SVS Securities highlights U.S. Oil and Gas as early-stage play in 'potentially prolific' region of US

In a note on U.S. Oil and Gas Plc (PLUS:USOP), London-based stockbroker SVS Securities said it is awaiting an announcement of a well drilling programme, targeting the Sevier Thrust - which the company  describes as “one of the most potentially prolific oil regions in the US”. SVS also noted that U.S. Oil is currently focused on its funding requirements.

U.S. Oil, through its wholly-owned subsidiary Major Oil, has a 21km2 lease acreage in Hot Creek Valley, Nye County, in Nevada, targeting the Sevier Thrust geological feature. The company listed on the PLUS Market on the 14th January.

SVS highlighted the key benefits of the onshore US oil and gas play, including the exisiting infrastructure surrounding Hot Creek Valley, the company’s established relationships in the area and the Sevier Thrust acreage.
The broker noted that the presence of volcanic rock, at Hot Creek, meant that conventional 2D and 3D seismic technology was unable to clearly identify oil bearing forms, and by utilising passive seismic surveying, and computer modelling to detect hydrocarbon reservoirs in structural and non-structural traps, the company believes it will be able to develop its resource opportunities.

U.S Oil is progressing a three-stage strategic plan: With Stage 1 utilising passive seismic, geophysical and geochemical studies and well log analysis; Indentifying strategic partners to jointly develop its target assets and facilitate a well drilling campaign in Stage 2; And in Stage 3, increase the resource base with further studies and exploitation of additional claim areas

To date, the company has carried out well log analysis, gravity magnetic surveying, geophysical and geochemical surveys and an IPDS seismic survey – the 1st time the technology has been used in Nevada.

“The passive seismic survey results, from an area of its Nevada lease showed three high potential well-drilling targets with the IPDS producing ‘very high DHI (Direct Hydrocarbons Indicator) readings, indicating a significant accumulation of hydrocarbons,”,SVS noted.

The stockbroker also highlighted that the data from the IPDS survey is being integrated with the other data sources, to validate the target hydrocarbon trap, in terms of its spatial consistency relative to size, its shape and condition.