There was excitement for UK Oil & Gas (LSE: UKOG) and Solo Oil (LSE: SOLO) shareholders earlier this month when they, along with others holding an interest in the Horse Hill site near to Gatwick, published the results of an independent assessment carried out by Schlumberger.
Thats now been followed up by a further update on the assessment provided to UK Oil & Gas by Nutech, who originally reported on the site in April. The new report on the 55-square miles covered by the Horse Hill licences provides a P50 best estimate of 9,245 million barrels of oil in place, with the biggest portion of that within the shales and tight conventional reservoir limestone sequences of the Kimmeridge zones.
How much can be extracted?
Comparing the Kimmeridge oil to possibly-similar reservoirs in the US, we could be looking at between 3% and 15% of the oil recoverable although UKOG stresses that the calculated OIP figures should not be construed as contingent resources, prospective resources or reserves.
The latest news is pretty much in line with expectations, and there hasnt been any dramatic response. UKOG, which has a 20% net interest in the project saw its shares up just 1% to 2.35p, while Solo (with its 6.5% net interest) dipped 2% to 0.5p.
Of the other interested parties, Evocutis shares rose 6.3% to 0.22p, Doriemus dipped 5.6% to 0.08p, Stellar Resources fell 6.5% to 0.49p and Alba Minerals remained flat at 0.6p.
These are still very early days for UKOG, Solo and the rest of the Horse Hill explorers, with UKOG CEO Stephen Sanderson making it clear that theyre still at the proof of concept stage, while adding that the latest news is a further valuable step towards it. Theres a proposed flow test at the HH-1 well in the offing, and the company will be seeking Nutechs advice on that.
Although there hasnt been much share price movement on the day, investors clearly seem to be optimistic about the prospect. UKOGs share price has soared by almost 450% since the start of 2015, and although Solo Oil price has been flatter in 2015 its still up 60% over 12 months.
And UKOGs share placing this month was snapped up, with an offer of 267 million new shares at 2.25p fully subscribed and a total of 6m gross raised.
Worth a punt?
Should you take a stake in this new venture? Well, at this stage its very hard to call. But some will be seeing it as the kind of high-risk venture they relish while others will be waiting for the results of the flow test. And dont forget too that sometimes its the early investors who get the cream, while at other times theyre the ones who eventually get squeezed out.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.