Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Europa Oil & Gas convinced Hykeham reservoir is oil-bearing

Europa Oil & Gas (AIM: EOG) said it believes that the Hykeham reservoir is oil-bearing and, given the right completion conditions, the reservoir will flow. The company’s first well to test the reservoir, Hykeham-1, has been shut-in while testing data is analysed alongside previously gathered wireline log and geological data.

In March Europa confirmed that the original perforation of Hykeham-1 failed to penetrate Hykeham-1’s well casing. Subsequently, Hykeham-1 has been re-perforated and a pump installed to lift the well. To date, the well has produced only small volumes of liquid and some gas.  According to Europa, this result is completely incompatible with both the wireline log and geological data from the well.

“I have experience of many wells over several decades and never seen such a mismatch between the test data and the geological data for the reservoir, managing director Paul Barrett commented. “We believe that this reservoir is oil-bearing and will flow given the right completion conditions and will be working to achieve this over the coming months”.

Europa’s core producing assets are based in the UK with operations in three on-shore oilfields, consisting of the wholly owned Crosby Warren and West Firsby and the 65% owned Whisby-4 well, on BP’s (LSE: BP) Whisby oilfield. The company is undertaking appraisal work in Romania and is exploring in France, Poland, Ukraine, Egypt and the Western Sahara region.

Hykeham-1 was drilled on the PEDL150 license, a short distance from the Whisby Field in the UK. In December the company completed the drilling of Hykeham-1 to a final total depth of 1,110 metres in a side-tracked wellbore, having encountered encouraging oil shows from 18 metre gross thickness of Basal Sandstone reservoir.

Previously the company said that the Basal Sandstone unit is directly analogous to the producing interval in the nearby Whisby Field, which has produced 700,000 barrels of oil to date. Europa’s Whisby-4 well is located on a producing oilfield located in the East Midlands, and production is being transported to the ConocoPhillips (NYSE: COP) Immingham Refinery, on the Humber estuary.

Europa is the operator of the PEDL150 licence, and it holds a 75% working interest. Once the analysis of Hykeham-1is complete a decision will be made on the forward programme, and Europa said that if the analysis concludes that remedial action is not appropriate, the well will be abandoned.

Disclosure: The author holds no positions in the company