W.H. Ireland Group plc (LON:WHI) Research Analyst Brendan D’Souza caught up with DirectorsTalk for an exclusive interview to discuss UK Oil & Gas Investments PLC (LON:UKOG): Latest flow test results, the significance and what’s next for their Horse Hill developments
Q1: Now UK Oil & Gas Investments have made a further announcement today on flow rates from a second zone. Can you tell me why this news was so material?
A1: Yes, let me start off with a bit of the news and then get into why it was material. So what’s happened at Horse Hill with UKOG holding 20 odd percent interest is they had a first interval which was done a couple of weeks back and today they’ve announced the second interval. Now the reason why the news is material is number one, the flow rate which was measured at 900 barrels per day has come in really strongly both in absolute and in relative terms. In relative terms, if you look at what had happened a couple of weeks back now we’re talking about stabilised flow rates i.e. something that’s flowed for a good few hours, not just for a short period of time. So the first interval flowed around 460 barrels so it came on at about 700 barrels and then they had to cut the choke because of the pressure being strong and that ended up flowing at 460 barrels. Converse that with what happened yesterday with the second interval, that came in at 900 barrels and that’s almost twice as the first interval and that’s greatly material because essentially we had validation that this acreage can be produced from just a conventional oil week a couple of weeks back now to add to it we can see that the Kimmeridge, this is the Upper Kimmeridge, the Lower Kimmeridge was done a couple of weeks back, is highly prolific and a combined rate, from the first and the second, of almost 1,400 barrels a day which is really brilliant.
Q2: So what do you think is next for UK Oil & Gas Investments and their operations at Horse Hill?
A2: So the Horse Hill operation was supposed to be three intervals and what they were going to do was they’re going to start at the bottom and move up so the next and the final stage would be they are going to get to the upper intervals, or the upper most interval, now this is the Portland limestone interval. This is located about 615 metres under the earth’s surface, this is in comparison with the interval that’s still be flow tested of 840 metres so that’s the next thing. The Portland limestone, that should start I would imagine later this week and we should hear something as to what the results from that is in the next 2 or 3 weeks.
