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Additional Loan funding and convening of General Meeting

Independent Oil and Gas plc ("IOG" or the "Company"), (AIM: IOG.L), the North Sea focused oil and gas company, is pleased to provide the following update.
Loan Agreement
The Company and its wholly owned subsidiary IOG North Sea Limited ("IOG North Sea") have agreed terms for a new loan with London Oil & Gas Limited ("LOG"), part of London Group Limited, for an aggregate amount of up to £800,000 (the "Additional Loan"). This Loan will provide additional funds to be invested in the Company's gas assets in the Southern North Sea, allow for additional contingency for the upcoming Skipper appraisal well, and provide for general corporate needs.
The interest rate and repayment terms of the Additional Loan have been agreed as per the loan from LOG previously announced on 7 December.  Interest of 9% per annum is payable on the amounts drawn by IOG North Sea and both the principal and interest are repayable by 30 December 2016, subject to completion of the loan and related security documentation.

IOG and IOG North Sea anticipate granting LOG a fixed and floating charge over the Company and the assets of IOG North Sea as security for repayment of the Additional Loan.  IOG has also agreed to grant warrants to subscribe for up to 7,500,000 ordinary shares in the capital of the Company ("Ordinary Shares") at a price of 8p per Ordinary Share which may be exercised at LOG's discretion at any time up to 30 December 2016 ("Additional LOG Warrants").

Completion of the Additional Loan and related security documentation is subject to approval from the company's existing lenders.  Drawdown of the Additional Loan is anticipated to be subject to the satisfaction or waiver of certain conditions precedent including the Oil and Gas Authority ("OGA") approving IOG North Sea as licence operator and completion of the Skipper rig contract.

In aggregate, the Company has therefore entered into loan agreements with GE Oil & Gas and LOG (the "Loan Agreements") to provide loans of up to £4.75m and has agreed terms with LOG for the Additional Loan of a further £0.8m.

As previously notified, pursuant to the Loan Agreements, IOG has agreed to grant warrants to each of the Lenders to subscribe respectively for up to 5,777,310 Ordinary Shares at a price of 11.9p per Ordinary Share.  The aggregate number of warrants to be issued, subject to completion of the Additional Loan and related security documentation is 19,054,620.
Salary Sacrifice Arrangements
Since the Company's listing on the AIM market, the Directors and certain members of the Company's management have agreed to sacrifice some or all of the salary or fees payable to them by the Company in return for the Company granting to the relevant person options to acquire Ordinary Shares at a price per share equal to the nominal value of the Ordinary Shares.  The number of Ordinary Shares subject to the relevant option grant is calculated by dividing the aggregate amount of the sacrificed salary or fees by the volume weighted average price (VWAP) of the Ordinary Shares on AIM for the preceding six month period. 

As at 31 August 2015, the aggregate amount of the sacrificed salary and fees for the prior six month period was £173,697.  The VWAP from 1 March to 31 August 2015 was £0.1133 and accordingly, subject to the passing of the Resolutions, the Directors and members of the management team will be granted options to subscribe for 1,531,778 Ordinary Shares at 1p per share. 

The salary sacrifice arrangements will remain in force until the earlier of: (a) the date on which the Company completes a fundraising pursuant to which gross funds of not less than £10 million are received by the Company; and (b) 31 December 2016.
General Meeting
The company is today posting a circular to shareholders convening a general meeting to be held at 10:00am on 29 December 2015 at the offices of Shakespeare Martineau LLP, One America Square, Crosswall, London EC3N 2SG ("General Meeting").  At the General Meeting, shareholders will be asked to approve the grant of the Additional LOG Warrants together with the grant of warrants and issue of shares to lenders and contractors to the company, details of which were set out in the announcements of 7 and 10 December 2015.

