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 exploration acreage
Through its wholly owned subsidiary, Major Oil International LLC, US Oil holds a federal lease acreage of 68,605 acres in Hot Creek Valley, Nevada, USA. The Valley is 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 two wells show it to be most likely from the same Chainman Shale source rock as Railroad Valley.
Both the Company’s wells in Hot Creek Valley, Eblana-1 and Eblana-3, flowed high quality oil to the surface (API 28.5-34.5) but were not deemed commercial. However, downhole well data, along with geophysical and geochemical surveys, indicate two strong plays on the Company’s leases, one to the west and the other to the east. A third well, Eblana-9, is now planned to the east and updip.
Planned drill operations (Eblana-9)
The East Play appears to be an analogue of Railroad Valley’s Trap Spring field (15.2 million barrels oil produced to 2015). After identifying the Play, the Company carried out a careful prospect assessment using well data from Eblana-1 and Eblana-3, four reprocessed 2-D seismic lines, gravity, magnetic and geochemical data, as well as VSP data from Eblana-1 and energy absorption analysis. Multiple targets were identified in the East Play, one of which the Company now intends to drill as Eblana-9. The well will target 28 million barrels of oil (STOIIP) in one block of a mapped multi-block compartment in a four-compartment East Prospect structure. Planned well depth is approximately 5000ft. Eight wells can potentially be supported on the single targeted block. Field potential is estimated to be up to one billion barrels.
The application for a Permit to Drill Eblana-9 is currently being processed by regulatory authorities, and undue delay is not anticipated. The Company is positioned operationally to drill on the award of the permit. Two further permit applications are in preparation, Eblana-8 and Eblana-10, the intention being to develop the field rapidly if Eblana-9 is successful.
Legal issues concerning certain leases
A legal case has been brought against federal agencies by an environmental group challenging the award of oil exploration leases in Wyoming, Utah and Nevada in June and September 2018 federal auctions. Leases held by Major Oil in Hot Creek Valley, in total 52,046 acres, are impacted by this ruling, which suspends operations on the affected leases but does not void the lease awards. The suspension order is currently being appealed by federal and other bodies. The Order has no impact on the Company’s plan to drill Eblana-9 or on the block’s development potential. The Company’s West Play leases are also unaffected.
Further details here.
The West Play
Subject to funding and regulatory permissions, the Company expects to drill a further well or wells in the west of its acreage, where the current basin model indicates a structural analogue of Railroad Valley’s Grant Canyon field. Grant Canyon historically included the most productive onshore well in the USA, flowing at over 4,000 bopd. In this area, the Paleozoic strata rise to relatively shallow depths, currently estimated to be 3,500 ft. or less, potentially allowing the development of low-cost wells. Intensive data analysis and modelling efforts are ongoing, and planned data collection includes seismic surveys to confirm structural aspects of identified leads.
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 (processed by Halliburton), and after a review of petrophysical parameters, Baker Hughes Inc. reported a Best Estimate for Contingent Recoverable Oil (20% recovery factor) of 206.6 million barrels.
On completion of currently planned Eblana-9 well, and in the light of a revised oil system model, resource estimates will be subject to revision and may decrease or increase accordingly.