TIDMGUN
RNS Number : 1884R
Gunsynd PLC
14 June 2018
Gunsynd plc
("Gunsynd" or the "Company")
UK Oil and Gas Authority ("OGA") Grants Approval for Extended
Flow Test ("EWT") Programme
Horse Hill-1 Kimmeridge and Portland Oil Discovery, Weald Basin,
UK
Highlights:
-- Planned 150-day production EWT set to commence on Horse Hill oil discovery.
-- All EWT regulatory permissions now in place and operations are fully funded.
-- The EWT follows the successful short-term 2016 flow tests
which achieved an aggregate stable rate of 1,688 barrels of oil per
day ("bopd") over three 30-90 hour test periods.
-- EWT comprises 3 separate long-term flow periods of the oil
productive Portland, Kimmeridge Limestone 4 ("KL4") and Kimmeridge
Limestone 3 ("KL3") zones.
-- Programme aims to confirm commerciality of Portland and
Kimmeridge Limestone oil discoveries and gear-up for first
permanent oil production targeted in 2019.
-- Drilling of HH-2 appraisal well as future producer to
directly follow successful flow testing outcome. Planning approval
and environmental permits for drilling are in place.
Horse Hill Developments Limited ("HHDL"), the operator of the
Horse Hill-1 ("HH-1") oil discovery, has informed the Company that
the UK Oil & Gas Authority ("OGA") has granted its consent for
the forthcoming HH-1 EWT programme. All other necessary regulatory
consents from Surrey County Council ("SCC"), the Environment Agency
("EA") and the Health and Safety Executive have been in place for
some months.
Gunsynd holds a 2.0% interest in HHDL which in turn holds a 65%
interest in the HH-1 discovery. Commencement of the EWT, expected
shortly, will be announced in due course.
Horse Hill Oil Discovery
The HH-1 Portland sandstone and KL3 and KL4 oil discoveries lie
within onshore Weald Basin licences PEDL137 and PEDL246, covering
an area of 55 square miles (143 km(2) ) north of Gatwick Airport.
As reported on 21 March 2016, HH-1 flow tested at a significant
commercial aggregate stable dry oil rate of 1,688 barrels of oil
per day ("bopd") from the Portland, KL3 and KL4 reservoir horizons.
Over the 30-90 hour flow periods from each of the 3 zones, no clear
indication of any reservoir pressure depletion was observed.
EWT Overview
The EWT will comprise a series of three separate test sequences
commencing in the Portland followed by the KL4 and finally, the
deeper KL3. If time permits a test combining the KL4 and KL3 (a
commingled test) may be undertaken. Each test will utilise existing
perforated zones as per the 2016 test programme. The expected
duration of the full flow programme is around 150 days.
As the 2016 short flow test campaign established commercially
viable initial flow rates for each of the Portland, KL4 and KL3
zones, the 2018 long-term testing programme's goal is to confirm
that HH-1's reservoirs are each connected to a commercially viable
oil volume, thus enabling a declaration of commerciality to be
made.
It is expected that, should the minimum commercial volume
threshold be met or exceeded, a declaration of commerciality for
each horizon could be made soon after the completion of each
testing sequence.
Portland Test
As per the 2016 test, which flowed oil from the Portland at a
stable metered rate of 323 bopd over an 8.5 hour period, a linear
rod-pump will be utilised to flow Portland oil from around 35
metres of existing perforations located at around 615 metres below
surface. As the 2016 test rates were constrained by the pump's
stroke capacity, the new test will use a larger pump with a
capacity of around 475 bopd.
Given the currently estimated low Portland production costs of
around $20-25 per barrel, the 32 million barrels most likely
Portland oil in place calculated by Xodus in 2017, together with
the good flow rates recorded in 2016, the Portland is a strong
candidate for commercial viability. Consequently, subject to a
successful test outcome, a Portland commercial declaration by late
summer 2018 is a realistic possibility.
