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.
Significant progress was made at Horse Hill during 2019 towards the goal of establishing permanent commercial oil production at the site. Extended well test operations continued at both the Portland Sandstone and the Kimmeridge Limestone intervals, and in August 2019 it was announced that aggregate oil production had reached a milestone of 60,000 barrels.
In September 2019 we announced that operations had commenced for the drilling of the new Horse Hill-2z (“HH2z”) Portland horizontal well. In mid-November we reported that the drilling had been successfully completed, with 2,500 ft of horizontal trajectory drilled wholly within the Portland reservoir’s most oil productive zone.
We also announced in September 2019 that Surrey County Council had granted full planning consent for longterm oil production at Horse Hill. The consent grants permission to produce oil over a period of 25 years at up to 3,500 barrels of oil per day from a total of six wells within the Portland and Kimmeridge oil pools, including the existing Horse Hill-1 (“HH-1”) well and the HH-2z horizontal well.
As at the financial year end, we reported that total HH-1 test production stood at over 78,000 barrels stretching back to the start of test production in July 2018. Post year end, we reported that during a scheduled shut-in for a long-duration pressure build-up test at HH-2z, evidence of formation water ingress was recorded. For that reason, an additional well intervention was planned to shut-off the water source.
On 9 March 2020 it was announced that that intervention was successful and dry oil had flowed to surface. It was also announced that further clean-up activities would be carried out prior to a shutin. We expect extended well test (“EWT”) operations from HH-2z to commence directly thereafter. Production from the horizontal section of the Portland Sandstone reservoir has the potential to exceed production from a vertical Portland producer such as HH-1.
In January 2020 we reported that, subject to receipt of regulatory approvals, the Operator now planned to bring HH-1 into commercial production this spring, to be followed by HH-2z in the third quarter of this year, subject to the successful completion of the planned HH-2z EWT programme. Shortly before the publication of this report, the Operator confirmed that the Oil and Gas Authority (“OGA”) had approved the Horse Hill Field Development Plan (“FDP”) and consented to the start of long-term production (“Production”) from the field.. The Operator has said that Portland oil pool Production will commence via HH-1, with Kimmeridge Production planned to be added in late spring 2020 by converting the well to a dual completion. Production from HH-2z is planned to follow upon completion of the current EWT campaign.