Project Update: P199
PROJECT UPDATE
Onshore UK
East Midlands Basin
Corporate Asset package
(including production, appraisal development
& upside exploration)
October 2016
Onshore UK (East Midlands)
Additional assets now included in the opportunity to
acquire a package of assets including production with
exploration upside.
Opportunity Overview: Blackland Park Exploration
Limited (‘Blackland’) is an independent oil and gas
company which owns several exploration and production
assets in the East Midlands, onshore England (UK), both in
its own right and through two wholly-owned subsidiaries,
AltaQuest Energy Corp (UK) Limited (‘AltaQuest’) and
Courage Energy (UK) Ltd (‘Courage’). The assets, covering
a total 250 km2, are all located in the vicinity of the
Gainsborough Trough of the East Midlands Basin.
The owners of Blackland would now like to divest all of their
assets through a corporate sale for cash including the
combined producing and undeveloped reserves attributed
to the assets it currently owns, including its subsidiaries.
These assets include Blackland’s own production from the
Whisby field, in which the #6 appraisal well drilled
successfully and defined new reserves in Q1 2016. Also,
AltaQuest’s shut in reserves at Newton oil field, with its
appraisal upside, and Courage’s undeveloped Reepham oil
field. The opportunity would also include all of the
prospective exploration upside in the combined acreage,
plus the booked accumulated tax losses associated with
the three companies which can be used to offset future tax
liability from other E&P assets elsewhere onshore UK if
appropriate.
Regional Setting: The UK has had an extremely
varied and complex stratigraphic and tectonic evolution
and, although it is a relatively small area, the resulting
geology contains significant mineral resources. These
include not only the major oil and gas
deposits offshore in the North Sea,
discovered in the early- to mid-1970s,
but also a number of productive onshore
oil and gas basins.
The East Midlands is one of these and
contains the oldest and largest number
of onshore fields in the UK. The first field
in the region was Kelham Hills,
discovered as far back as the 1920s. In
1939, discovery of the 5 MMbbl Eakring
field by BP (then known as D’arcy
Exploration) and the subsequent growth
in demand for oil during World War II led
to new exploration and many more fields
being found.
Higher commodity prices and new
exploration technologies which unlocked
the success and growth of E&P in the
North Sea in the 1970s led to another
phase of exploration, onshore UK, in the
1980s.
Renewed
exploration with modern
seismic in the East
Midlands
basins
subsequently led to the discovery of over twenty new fields.
These included the 20 MMbbl Welton field which is situated
immediately northeast of the Blackland Group acreage.
The Newton, Reepham and Whisby fields share a common
oil kitchen along with several other established producing
oil fields in the region. These include the large Egmanton
field to the south (2.5 MMbbls) and the Farley’s Wood and
Bothamsall fields to the west (Ref: Location Map).
The region’s productive plays consist mostly of Upper
Carboniferous Namurian and Westphalian reservoirs,
sourced by underlying Namurian shales and older Lower
Carboniferous marine strata.
Stratigraphic & Structural Evolution: The Caledonian
Orogeny of the Early Palaeozoic imprinted a SW-NE fault
pattern on British topography. Elements of this are still
remnant in the East Midlands. A more significant imprint,
however, was created by plate movement in late
Devonian-early Carboniferous times.
Northward compression caused the E-W trending Variscan
front to form south of the Brabant Massive that defines the
northern margin of the productive Weald Basin in southern
England. To the north of this front, extensional movements
on both pre-existing and new fault lines resulted in the
Project P199 – AltaQuest/Blackland Group (Onshore UK)
formation of tilted blocks, or half-grabens, which are today
responsible for many of the extensional traps in what is now
central and northern England. In the East Midlands, three
interconnected basin areas were created which today form
the main East Midlands play area. Blackland’s acreage is
associated with the Gainsborough Trough, which is the
most northerly of these basins.
