us with the necessary encouragement to proceed with our plans to prove the concept that oil may flow and possibly be recovered in commercial quantities from these tight oil plays. The planned activities in Horse Hill and Holmwood will therefore be key steps. Although we are only in the early stages of this proof of concept process, the findings of our recently published Weald tight oil conceptual development studies, demonstrate that, in the success case, oil could be produced with sensitivity to the Weald locality. This is a fundamental aspect of the company’s business philosophy.”
Following UKOG's latest development, oil and gas analysts at WHIreland were quick to offer a cautionary note. In a brief analyst comment, WHIreland's Brendan D'Souza stated:
"We caution that estimated OIP volumes mentioned in today's report by Nutech...are based on petrophysical analysis and cannot/should not be interpreted as discovered reserves or resources."
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