KL3 and KL4 Tests
The planned Kimmeridge programme is designed to build upon the
short stabilised natural flow periods of the 2016 test campaign,
which tested at an aggregate stable dry oil rate of 1,365 bopd,
comprised of 901 bopd and 464 bopd from the KL4 and KL3 zones
respectively. The 2016 dry oil rates were recorded over 4-7.5 hour
stabilised flow periods.
The two 2018 long term Kimmeridge tests will utilise existing
perforations and will access around a 30 metre gross reservoir zone
in each of the KL3 and KL4 zones, located at around 840 and 900
metres below surface respectively. As well as determining the
volume of Kimmeridge oil in contact with the wellbore, the testing
programme is designed to assess whether the Kimmeridge is one large
single reservoir where both KL3 and KL4 are connected by natural
fractures within the encasing oil generative shales.
Furthermore, the long term Kimmeridge reservoir performance data
is expected to provide the necessary data to enable Petroleum
Resources Management System compliant Kimmeridge limestone reserve
and resource figures to be estimated at Horse Hill and, by analogy,
for the wider Kimmeridge play.
Future Drilling and Production Plans
Subject to a successful testing outcome in the Kimmeridge and
Portland, the HH-2 appraisal well is planned to immediately follow
the EWT in late 2018/early 2019. The well will be drilled as a
future Portland production well. Drilling plans include optionality
to deepen HH-2 into the Kimmeridge to gather core and image log
data, together with a possible northwards deviation to access the
adjacent oil bearing Collendean Farm fault block's significant
Portland oil resources.
Similarly, contingent upon EWT success, an HH-1z Kimmeridge
sidetrack spud is planned in 2019 following integration of HH-1
Kimmeridge production data into a reservoir model and data from any
future HH-2 Kimmeridge core. Necessary Planning and EA permits for
HH-2 and HH-1z are in place.
To achieve its goal of stable, long-term Horse Hill oil
production during 2019, HHDL now plans to submit a further
production planning application to SCC in summer 2018. This
application will seek consent to produce oil initially from HH-1
& 1z, and HH-2, together with further production wells in a
second contingent drilling phase.
Glossary:
discovery a discovery is a petroleum accumulation for
which one or several exploratory wells have
established through testing, sampling and/or
logging the existence of a significant quantity
of potentially moveable hydrocarbons
limestone a sedimentary rock predominantly composed
of calcite (a crystalline mineral form of
calcium carbonate) of organic, chemical or
detrital origin. Minor amounts of dolomite,
chert and clay are common in limestones. Chalk
is a form of fine-grained limestone
-------------------------------------------------------
oil field an accumulation, pool or group of pools of
oil in the subsurface. An oil field consists
of a reservoir in a shape that will trap hydrocarbons
and that is covered by an impermeable or sealing
rock
-------------------------------------------------------
pump stroke capacity in a rod pump the product of the rod cross-sectional
area, maximum distance between the top and
bottom of the rod stroke movement and the
pump stroking speed
-------------------------------------------------------
recoverable volumes those quantities of petroleum (oil in this
or resources case) estimated, as of a given date, to be
potentially recoverable from known accumulations
-------------------------------------------------------
reserves those quantities of petroleum anticipated
to be commercially recoverable by application
of development projects to known accumulations
from a given date forward under defined conditions.
Reserves must further satisfy four criteria:
they must be discovered, recoverable, commercial,
and remaining (as of the evaluation date)
based on the development project(s) applied.
Reserves are further categorised in accordance
with the level of certainty associated with
the estimates and may be sub-classified based
on project maturity and/or characterised by
development and production status
-------------------------------------------------------
sandstone a clastic sedimentary rock whose grains are
predominantly sand-sized. The term is commonly
used to imply consolidated sand or a rock
made of predominantly quartz sand.
-------------------------------------------------------
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
The directors of Gunsynd accept responsibility for this
announcement.
For further information please contact:
Gunsynd plc
Hamish Harris +44 20 7440 0640
Cairn Financial Advisers LLP
James Caithie / Liam Murray +44 20 7213 0880
Peterhouse Corporate Finance
Lucy Williams +44 20 7469 0930
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END
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