UK Oil & Gas's share price leaped more than 71 per cent this morning after revealing there were "significant quantities of moveable oil" at the so-called Gatwick Gusher.
Horse Hill Developments has told UK Oil & Gas that "light, 40-degree API, sweet oil has flowed naturally to surface from an 80-foot zone within the Lower Kimmeridge limestone interval at a depth of approximately 900 metres below ground level.".
The flow started at around 10am yesterday at an initial instantaneous rate of more than 700 barrels a day using a one inch choke, with an approximate mix of 50-50 oil to water. Once choked back further, it produced a "steady early oil rate" of more than 463 barrels of oil per day over a further 7.3-hour period, in a rough mix of more than 99 per cent oil and less than one per cent water.
Stephen Sanderson, UKOG's executive chairman, said: "This is a very significant event for the company and for oil and gas activity in the Weald basin of southern England. Importantly, tests so far show oil has flowed to the surface under its own pressure and has not, so far, required artificial lift.
"The flow test, the first ever in the Lower Kimmeridge limestone within the Weald basin, provides proof that significant quantities of moveable oil exist within the Kimmeridge section of the well and can be brought to surface at excellent flow rates. In this case from a vertical well with minimal stimulation.
"While these flow rates are significant and in excess of management's expectations, it should be borne in mind that the planned future use of a horizontal well and appropriate conventional reservoir stimulation techniques could likely increase flow rates even further.
"We look forward to more news from the final test results from the Lower Kimmeridge limestone and the shallower tests. The Company will be starting the regulatory permit process forthwith, so we can return to the well to seek to demonstrate sustainable commercial production."
The company plans to continue running the flow from 7am today at Lower Kimmeridge, and will begin testing the shallower Upper Kimmeridge limestone and Portland sandstone zones at approximately 840 and 615 metres below ground level, once complete.
The HH-1 discovery well, the original exploration drilling phase originally completed at the end of 2014, is located within onshore exploration licence PEDL137, on the northern side of the Weald Basin near Gatwick Airport.
UKOG owns a 20.16 per cent interest in PEDL137.