02 Jul 2019
Corporate UpdateIndependent Oil and Gas plc ("IOG" or the "Company"), the development and production company focused on becoming a substantial UK gas producer, is pleased to provide an update on the Harvey appraisal well and other key corporate activities.
Harvey Appraisal Well Update
The Company’s preparations to drill the Harvey appraisal well with the Maersk Resilient jack-up rig are now well advanced. The Maersk Resilient is a modern, high-spec rig with a strong operating history and an excellent safety record. It is currently on contract with another operator, drilling a well in the Central UK North Sea which is expected to conclude in late July. Allowing for mobilisation to the Southern North Sea, IOG therefore currently expects the Maersk Resilient to be on location at Harvey by the end of July. In the success case, the well is forecast to take up to two months.
In the meantime, IOG and its designated Well Operator, Fraser Well Management, are completing final procurement, regulatory and other preparatory processes ahead of the well, all of which are proceeding on schedule.
Harvey is centrally located within IOG’s asset portfolio in UK Southern North Sea Blocks 48/23c, 48/24a, and 48/24b, close to the IOG owned and proven 550 MMcfd capacity Thames Pipeline. The primary objective of the Harvey appraisal well is to confirm gas volumes which management estimate at 85/129/199 BCF Prospective Resources in the Low/Best/High case, with a 63% Geological Chance of Success¹ and secondly to demonstrate reservoir deliverability. If successfully appraised, the additional scale and synergies of a Harvey development could substantially enhance the portfolio’s overall value and returns. A detailed presentation about the Harvey opportunity can be found on the IOG website.
Farm-Out Process Update
IOG has continued to work intensively on the farm-out process for its Core Project, which comprises 410 BCF²,³ of 2P+2C reserves and resources across six discovered Southern North Sea (SNS) gas fields. This process has progressed substantially and the Company aims to be in a position to release further updates during July. The farm-out is intended to provide a significant amount of development funding and represent a major milestone towards Final Investment Decision (FID) on Phase 1 of the Core Project, which is planned at the earliest feasible time.
Thames Reception Facilities Acquisition Update
In addition, IOG remains in advanced exclusive discussions to acquire the Thames Reception Facilities at the Bacton Gas Terminal from its joint owners, the Thames Partners. As previously indicated, the process of agreeing the required documentation has highlighted certain legal complexities relating to land title which have required co-ordinated input from several parties. IOG has been working constructively with the Thames partners in a dedicated process and expects to resolve these outstanding issues and sign the agreement at the earliest feasible time.
Andrew Hockey, CEO of IOG, commented:
We are pleased to confirm that we are on schedule to drill our exciting appraisal well at Harvey. The well is a major catalyst for IOG, potentially proving up a substantial, high-quality reservoir in the heart of our core area, close to our fully-owned Thames Pipeline. Final preparations are underway and the summer drilling slot should help to minimise weather-related operational risks in executing the well.
Needless to say, our primary focus remains to progress the funding of our Core Project to FID and in particular the farm-out process. We are highly motivated to deliver a farm-out transaction that can enable us to progress to FID this summer.
We look forward to updating our shareholders on progress on these key milestones for the Company.
Independent Oil and Gas plc +44 (0) 20 3879 0510
Andrew Hockey (CEO)
James Chance (CFO)
Rupert Newall (Head of Corporate Finance)
finnCap Ltd +44 (0) 20 7220 0500
Christopher Raggett, Anthony Adams (Corporate Finance)
Camille Gochez (Corporate Broking)
Peel Hunt LLP +44 (0) 20 7418 8900
Vigo Communications +44 (0) 20 7390 0230
About Independent Oil and Gas:
IOG owns substantial low risk, high value gas reserves in the UK Southern North Sea. The Company is targeting a 2P peak production rate of 146 MMCF/d (c. 25,000 Boe/d) from its substantial Core Project (2P gas Reserves of 302 BCF² + 2C gas Contingent Resources of 108 BCF³) via an efficient hub strategy. In addition to the independently verified 2P reserves at Blythe, Elgood, Southwark, Nailsworth and Elland and 2C Contingent Resources at Goddard, IOG also has independently verified best estimate unrisked prospective gas resources of 202 BCF¹,³ in Harvey and Goddard. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns. All IOG's licences and the Thames Pipeline are owned 100% and operated by IOG.
Competent Person’s Statement
In accordance with the AIM Note for Mining and Oil and Gas Companies, IOG discloses that Andrew Hockey, IOG’s CEO, is the qualified person that has reviewed the technical information contained in this document. Andrew Hockey has an MSc in Petroleum Geology and has been a member of the Petroleum Exploration Society of Great Britain since 1983. He has over 35 years’ operating experience in the upstream oil and gas industry. Andrew Hockey consents to the inclusion of the information in the form and context in which it appears.
¹Updated management estimates based on interpretation and mapping of 3D seismic data reprocessed to Pre-Stack Depth Migration (PSDM) in 2018, subsequent to ERC Equipoise's 2017 Competent Persons Report
²ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression
³ERC Equipoise Competent Persons Report: October 2018
Certain information communicated in this announcement was, prior to its publication, inside information for the purposes of Article 7 of Regulation 596/2014.