Formation of these grabens coincided with a rise in sea
level in the early Carboniferous (Dinantian) times and
marine sedimentation, including widespread limestone
deposition. This was followed by deposition of thick marine
shales in the early Namurian. Subsequent and progressive
regression initially produced the coarse clastics and
sandstones that make up the Millstone Grit stratigraphy
today.
These were then overlain with large scale deltas providing
the widespread coal and sandstone deposition of the
Westphalian Coal Measures which are present in
Blackland’s acreage. These deposits, consisting mainly of
interbedded coals, channel sandstones and siltstones,
today cover an area of approximately 11,000 km2 of the
UK’s surface, with a further 28,000 km2 of sub-surface
deposits onshore.
Late Carboniferous Variscan-related inversion, with
increasing plate pressure from the south during late
Westphalian / Stephanian times, uplifted the Pennine hills
which now separate the East and West lowlands of
England. This Variscan-related inversion is seen as the
main trap-forming event in the East Midlands, as it caused
several grabens and half grabens to invert. As a result the
many anticlinal traps, which have provided most of the oil
and gas discoveries in the East Midlands to date,
commonly have the best reservoir under closure where
originally deposited in the asymmetric synclines adjacent to
the bounding half graben faults before being inverted.
At the onset of the Permian, an arid desert environment
prevailed and resulted in mild peneplanation of the Upper
Carboniferous.
Project P199 – AltaQuest/Blackland Group (Onshore UK)
A largely conformable Mesozoic was subsequently
deposited over the NW-SE trending Carboniferous
subsurface in the East Midlands region, east of the Pennine
Hills, towards the North Sea, and underlies the
Gainsborough Trough area today. Today, these strata dip
regionally towards the east, due to the uplift and tilting of the
British Isles during progressive widening of the North
Atlantic during Cretaceous and Tertiary times. Other than
the rejuvenation of some of the major faults, this produced
only minor structural deformation in the region.
Petroleum Geology Overview: The primary source
rocks in the Gainsborough Trough are oil-prone Namurian
marine shales, found beneath the Millstone Grit where
deposited within the deeper sub basins of the East
Midlands Basin. These are complemented by both older
marine shales, found interbedded with the Dinantian shelf
carbonates, and younger Westphalian shales from the
Lower Coal Measures, which are a secondary source
contributor.
The main reservoirs in the area are formed by the thicker
Namurian Sandstones and the multiple channel sands of
the Westphalian. These comprise up to four reservoir units
in the Newton Field, including the Crawshaw, Longshaw,
Chatsworth and Kinderscount reservoir sand and grit units.
These range in thickness from 2 metres up to 17 metres
gross, all containing thin oil columns. Significantly, multiple
channel sands were more thickly developed in the hanging
walls of extensional faults. As a result, when these were
inverted by Variscan compression, the thicker reservoirs
end up on the crestal areas of the anticlinal rollovers.
A thick regional seal is provided by intra-Carboniferous
siltstones and mudstones.
Asset Prospectivity: This can best be categorised
into the producing, appraisal and exploration potential of
the acreage owned by each corporate entity of the
Blackland Group and is summarised below and in table on
the next page.
AltaQuest holds 100% of the EXL-141-2 Licence (Block
SK87i), which contains the Newton field and several
undrilled 3D prospects. The Newton-1 discovery well,
drilled to a depth of 1,404 metres, encountered oil in a 24
metre column of net reservoir consisting of four reservoir
horizons in the Carboniferous. These comprise the
Namurian-age Kinderscout and Chatsworth formations,
the Westphalian-age Crawshaw sandstones and
Longshaw formation. Primary oil production of up to 120
bopd was achieved when in production, mainly from the
Longshaw and Crawshaw Sands. The other sandstones
also had oil shows but were not put on production.
