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Horse Hill

BACKGROUND

In February 2014, the Company announced that it had entered into a share acquisition agreement with Horse Hill Development Limited (HHDL), a special purpose company that had acquired the rights to a 65% participating interest and operatorship in licence PEDL137 onshore in the UK Weald Basin.

Solo acquired a 10% interest in HHDL, which is equivalent to a 6.5% interest in the Horse Hill prospect and in both PEDL137 and adjacent PEDL246. The Horse Hill prospect itself lies about 3 kilometres from Gatwick Airport and covers an area of up to 16 square kilometres in the south-west of PEDL137.  The licence is operated by HHDL, with UK Oil and Gas Investments (UKOG) and Solo as technical partners.

 

HORSE HILL-1 WELL

The Horse Hill-1 (HH-1) discovery well was the first well since the 1980s to test the entire Jurassic and Triassic section of the Weald Basin, reaching the Palaeozoic basement at approximately 8,500 feet.  The well was drilled with oil-based mud to ensure the subsequent collection of good quality electric logging data. A comprehensive suite of modern log data, including magnetic resonance data, was acquired. Geological samples were collected at 10-foot intervals throughout the well for geochemical analysis.

 

TIMELINE

September 2014 Horse Hill-1 well (HH-1) spudded.
   
October 2014 Announced the Portland sandstone Oil Discovery in the Jurassic section.
   
December
2014
Provisional estimated most likely estimate of discovered oil in place was reported as being 8.2 million barrels (mmbbls) in the Portland sandstone reservoir.
   
March 2015 The initial well data analysis conducted by UKOG and an independent consultancy, Nutech, identified 407 feet of potential net oil pay within the Upper Jurassic Kimmeridge, Oxfordian and Lias interbedded limestone and mudstone sequence, in addition to the 102 feet of Portland sandstone gross oil pay. Geochemical analysis of samples throughout the Kimmeridge section showed the presence of a world-class oil source rock.
   
April 2015 Nutech estimated a total Stock Tank Oil Initially In Place (STOIIP) of 158 mmbbls per square mile in the Kimmeridge section. Approximately 72% of the STOIIP, or 114 mmbbls per square mile, lies within the Upper Kimmeridge limestone and shales.
   
May 2015 Reserves auditor Xodus calculated an estimated most likely STOIIP of 21 mmbbls for the Portland sandstone section of the well. Electric log analysis showed that the well had approximately 100 feet of gross oil pay.
   
4 June 2015 A study conducted by Schlumberger independently evaluated the unconventional oil potential of the HH-1 area to be even higher than Nutech’s analysis, estimating approximately 271 mmbbls per square mile for the Jurassic section. A total of 255 mmbbls gross STOIIP was estimated to lie within the limestone and mudstone plays of the Kimmeridge, Oxford Clay and Lias and the balance in the Upper Portland Sandstone discovery.
   
18June 2015 Nutech provided an additional independent report of the estimated STOIIP contained within the 55 square mile area covered by the Horse Hill licences. The study calculated a best estimate STOIIP of 9,245 mmbbls (9.25 billion bbls) within the Jurassic section, with a calculated best estimate total Kimmeridge formation STOIIP of 5,230 mmbbls (5.23 billion bbls).
   
August 2015 Schlumberger reported a higher estimate of total STOIIP of 10.993 billion barrels (bn bbls) within the Jurassic section of the Horse Hill licences. This is split between the Kimmeridge Clay Formation 8,262 bn bbls, with the shales of the Oxford Clay and Lias Formations containing a further aggregate STOIIP of 2,731 bn bbls.
   
November 2015 The Environment Agency formally granted the permit necessary to carry out a flow test of HH-1 oil discovery.
   
January 2016 The Oil and Gas Authority granted final consent for a flow test.
   
February - March 2016 Flow tests over three separate zones (Lower Kimmeridge, Upper Kimmeridge, Portland sandstone) were carried out. High quality light, sweet oil (40 API degree in Kimmeridge, 37 API degree in Portland) was produced and delivered to the Esso Fawley refinery. Exceptionally high rates were achieved in all three zones, setting new records for flow rates achieved in onshore exploration wells in the UK. Summary of the results in the table below.
   
October 2016  Submission of planning application to Surrey County Council for further appraisal testing and drilling at the Horse Hill-1 oil discovery
   
 February 2017

Upgrade to Portland Oil Resources, Horse Hill Oil Discovery, Weald Basin, UK. New report conducted by Xodus calculated an increase of 53% OIP (32 MMbbl) in the Portland Sandstone Discovery from the previously 21 MMbbl. Gross recoverable Portland 2C Contingent Resources 1.5 MMbbl. Base Case Portland initial oil-rate estimated at 350 barrels of oil per day per well. Work plans now aimed towards Portland long-term production by end 2018

 

Summary Table of Test Results

Zone Maximum instantaneous
oil rate
Stabilised dry oil rate *** Perforated interval Depth below surface
  bopd bopd feet metres
U. Portland* 360 323 103 615
U. Kimmeridge ** 1008 901 88 840
L Kimmeridge ** 700 464 80 900
Notes:
* flow rate limited by pump stroke rate capacity
** natural flow
*** average over 20 hours

 

IMPORTANCE OF HORSE HILL

The HH-1 well has demonstrated the presence of a potentially commercial Portland sandstone discovery and equally importantly the existence of a potentially very highly significant naturally fractured Kimmeridge limestone reservoir, which could be laterally very extensive and is in contact with a mature world-class source rock.