Oil production at the Avington field in Hampshire, England, will restart, according to a press release from UK Oil & Gas PLC, which has a 5% non-operated interest in the asset and surrounding licence.
UK Oil & Gas said the Avington Joint Operating Committee has formally agreed to restart oil production at the field, which has “potentially significant recoverable oil resources” for future exploitation, as the three nearest similar producing fields at Avington show oil recoveries of approximately six to 13 percent of the oil assessed in place.
Before the 2017 shutdown, the Avington field had produced 276 billion barrels from an estimated average case of 59 million barrels of original oil in place, representing a recovery factor of just 0.47 percent , the company said. The field received new planning permission in December 2021.
Avington operations will restart with a revamp of Avington-3z, the field’s best-performing well, which came on stream in 2007 and accounts for about 81 percent of the oil produced, according to the company.
Secured funding for upcoming plans
In an earlier press release, UK Oil & Gas said it secured a $3.94 million (GBP 3 million) committed funding pool with RiverFort Global Opportunities PCC Ltd and YA II PN Ltd.
The facility, which will be received in three tranches, will fully fund the working capital required to progress the company’s planned key activities over the next 12 months for the Loxley gas discovery, the Horse Hill field project, the of Portland hydrogen storage and the Pinarova-1 project. in Turkey, according to the statement. There is an option for a further advance of up to $2.63 million (GBP 2 million) by mutual consent.
“The facility provides the company with working capital on competitive terms to fully fund its planned key activities in the UK and Turkey over the coming year,” said Stephen Sanderson, chief executive of UK Oil & Gas . “The offload/conversion terms are attractive as they will either be zero discounted to the lowest daily VWAP during the 15 days prior to conversion, or at a 35 percent premium to the reference price of the relevant disposition, whichever is greater low. This contrasts with the likely significant discount to the company’s share price associated with a more traditional equity placement in the current financial climate.”
According to the company’s latest unaudited results, UK Oil & Gas reported an operating loss of $1.71m (GBP1.3m) for the six-month period ended March 31, which is comparable with the same period last year. The company’s revenue for the six-month period was flat at $1.18m (£0.9m) with a slight decline in oil production at Horse Hill offset by an increase in the average price of sale of oil, according to the statement.
“This interim period was dominated by progress made by the company’s wholly-owned subsidiary, UK Energy Storage Ltd, at Portland Port in Dorset, which plans to provide key hydrogen energy infrastructure to help the UK achieve a future powered by homegrown renewable sources of energy,” Sanderson said in a statement. “We have made significant progress with our hydrogen project in Dorset, having signed a lease agreement with Portland Port Limited covering two sites at the former Royal Navy port. We intend to develop a hydrogen power center, focused on large-scale hydrogen storage in man-made salt caverns.”
“A lot of time was also spent evaluating the shallow Pinarova prospect in Turkey before the post-drilling and testing period. Testing will resume at the well pending import of larger drill guns to Turkey” , Sanderson added. “We await the results of geochemical analyzes of oil samples collected from the well mud wells, the nearby shallow oil seep and the upcoming East Sadak field in due course by our chosen specialists in the UK. These results they will tell us if the seepage and Pinarova oils come from the same deeper source.”
In Turkey, UK Oil & Gas has a 50 percent non-operating interest in Pinarova-1 and the surrounding Resan license, which also includes the undeveloped Basur-1 light oil discovery, a potential future appraisal drilling target, said the company.
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