U.S. Oil & Gas plc - Operations Update

U.S. Oil & Gas plc - Operations Update

PR Newswire

London, October 23

October 23, 2020

U.S. Oil & Gas Plc.
("US Oil" or the "Company")

Operations Update

U.S. Oil & Gas Plc, ("USOIL" or the "Company"), the oil and gas exploration company with assets in Nevada, is pleased to update shareholders on progress towards the Eblana-9 drill.

Environmental Assessment (EA)
The Bureau of Land Management (BLM) has intimated that the period for public comment on the draft Eblana-9 Environmental Assessment will end on Friday October 30, 2020. Any issues raised by the public will then be notified to the Company and addressed by the BLM. The Company expects this process to proceed efficiently, allowing the permitting process for Eblana-9 to move to completion.

Immediately on award of a Permit to Drill, the Company will finalise contracts with the rig supplier and other services, and will fix a date for drilling. A drill in Q4 of this year remains a reasonable expectation.

Eblana-9 objectives
In placing the Eblana-9 well, the company drew on geological expertise familiar with the analogous formations in the adjacent, producing Railroad Valley. In addition, a specialist reservoir engineer and a well test engineer have worked closely with the exploration team to devise an efficient and comprehensive test programme for the well. The purpose is to determine the likelihood of commerciality, the viability of moving on to long-term production testing, and the assessment of potential Reserves. Data collection protocols have been agreed with an independent Competent Person reporting consultancy to ensure that all the data required for preliminary resource estimates will be available.

The Eblana-9 well
The well will be drilled at Lat: 38.444230735N, Long: 116.266997197W. Target depth is 5,300 ft. Drilling is expected to take 4-6 days and will be followed by Drill Stem Testing (DST) of 4-6 days. If the DST indicates oil in economic volumes is possible, production casing (4.5") will be run and cemented. The well is planned as a straight hole with no deviation.

Reservoir characteristics
The Eblana-9 well location is a structural/stratigraphic play updip and east of the company's previously drilled wells, Eblana-1 and Eblana-3. Both wells produced significant, though non-commercial, quantities of highly mature, light crude oil.

The volcanic rock types likely to be encountered in drilling Eblana-9 are Trachyte, Rhyolite and Basalt as well as Welded Tuff and Ignimbrite. These rocks can form viable hydrocarbon reservoirs with acceptable porosity and permeability and can also form the necessary seals. Permeability (MD) is expected in the range 65-75, with porosity of 19.5-22.5%. API is expected in the range 28-33.

Three potential producer zones are of interest: Zone 1 with top at 4,420 ft. and 200 ft. thickness; Zone 2 at 4920 ft. with 90-120 ft. thickness; and Zone 3 with top at 5140 ft. and 30-60 ft. thickness.

Drilling
A conductor will be drilled to 120 ft., and pipe will then be run to that depth. The surface hole section to 8.5" will start at 120 ft. and run to a depth of 2,550 ft. The production hole section will be 6.125" hole size and run from 2,550 to 5,300 ft. From 3,500 ft., cutting samples will be taken every 30-40 ft. until chromatography shows high gas, when cuttings will be taken every 10-20 ft. Drilling will continue until the bottom of the third reservoir. Upon reaching TD, Open Hole logs will be run to aid in evaluation of the formation.

Testing
The purpose of the Drill Stem Test (DST) is to determine if the well is likely to produce at commercial rates. In addition, DST will also collect representative fluid samples for analysis, obtain steady state flows and collect flowing and shut-in bottom-hole pressure buildup data to aid in determining formation permeability and productivity. For each of the three zones of interest, 16 hrs. will be allocated for flow and 8 hrs. for shut-in. Swabbing will be carried out if required to initiate flow. The Surface Well Test contractor will provide a documented test report with flow rates, fluid cuts, surface pressures, and operations logging.

If one or more of the expected intervals show good indications of production potential, a one to two-day flow test will follow.

It is important to note that the purpose of testing at this stage is not to maximise flow but to determine the likelihood of commerciality and the viability of long term production testing. Maximising flow will be a subsequent exercise and may involve artificial lift or other measures.

Completion
Depending on DST results and open hole logging program, the decision may be taken to complete the well. In that case, 4.5" production casing will be run and a perforation programme carried out. Long term production testing would then follow in due course to ascertain likely recovery factors and other parameters. Operational planning for production testing is currently underway.

Brian McDonnell, US Oil CEO, said:
"While awaiting the award of the permit to drill Eblana-9, the Company has finalised its drilling and well test programme. Operations have been carefully planned for maximum efficiency and, above all, to produce the high quality, independently managed data we need to make the right decisions about the potential of the well and the next steps to take. As always, the drill bit will decide, but we believe we are fully justified in having high hopes for a commercial well. If that should happen, we are positioned to move rapidly ahead with production testing and further field development."

FORWARD-LOOKING STATEMENTS
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 [phone]

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.usoilandgas.us

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