Mark Routh, CEO of IOG, commented: 

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About Independent Oil and Gas:
IOG is an oil and gas company with established assets focused on the UK North Sea.  The company's strategy is to deliver near term development and production assets in North West Europe, through its extensive technical and commercial expertise, whilst maintaining some exposure to exploration upside.  The company is looking to grow both organically and through acquisition.  After the completion of the Skipper acquisition from Alpha Petroleum Resources Ltd. ("Alpha"), the combined estimate of 2P reserves in Blythe and 2C resources in Skipper net to IOG will be 37.1 million barrels of oil equivalent ("MMBoe").
Post completion of the Cronx acquisition IOG will have five licences in the North Sea.  Four of these licences will now be owned 100% by IOG and subject to DECC/OGA approval will be operated by IOG.  The Blythe licence is co-owned 50% with Alpha which is the operator.  IOG has a 100% working interest in two other licences, one awarded in the 27th licensing round and another in the recent 28th licensing round.  One is to the east of Blythe containing the Truman prospect and Harvey discovery and the other is between the Blythe and Cronx licences which contains the Elgood and Hambleton discoveries and the Tetley and Rebellion prospects.  Both these 100% owned licences have potential resources that could be tied back to nearby infrastructure or to the Blythe development.

Further information can be found on
About Blythe:
The Blythe gas discovery straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736 which is 50% co-owned by IOG and Alpha (operator).  Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 BCF (6.1 MMBoe) which is 17.2 BCF (3.0 MMBoe) net to IOG.  (Source: ERC Equipoise Competent Person's Report ("CPR") dated September 2013.)

The partnership is working towards submitting a Field Development Plan for Blythe by the end of 2015.

About Skipper:
The Skipper oil discovery is in Block 9/21a in the Northern North Sea in licence P1609.  Skipper needs further appraisal by drilling a well to retrieve an oil sample in order to design the optimum field development plan.  Subject to the completion of the previously announced acquisition of Skipper from Alpha, IOG can now progress to the appraisal and development stage of this asset.  Skipper has independently verified gross 2C resources of 26.2 MMBbls.  IOG management estimates that the recoverable oil from Skipper is 34.1 MMBbls based on a recovery factor of 25%, compared to the historic CPR estimate of 19%.  Successful flow tests from nearby heavy oil fields substantiate the company's estimate of a 25% recovery factor. The appraisal well will also target two exploration prospects directly beneath the Skipper oil discovery which may contain oil in place of 46 MMBbls.  (Source: AGR Tracs CPR dated September 2013.)
About Cronx:
IOG has agreed to acquire 100% of Cronx (Block 48/22a, licence P1737) which is subject to completion.  The Cronx gas discovery is 14km north-west of the Blythe field in which IOG owns 50%.  Cronx was discovered in 2007 by well 48/22b-6 drilled by Perenco UK Ltd.

IOG commissioned an independent CPR by ERC Equipoise on Cronx in July 2012 which shows a base case expected gas recovery of 17.6 BCF or 3.4 MMBOE 2C resource.  IOG anticipates drilling a well in 2016, subject to rig availability, the necessary permits and funding.  IOG expects the well to confirm the recoverable resources, which IOG believes has the potential to be larger than the 17.6 BCF base case in the CPR.  IOG is currently evaluating options for the development and export of the Cronx gas.

About Elgood and Hambleton:
The Elgood discovery (IOG 100%) (Block 48/22c, licence P2260) was drilled by Enterprise Oil in 1991 and tested gas to surface at 17.6 MMcfd but was not progressed by Enterprise due to size and gas prices at that time.  IOG's estimate of the recoverable reserves in Elgood is 2.1 MMBoe.

The Hambleton discovery, to the south of the same licence, was drilled by Century Exploration in 2005 but also was not progressed to development.  IOG estimates that Hambleton has recoverable resources of 6 BCF (1 MMBoe).  IOG believes that the reprocessing of existing 3D seismic data could increase recoverable resources up to 26 BCF.

There are prospective resources on licence P2260 of 5.3 MMBoe in the Tetley and Rebellion prospects.  Reprocessing of existing 3D seismic across 48/22a and 48/22c is required to determine whether Elgood connects to Cronx which would boost recoverable reserves significantly.  The new seismic interpretation will also determine the likely size of Hambleton.  IOG is now working on the potential development plans and will commission a CPR"Ž to confirm the resources over this area.

Competent Person's Statement:
In accordance with the AIM Note for Mining and Oil and Gas Companies, IOG discloses that Mark Routh, IOG's CEO and Interim Executive Chairman is the qualified person that has reviewed the technical information contained in this announcement.  Mark Routh has an MSc in Petroleum Engineering and has been a member of the Society of Petroleum Engineers since 1985.  He has over 35 years' operating experience in the upstream oil and gas industry.  Mark Routh consents to the inclusion of the information in the form and context in which it appears.