Alba Mineral Resources plc (LON:ALBA) executive chairman George Frangeskides told investors that the company is pleased with the ongoing performance of the Horse Hill extended production testing programme.
UK Oil & Gas plc (LON:UKOG), the largest Horse Hill stakeholder with 50.635%, this morning provided the market with an update from Horse Hill, highlighting a number of milestones.
The company said that 10,000 barrels have now been produced from the Portland reservoir and it continues to flow at an average rate of 220 barrels of oil per day.
It explained that the production rate is deliberately held beneath the previously reported test rate of 362 bopd for “prudent reservoir management purposes”.
The Portland production adds to the 25,000 barrels of crude previously produced from the Kimmeridge zone in an earlier phase of the testing programme, and, takes the aggregate to 35,000 barrels. Some 165 tankers worth of crude has now been routed from Horse Hill to the Hamble oil terminal, sold a Brent Crude Oil prices (after deductions for handling and marketing).
Alba’s Frangeskides said: "We are pleased to see continued stable production reported from the Portland Sandstone and look forward to further updates from the operator as the programme continues."
Plans for production through all of 2019
Looking ahead, UKOG highlighted that the current plan sees Horse Hill test production revenues continuing through the remainder of 2019 and that long term field production revenues will begin before the calendar year end.
New drilling this spring – comprising a the HH-2 well and a new Kimmeridge sidetrack for the existing HH-1 well – will aim to boost production capacity.
UKOG said it is optimistic that Horse Hill can achieve its horizontal production targets of 720-1,080 bopd per well. At such a level, the company said the project will be generating free cash flow in 2020.
Subject to regulatory approvals, the plan is to switch seamlessly from ‘testing’ into long term production.
It also highlighted that as the project phases into full production, the addition of proven and probable reserves at Horse Hill will open up the possibility of reserve-based lending – in other words, the debt could be raised against the crude remaining beneath the ground.
A rig tender process has recently begun for this spring’s drilling programme, and, the company noted that it already has planning and environmental permits in place for the work.