AltaQuest acquired 21 km of new 2D seismic on the
original EXL 141 in 1997-8 (before the Licence was split
into two parts) which added to the older pre-existing BP
seismic data. A 30 km2 area of 3D data was later acquired
in the Licence centred around the successful Newton-1
discovery well, but only after it was drilled in March-April
1998. This 3D data is regarded as fair-to-good quality and
shows that the Newton-1 well penetrated the southern
flank of a large roll over closure, downdip from the crest.
Undeveloped potential is, therefore, predicted in the
undrilled crest of the closure, where the seismic also
shows increased amplitude that might signify better
Crawshaw reservoir updip (due to inversion of the original
depositional syncline). Newton is, therefore, likely to
contain materially larger reserves if thicker updip reservoir
is proven by appraisal drilling than reserves estimated
purely on the basis of the reservoir thickness already
encountered by the existing Newton-1 well.
Based on the most recent 3D interpretation it is now
estimated that the Newton field’s most likely remaining
reserve potential is around 97,000 bbls recoverable. This
could best be accessed via a short sidetrack to an updip
location north of existing Newton 1 well. This could itself
then be used for the re-injection of any future water
produced from a new crestal well into the flanks of the
closure to maintain reservoir pressure updip.
AltaQuest holds 50% of EXL 141-1 (Block SK77e) which
contains the northern part of the large North Egmanton
prospect which extends into both Courage’s PEDL 090
and Blackland’s new PEDL 131, both of which lie
immediately to the south (ref: Location Map). This prospect
is estimated capable of containing unrisked resource
potential of over 3 MMbbls recoverable.
Project P199 – AltaQuest/Blackland Group (Onshore UK)
Summary of Blackland Group Assets (c/o Holding company Sunswept)
as @
10-10-16
Obligations
Licence
OS Blocks
Blackland Park Exploration Limited
PL 199-2
SKs 86b & 87h
PL 215
SKs 67b, 77, 86a & 87
PEDL 209 (Conventional)
SK89
PEDL 209 (Unconventional)
SK89
% Interest
Summary of Asset
95 % Op
100 % Op
28%
14%
Commitment
Drill Or Drop
Current Term Expiry
PEDL 313
SK76b
50% Op
PEDL 315
SK87b
100% Op
Whisby Field producing 140 bopd (Est. < 1 MMbor remaining).
Carried Appraisal #6 well drilled 2016 (est. additional 2 MMbor)
Conventional Exploration Prospectivity
Unconventional Exploration Prospectivity
Protection Acreage over extensionn of large North Egmanton
Pospect in PEDL 090 to north
Protection Acreage between Whisby and Newton
AltaQuest Energy Corporation (UK) Limited
EXL 141-2
SK87i
EXL 141-1
SK77e
100% Op
51% Op
Newton Field (Est. < 2 MMbor) + Undrilled 3D Prospects
Part of North Egmanton Prospect
NONE
NONE
NONE
NONE
31-Mar-2029
31-Mar-2029
Courage Energy (U.K.) Ltd
PEDL 090 Sub Area 2
EXL 294 (a)
51% Op
100%
Part of North Egmanton Prospect
Reepham Field (Est. 0.3 MMbor) only 1x1 Km2 site area held
NONE
NONE
NONE
NONE
7-Sep-2031
30-Mar-2026
SK77 (part)
TF07 C
Courage owns 100% interest in EXL 294 which holds the
undeveloped Reepham Field and the large Fox Covert
prospect which lies on the hanging wall of the Nettleham oil
field (16 MMbbls).
The Reepham field was discovered in 1998 by the
Reepham-1 well, which encountered a 12 metre thick Basal
Sandstone containing 7 metres of 24° API oil underlain by
water. Flow tests indicated potential production rates of 50
bopd with a 70% water cut. The Reepham-2 well was then
drilled updip on the Basal Sandstone pinchout, defining the
northern extent of the closure. Much of this licence has now
been relinquished but the site around the well has been
retained and a wider area around it could be re-applied for
out of round from the OGA.
