oil

I wonder if this has more to do with talking up a company and its value than some sort of new oil “goldmine” in the South East.  Energy is a hugely necessary and hugely divisive issue in rural England. The story tells us:

An oil company whose shares rose 200% after it announced a discovery of huge reserves near Gatwick airport has tried to dampen expectations by stressing that production may not even be commercially viable.

UK Oil & Gas Investments said on Wednesday that estimated volumes of 158m barrels per square mile “should not be considered as either contingent or prospective resources or reserves”.

The value of the shares fell 18% on the London Stock Exchange (LSE) at one point, although they later recovered to close 5.5% down.

Some critics had claimed from the beginning that the oil strike at Horse Hill in the Weald basin of southern England had been hyped up, and the company insisted there could be no certainty that oil could be produced. According to estimates which emerged last Thursday, up to 100bn barrels of oil had been discovered.

It said in a statement to the LSE: “Further development work in the form of appraisal drilling, well testing and assessment of recovery factors will be required to seek to quantify net resources in relation to the company’s licence areas and to prove its commerciality.”

The tone of the statement was significantly different from management comments last week that “we’ve found a very significant discovery here, probably the largest [onshore in the UK] in the last 30 years, and we think it has national significance”.

The British Geological Survey estimated last year that there are 4.4bn barrels of shale oil in the wider Weald basin but warned it was not known how much could be commercially extracted.