08 May, 2013 - U.S. Oil & Gas Plc - Operations Update
- Continuous flows of crude oil maintained from two zones,
one a fracture.
- Accumulation confirmed as 'discovered'.
- Data submission for Competent Person's Report completed.
- Oil chromatograph readings fluctuating up to 50%.
- Average water cut too high for commerciality at present.
- Analysis indicates the well location is within the oil pool and close to
fluid contact points but penetrating the transitional zones.
The Testing Programme
U.S. Oil & Gas Plc (GXG London: USOP, OTC New York: USOPY), the oil and gas exploration company with exploration assets in Nevada, announces that testing of its Eblana #1 well in Hot Creek Valley is now complete. Zones tested since testing commenced in September 2012, were from 3,232 feet to 7,460 feet. The first part of the programme was to cement the well, perforate the potential payzones and briefly test each zone. The second part of the programme was designed to identify the producer zones. The intention with the current testing programme was to extend the perforated intervals in two of those zones to increase and stabilize flow with the aim of obtaining flow from above the oil/water contact. This part of the programme was also designed to generate the maximum amount of data ahead of the finalising of a Competent Person's Report.
Continuous flows of crude oil associated with formation water were maintained from the two reservoir zones previously identified from 6,285 feet to 7,202 feet. The hydrocarbon accumulation is therefore confirmed as 'discovered'. During the previous testing period, (February 4 to March 4, 2013), the focus was on the producer zones (7,015-7,202 and 6,370-6400 ft, the former a fracture) that showed a flow of crude oil associated with formation water. The current programme included additional zones perforated on April 7, 2013. The intent was to move beyond the transition zone, increasing the crude oil rate and decreasing the water cut.
The extended testing and data collection on the newly perforated intervals within the two identified producer
zones gave the following results:
1. During the testing period a continuous pulsing flow of crude oil was recorded from one of the two
reservoirs (7,015-7,202ft), with continuous chromatograph gas signature C1 through nC4 and oil readings from 2%
to 50% indicating a strong reservoir fracture network, with a steady temperature of 122F. The frequency of
pulsing increased over testing. Previously encountered kerogen and wax were dissipated by high temperatures.
2. For the second formation (6,370-6,400) ft., oil flow associated with formation water remained constant
and did not increase.
3. Both zones are either at the transition zones or at the edge of the reservoir pools.
4. Strong and continuous swabbing followed by a hydraulic pump out, which resulted in continuous flow of
crude oil associated with formation water from the two producer zones, showed that the zones are below the oil
water contact point.
Large amounts of new data were generated during the testing process and these have been submitted to Forrest
Garb & Associates who will now complete a Competent Person's Report on the asset in Hot Creek Valley. The new
data will also significantly deepen the Company's understanding of the 8-10 further drilling targets already identified and enhance prospects for the next drill.
The Company is currently assessing the possibility of acquiring downhole Vertical Seismic Profile data (VSP) and other additional data from the acreage adjacent to the well location to get a clearer picture of the field structure. Amongst the options that will then be considered is Directional Drilling from Eblana #1 using a Reservoir Navigation System (RNS) to drill a spur from the existing well. Alternatively, the Company will move forward to its second drill.
Rigging down at Eblana #1 is now underway and the Company will shortly, subject to permissions, temporarily close the well in accordance with state and federal regulations.
CEO Brian McDonnell said, 'Our discovery in Hot Creek Valley is a tremendous achievement in Nevada oil exploration. We have proved our discovery of crude oil. Although our data indicated a good chance that this discovery well might deliver the additional benefit of commerciality, the steadily increasing oil flow we hoped for did not materialize; instead we continue to have pulsating flow, which we will further analyse. We now look forward to a Competent Person's Report providing an independent view of our asset in Hot Creek Valley. The Company will meantime focus on mapping out the best way forward to maximise the value of that asset for shareholders.'
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
Neither this announcement nor the information contained herein constitutes an offer or solicitation by U.S. Oil and Gas plc for the purchase or sale of any securities nor does it constitute a solicitation to any person in any jurisdiction where solicitation would be unlawful.
For further information contact:
Brian McDonnell, Chief Executive Officer +353 (0) 87 238 3419
Alexander David Securities Ltd - Corporate Finance Adviser
Fiona Kinghorn/David Scott +44 (0) 20 7448 9800
Jonathan Charles +44 (0)779 189 2509
Simon Kiero-Watson +44 (0) 20 7653 1935
Alex Benger +44 (0) 20 7653 1935
ADR Broker Desk, Deutsche Bank
Simon Davies and Richard Willis
Tel: +44 (0) 20 7547-6500
Fax: +44 (0) 20 7547-9995
Tel: +1 212 250-9100
Fax: +1 732 544-6346
About American Depositary Receipts (ADRs)
An ADR is a negotiable certificate that represents ownership in securities of a non U.S. company. ADRs are issued by a sponsoring U.S. bank and denominated in U.S. dollars. An ADR represents a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs allow foreign companies shares to be traded in a similar manner to shares in U.S. companies on the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), Nasdaq and the over-the-counter (OTC) market. ADRs enable U.S. citizens to acquire shares in a foreign company without the need for cross border or cross currency transactions. Any dividends and capital gains are in U.S. dollars.
About U.S. Oil & Gas
U.S. Oil & Gas plc is a GXG quoted (Ticker: USOP) oil and gas exploration company with a strategy to identify and acquire oil and gas assets in the early phase of the upstream life-cycle and mature them. The Company's main asset is in Nye County, Nevada where it holds the entire share capital of US-based company Major Oil International LLC ("Major Oil"). Major Oil has acquired rights to exploration and development acreage in Hot Creek Valley, Nye County, adjacent to the oil and gas rich Railroad Valley area of Nevada, both of which are part of the Sevier Thrust of central Nevada and western Utah, USA.
U.S. Oil & Gas PLC.
For further information please refer to our website at: www.usoil.us