By Amy McLellan
Excitement is mounting for backers of AIM-listed onshore drillers Europa Oil & Gas, Egdon Resources and Union Jack Oil as the second of the three intervals being tested at the Wressle-1 discovery in the East Midlands has come good.
The Wingfield Flags reservoir has flowed free oil at rates of up to 182 barrels of oil per day along with 456,000 cf/ of gas day. This builds on the positive results from the first interval, the Ashover Grit, which tested 80 bpd and 47,000 cf/d.
The Wingfield Flags were perforated over an interval of three metres at a depth of 1,937 to 1,940 metres and following an initial clean-up flow, two flow tests were conducted to trial different choke sizes to optimise oil flow rates. No appreciable volumes of water were encountered and the oil is of good quality with a gravity of 39-40o API.
Down hole data, including pressure data recorded during the main flow and subsequent shut-in build-up period, will now be analysed to evaluate the permeability of the reservoir and its possible response to pumping. The companies plan a longer term production test using pumping equipment following the current testing programme – oil from which will be sold to the market – with the Penistone Flags the third and final potential payzone to be tested.
“Wressle is so far living up to its pre-drill billing as a potential oil and gas discovery that could transform our existing production and revenue profile,” said Hugh Mackay of Europa Oil & Gas, which has a 33.33 per cent stake in the East Midlands discovery.
Shares in £12 million market cap Europa were up almost nine per cent at 6.25 pence on the news. As we wrote earlier this week, this is just the beginning of a newflow-busy period for AIM-quoted Europa, which also has a 50 per cent stake in the upcoming Kiln Lane well, which is targeting a 2.9 million boe conventional oil prospect some 25 km to the east of Wressle, as well as progress being made on its licences in France and offshore Ireland.
Mark Abbott, managing director of Egdon Resources, which has a 25 per cent stake in the find and saw its shares gain 5.5 per cent to 9.62 pence in morning trading, welcomed the “very encouraging results”.
He pointed out that the low capital and operating costs of this onshore UK development would make the find “commercially attractive even in today’s lower oil price environment”.
And the attractive fiscal terms for small onshore oilfields will also be useful in pushing the find over the commerciality threshold.
The latest Wressle update is also good news for AIM micro-cap Union Jack Oil, which has an 8.33 per cent stake in the discovery, and privately-owned Celtique Energie, with 33.3 per cent. Despite the gloom of low oil prices, this is a good boost to sentiment for onshore drillers in the UK – and no fracking involved.