U.S. Oil & Gas plc was formed to exploit the potential for substantial conventional oil and gas finds in onshore North America, using the most advanced technology available.
The Company has been awarded two Permits to Drill by federal and state permitting authorities for further wells in Hot Creek Valley, Nevada, USA. A third application has been submitted and is currently in process.The required bonds have been lodged for the two permitted wells.
Intention to drill
In order to make rapid operational progress, the Company is currently moving ahead with preparations for drilling Eblana-3 and Eblana-6, both vertical wells. The Company’s view at this time is that it will drill Eblana-3 first, deciding on subsequent operations in the light of results.
Eblana-3 and Eblana-6 target updip Tertiary zones, while Eblana-6 is also intended to drill deeper to the Paleozoics. Both are vertical wells.
Groundworks, including road improvements, drill pad construction, access ways and the drilling of a water well, are complete (images here). Now that permits have been granted, terms can be finalised with the selected drilling contractor and other vendors, and activities coordinated.
US Oil holds a lease acreage of 88 sq km in Hot Creek Valley, Nevada. The leases are 35 miles west of Railroad Valley, a location that has produced more than 40 million barrels of oil to date. Analysis of oil flowed by the Company’s Eblana-1 well shows it to be of similar composition, and most likely from the same Chainman Shale source rock, as that in Railroad Valley.
US Oil surveys have identified five large possible hydrocarbon-bearing structures on its acreage. In addition, preliminary results from a December 2017 geochemical survey indicate a high potential for hydrocarbons throughout the Hot Creek Valley concession and confirms the Company’s view that its leases cover a major oil system.
On February 2, 2017, on the basis of all available data, including Vertical Seismic Profile (VSP) data collected from the Company’s Eblana-1 well and processed by Halliburton, and after a review of petrophysical parameters, Baker Hughes Inc. reported revised Original Oil-in-Place estimates for the Tertiary zones in the area updip to Eblana #1 as follows:
BHI Resource Estimates Hot Creek Valley, Tertiary Volcanics, Estimated Net Recoverable Resources (units: bbls = ‘barrels’)
|Resource category||Low estimate||Best estimate||High estimate|
|Contingent Recoverable Oil (bbls) @ 20% recovery factor ||56,600,000||206,600,000||398,600,000|
For tables of Resource Estimates, please click here
The Eblana #1 exploration well, drilled by U.S. Oil’s wholly owned subsidiary Major Oil International LLC, identified nine large potential oil reservoir intervals and associated high fracture zones before reaching its target depth of 8,550 feet. Testing confirmed two producer zones, approximately 150 feet cumulative net pay, and identified light, sweet oil of 33 and 28.5 API. Oil produced had a high water cut and did not flow at commercial rates due to the well encountering the oil/water transition zone. The discovery was confirmed by an independent Competent Person’s Report prepared by Forrest Garb & Associates.
Halliburton VSP study
In 2016 the Company contracted Halliburton to carry out a Vertical Seismic Profile (VSP) survey based on US Oil’s Eblana #1 discovery well, and Baker Hughes (BHI) to carry out structural modelling based on all the available data including VSP. The purpose of the structural modelling was to reduce risk as far as possible before the Company carries out its planned drills. In addition, Baker Hughes calculated the revised Oil-In-Place estimates reported above for the Tertiary Structure updip of the Eblana #1 well. These estimates do not include the Palaeozoic strata, which may also be highly prospective.
Conventional play, low uplift costs
The Hot Creek Valley discovery is potentially a conventional onshore resource, requiring no fracking, and with extremely low uplift costs. In the present environment of relatively low oil prices the potential exists for a highly competitive opportunity. In addition, the currently depressed price of drilling and services offers a valuable window for highly cost-effective operations.