The Company currently owns a 4% interest in a special purpose company, Horse Hill Developments Ltd, which is the operator and 65% interest holder in two Petroleum Exploration and Development Licences (“PEDL”) 137 and 246, in the northern Weald Basin north of Gatwick Airport.
The PEDL137 licence covers 99.29 square kilometres (24,525 acres) in Surrey and contains the Horse Hill-1 (“HH-1”) discovery and several other exploration leads. PEDL246 covers an area of 43.58 square kilometres (10,769 acres) and lies immediately adjacent and to the east of PEDL137.
The HH-1 well is located approximately 7.5 kilometres south east of the producing Brockham oil field and approximately 15 kilometres southwest of the Palmers Wood oil field. The pre-drill primary target reservoir horizons were the Portland Sandstone, which is productive in the Brockham oil field, and the Corallian Formation, which is the producing horizon in the Palmers Wood oil field. Secondary targets for the well included the Triassic, which has previously tested gas in the Weald Basin, and the Oolite Formation.
In May 2015, an independent oil in place (“OIP”) review of the Upper Portland Sandstone discovery by the Xodus Group was released, which saw initial OIP estimates substantially increased to 21.0 million barrels, (“mmbbl”, Best Estimate, P50).
Nutech Inc. (“Nutech”), an industry specialist in tight reservoir analysis, was contracted to conduct further detailed petrophysical evaluation of the electric logs. This work resulted in the announcement in April 2015 of a potentially significant play with estimated gross OIP of over 150 mmbbl per square mile.
The results of the work by Nutech were independently verified in May 2015 by Schlumberger, one of the world’s leading oil and gas service companies, using their proprietary modelling developed in tight reservoirs in the USA and applied extensively in the USA and elsewhere. Schlumberger’s estimate of OIP in the Kimmeridge, Oxford and Lias mudstones and limestones is approximately 255 mmbbl per square mile (gross). If confirmed, this Kimmeridge play opens up large areas of the Weald Basin that may have potential for oil production, not limited to the PEDL137 and PEDL246 licences where Horse Hill is located.
In June 2015, Nutech calculated that the total Jurassic shale plus conventional reservoir sections contained in the 55 square miles of PEDL137 and PEDL246 is a Best Estimate, or P50, OIP of 9,245 mmbbl. The most significant oil in place within the Jurassic section is contained within the shales and conventional limestone reservoir sequences of the Kimmeridge, with a calculated Best Estimate, or P50, total Kimmeridge OIP of 5,230 mmbbl.
Again, in August 2015, Schlumberger independently verified Nutech’s Horse Hill OIP estimates contained in PEDL137 and PEDL246. Schlumberger estimated a Mean OIP of 10,993 mmbbl, with Kimmeridge OIP of 8,262 mmbbl. Schlumberger’s Mean OIP estimates are therefore 19% higher in total than Nutech’s P50 OIP estimate over the two Horse Hill licences and 58% higher in the Kimmeridge.