Courage also holds 51% in PEDL 090 containing the
central part of the North Egmanton prospect, as defined
above, which lies updip from the Egmanton field (2.5
MMbbls) immediately to the south.
Blackland has interests in two licence areas, comprising
PL 199-2 / PL 215-2, which contain the Whisby field and its
5 wells, and also a minority stake in PEDL 209.
WHISBY FIELD: The Whisby field, which has produced
over 700,000 bbl oil to date, was discovered in 1985 by the
Whisby-1 well, which produced 70 bopd from a 13 ft Basal
sandstone interval. The first appraisal well, Whisby-2, drilled
to the NNE, was unfortunately water wet and is now
attributed to have missed the closure due to the mapping at
the time but is now used for water disposal under licence.
Whisby-3, drilled to the NW, flowed 80 bopd from the Basal
sandstone, which was increased to 175 bopd by
mechanical fracturing and led to the field being brought on
production from just the #1 and #3 wells in June 1990.
Whisby-4 was drilled in 2002-3 and flowed a total of 130
bopd from both the Basal sandstone and an 18ft thick
Loxley Edge Rock reservoir section above.
The Whisby-5 well was located updip from Whisby-1 well
and whilst it encountered oil in a Carboniferous limestone
which produced some oil on test, it was subsequently
defined as being located in a small downthrown block which
explained why it was deep to prognosis. As a result, only
NONE - Production Licence
21-Oct-2021
8-Aug-2026
NONE
NONE
30-Jun-2019
new 2D (10 Km)
1 well
20-Jul-2021
NONE
1 well
21-Jul-2021
some 5,000 bbls of oil have ever been produced from this
well.
The Whisby-6 well is the latest well to be drilled and
encountered oil in a completely undrilled fault compartment
of the mapped closure. This was drilled, completed and put
on stream in Q1 2016 and flowed up to 168 bbls/d naturally
from the Basal Sandstone reservoir. Managing the wax has
been the only challenge in this well to date and likely to be
limiting the current production rate, but a treatment solution
is in hand.
The 2D seismic over the field has also recently been
re-processed and the field remapped, where a new
reserves update is expected imminently. Early results
suggest that the reserves in the enlarged Whisby closure,
proven by drilling, may have been doubled by the
successful #6 well and that it is quite likely to exceed the
current 0.5 MMbbls already produced from the #4 well. The
average porosity of this Basal sandstone is 16% but with a
high net to gross of 85% to 95% due to post-depositional
reworking now recognised.
Significantly, only four of the eleven compartmentalised
fault blocks now mapped under closure in the Whisby field
to date are estimated likely to contain economically
recoverable reserves, of which only two are currently being
produced.
PEDL 209: Blackland owns a 28% working interest in the
conventional exploration of the Egdon-operated PEDL 209
which contains several large undrilled prospects and leads.
These are being further evaluated for future exploration
drilling that are regional analogues to other proven plays in
the area, so quite different from the large - but much higher
risk - prospect last drilled in this acreage. It is also
understood that Total have an option to farm into an interest
in the Licence from one of Blackland’s partners for the
area’s unconventional potential.
OTHER: Blackland recently acquired 50% of a new Licence
(PEDL 313) that contains the southern part of the North
Egmanton prospect as previously defined above.
This Licence contains part of the Caunton field which was
discovered by D’Arcy in 1943 as part of the search for
domestic oil in WWII. The field is understood to have
Project P199 – AltaQuest/Blackland Group (Onshore UK)
historically produced up to 100 bopd from the most
productive of the 22 wells drilled targeting the Rough Rock
and Chatsworth reservoirs. Most of the initial 0.3 million bbls
reserves Caunton is estimated to have contained are
probably depleted, although this will be reviewed as part of
the ongoing re-evaluation to establish if there is any
undeveloped upside as well as evaluation of other undrilled
leads and unconventional potential of the PEDL 313
Licence area.
