U.S. Oil & Gas Plc.
(“U.S. Oil” or the “Company”)
OPERATIONS UPDATE AND LEASE ACQUISITIONS
- Preliminary testing of Eblana-3 set to begin
- Equipment and personnel onsite
- Up to two zones to be tested initially
- Additional downhole operations pending regulatory approvals
- Further leases secured
During drilling operations at the Eblana-3 well in April 2018, at least eight potential hydrocarbon-bearing zones were identified from cutting samples, mud logs, and geophysical wire-line logs. After a review of all available data, six zones indicating a high potential for hydrocarbons were selected for perforation.
Downhole operations using a workover rig were conducted between June 18 and June 30, 2018. However, perforation equipment failures led to significant delays in the program, curtailing swabbing and preventing preliminary flow testing of the perforated zones. The Company duly announced that it would recommence testing operations when equipment and personnel could be reassembled. During the last hours of operations, promising zones identified earlier, zones 5 and 6 (3856-3866 ft. and 3580-3590 ft.), were jointly subjected to limited swabbing and produced some crude oil. Insufficient rig time remained for further operations. The rig was stood down, and the well was plugged pending testing at a later date.
Data analysis and planning
Analysis of downhole data by Baker Hughes, as well as additional reservoir engineering studies and laboratory testing, indicated that of the six perforated zones, two (zone 5 at 3856-3866 ft. and zone 6 at 3580-3590 ft.) could be tested without further operations to clear debris from the formations, while the remaining four zones would benefit from clearing by water injection methods. The latter programme required detailed planning, modelling and additional regulatory approvals. The Company therefore decided to press on with preliminary testing of zone 5 and zone 6, while working with regulatory authorities to finalize plans for the remaining zones and for other operations including water disposal.
To prepare the well for testing, a workover rig was deployed to Eblana-3. During these operations, light hydrocarbons flowed to the surface, and samples were collected. The completion rig was then stood down and a rod pump installation with advanced automatic control for fluid lift was deployed. Pumping has now commenced from zones 5 and 6 combined, initially to further clear the two zones of perforation debris and drilling fluid residue, and will continue for as long as is required to prepare the zones for testing. Oil separation apparatus and tankage is also being commissioned.
For testing, a workover rig will again be deployed. Operations will initially focus on zone 6 possibly moving to zone 5 depending on results and the work schedule. Subject to regulatory approvals, the Company may also carry out its planned perforation clearing operations on some or all of the four additional zones of interest.
The Company wishes to emphasise that the planned tests are preliminary. No attempt is being made at this stage to maximise flow. A considerably longer production test will be required before definitive statements can be made about long term flow rates or commerciality.
The Eblana-3 well is located on Lease 87414 in Hot Creek Valley, Nevada, USA. US Oil has a 100% interest in the lease through its wholly owned subsidiary Major Oil Intl. LLC.
Additional acreage acquired
In competitive and non-competitive auctions held by the Bureau of Land Management (BLM) in June and July 2018, the Company successfully bid for an additional acreage contiguous to its existing holdings in Hot Creek Valley. The Company’s total acreage position, through its wholly owned subsidiary Major Oil Intl LLC will shortly be confirmed on receipt of final documentation.
The statements in this communication reflect the current thinking of the Board and the Company’s present plans. The Company reserves the right to alter plans in the light of developing knowledge and circumstances. Shareholders’ attention is drawn to the note below concerning Forward-looking Statements.
This press release contains certain “forward-looking statements” and “forward-looking information”. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to: business plans and strategies of US Oil and Gas; operating or technical difficulties in connection with drilling or development activities; availability and costs associated with inputs and labour; drilling and exploration costs; the speculative nature of oil exploration and development; diminishing quantities or quality of reserves; synergies and financial impact of completed acquisitions; the benefits of the acquisitions and the development potential of properties of US Oil and Gas; the future price of oil; supply and demand for oil; the estimation of reserves; the realization of reserve estimates; costs of production and projections of costs; success of exploration activities; capital expenditure programs and the timing and method of financing thereof; the ability of US Oil and Gas to achieve drilling success consistent with management’s expectations; net present values of future net revenues from reserves; expected levels of royalty rates, operating costs, general and administrative costs, costs of services and other costs and expenses; expectations regarding the ability to raise capital and to add to reserves through acquisitions, assessments of the value of acquisitions and exploration and development programs; geological, technical, drilling and processing problems; treatment under governmental regulatory regimes and tax laws.
All statements other than statements of historical fact are forward-looking statements
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 (1) 631 9022
About U.S. Oil & Gas:
U.S. Oil & Gas plc is an 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.
For further information please refer to our website at: www.usoil.us