The share price of AIM listed London quoted UK Oil and Gas Investments (UKOG) jumped 75% in early morning trading today. The announcement of a significant discovery and report given to them by US-based Nutech Ltd, one of the world’s leading companies in petrophysical analysis and reservoir intelligence, estimates that the Horse Hill well in the Weald Basin contains a total of 158m barrels of oil per square mile.
The Horse Hill licences cover 55 square miles of the Weald Basin in Southern England of which UKOG has a 20.36% interest.
Stephen Sanderson, UKOG’s CEO, commented: “The operator, Horse Hill Developments Ltd, with the assistance of Nutech, is now focussed on flow testing the Portland Sandstone and Kimmeridge Limestone sections of the well, to establish producibility and thereby seeking to quantify an overall net discovered resource”.
It is possible, based on the findings, that there could be up to 100bn barrels of oil present following the drilling of the well last year, although UKOG have admitted estimates say that possibly only 3-15% of the ‘black gold’ will be able to be recovered compared to similar geology in the US and West Siberia.
Despite these estimates, this discovery could have significant impact on Scotland’s quest for Independence. The Weald Basin contains five types of shale, all of which have the potential as oil resources, similar to that found in North America. It also has potential to produce hybrid oil – a combination of conventional and shale oil.
One of the biggest threats to the rest of the UK which arose during the vote last year was its dependence on Scotland for its oil. However, the UK has only produced c. 45bn of barrels in the last 40 years from Scotland’s North Sea Oil industry which continues to battle dwindling oil production meaning that if the Horse Hill well produces anywhere near its potential it could well push Scotland closer their elusive stand alone status.