Blackland has also recently acquired a new Harvey licence
(PEDL 315) with 100% interest and operatorship covering
all the acreage that lies between the Whisby field and the
Newton Field as part of the 14th licencing round, so now
protects the play potential between the two areas. Initial
reviews of the seismic indicate that there are several
economically sized fault defined closures at lower
Westphalian level as well as a prospective thickening
Namurian wedge play.
Fiscal & Economic Summary: All current and
future production from the Blackland Group’s assets are
taxed under the UK’s very favourable production Licence
terms, which are still some of the best in the world for a
stable country surrounded by established markets and
infrastructure. This ensures that even very small
discoveries at modest prices are commercial, assisted by
the local authorities’ historic familiarity and experience of
administering exploration and production activities.
As a result, OPEX for management of onshore fields is
generally modest, including site supervision and product
processing including oil treatment (dehydration) which, at
Whisby, is carried out on site and allows rapid and
inexpensive trucking to the refineries some 40 miles away.
The Total and ConocoPhillips refineries at Immingham deal
with production from the North Sea as well as the East
Midlands. Rail links are no longer used and contractual
trucking is the norm. Gas production in the region, whether
clean or separated from oil, is locally used to supply
hospitals (e.g. Gainsborough) or generate electricity (up to
10 MW) that can be tied straight into the national grid. The
East Midlands is well served by major road and rail
connections and several international airports. The local
Humberside airport also provides an increasing number of
connections to national and overseas destinations.
Obligations & Work Programme: The table above
also summarises the work obligations associated with each
Licence and confirms that all work commitments have been
fulfilled, other than a requirement for 15 Km of new 2D
seismic for the most recent licence award, PEDL 313.
Together with PEDL 315, both licence terms expire
mid-2021 and can be progressed to a 2nd Licence term on
commitment to one exploration well in each.
Production Licences PL 199-2 and PL 215, encompassing
the Whisby field, are due to expire in 2021 and 2026
respectively but can be extended for a further 10 years if
any field within its boundaries is still producing. EXL 141-2
which incorporates the Newton field, is also a production
Licence which is not due to expire until 2029.
Based on these timings and minimal obligations, any
incoming party acquiring the Blackland assets would have
plenty of time to properly evaluate each area, reprocess
existing and/or acquire any additional infill seismic data,
then remap to define and confirm suitable drilling locations
for potential tests of both exploration and additional
appraisal / development potential.
The Opportunity: Blackland would now like to find a
company interested in acquiring 100% of the private equity
of the Blackland Group in a cash deal, including its
wholly-owned subsidiaries (Courage and AltaQuest) and
their combined E&P interests in the East Midlands
including, of course, the existing production at Whisby, the
undeveloped potential of Whisby, Newton and Reepham
fields and upside exploration potential mapped to date. The
purchase would also include the various tax losses of the
group, mostly attributable to Courage, which can be used to
offset future tax on oil production profits within the
Blackland group or elsewhere.
Additional Information: Access to the available
technical and commercial data on the assets can be made
available after execution of the Confidentiality Agreement
(CA). Seriously interested parties will be invited to meet the
owners for more detailed discussions. All expressions of
interest and requests for more information, including a copy
of the CA for execution prior to access to the data, are to be
made through Envoi.
Contact: Mike Lakin
Envoi Limited
1b Walpole Court
Ealing Green
London W5 5ED
T: +44 (0)20 8566 1310
E: [email protected]
I: www.envoi.co.uk
Disclaimer: The information in this memorandum is for guidance only. Neither Envoi Limited (Envoi), or its client(s) (Client) nor any director, officer or employee of Envoi or its Client(s) accepts
responsibility for, or makes any representation or warranty, express or implied, with respect to the accuracy or completeness of the information, estimates and opinions contained in this
document. This document does not constitute an offer, and neither this document nor the information, estimates and opinions contained in it shall form the basis of any contract. Companies
wishing to acquire an interest in the project will be expected to make their own review of all documents and form their own judgments entirely.
© Envoi Limited 2016