Latest news

 

Corporate Update 28 August 2015

Independent Oil and Gas plc ("IOG" or the "Company"), (AIM: IOG.L), the North Sea focused oil and gas company, provides an update on its drilling plans on the Skipper licence and a funding update.
 
Highlights:
  • The Company is pursuing a contractor led funding approach to drill the Skipper commitment appraisal well in late 2015 and continues to explore alternative funding arrangements
  • Skipper licence extended to 31st December 2015
  • Sale and Purchase agreement to acquire 50% of the licence from Alpha extended to 7th October 2015.
  • Blythe licence extended to 31st December 2016
  • Repayment of Darwin loan extended to 4th October 2015 
IOG is pursuing a contractor led funding approach to drill the Skipper commitment well, which is a strategic priority. The aim of the well is to retrieve core and oil samples in order to design the optimum field development plan.  Skipper has independently verified gross 2C resources of 26.2 MMBbls.  The appraisal well will also target two exploration prospects directly beneath the Skipper oil discovery which the Competent Person estimates may contain additional oil in place of 46 MMBbls.
 
IOG has received a rig proposal that includes a partial deferment of the costs and could allow the well to be drilled later this year, subject to full funding of the rig contract and the well permitting process. IOG continues to explore alternative funding arrangements and is in discussions with several contractors regarding the provision of well services and equipment on a full cost deferral basis and also with several parties regarding potential loan finance to bridge any funding gap relating to the Skipper commitment well.
 
IOG has presented the rig proposal and the progress with certain contractor discussions to the Oil and Gas Authority ("OGA") and it has agreed to extend the licence by three months to 31st December 2015. IOG aims to drill the Skipper well as 100% owner, which requires completion of the Sale and Purchase agreement to acquire 50% of the licence from Alpha Petroleum Ltd ("Alpha"). Alpha has agreed to extend the deadline for completion of the acquisition by one month to 7th October 2015.
 
Alpha and IOG also recently presented an update on the Blythe development plans to the OGA and a 15 month licence extension to 31st December 2016 has now been agreed. Alpha and IOG have agreed with the OGA that a draft Field Development Plan will be submitted by 31st December 2015.
 
Darwin Strategic ("Darwin") has agreed to defer the repayment of its loan to IOG by one month to 4th October 2015 when £358,000 will be payable. No additional fees or interest have been charged. If the loan is not repaid by this date Darwin will have the right to convert any outstanding balance into equity at 85% of the three lowest average daily prices in the preceding 10 days. IOG is now funded until early October 2015.

Mark Routh, CEO of IOG commented:

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") and the previously announced Cronx acquisition, the combined estimate of 2P reserves and 2C resources net to IOG will be 38.6 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 www.independentoilandgas.com
 
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 September 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 core and oil samples in order to design the optimum field development plan for the field.  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.  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.