08 Dec 2016
Extension of the Blythe LicenceIndependent Oil and Gas plc ("IOG" or the "Company"), the development and production focused Oil and Gas Company, is pleased to announce that following discussions with the UK Oil & Gas Authority, the licence for Blocks 48/22b and 48/23a in the Southern North Sea ("SNS") containing the Blythe gas discovery (P1736) has been formally extended until 31 December 2017.
IOG owns 100% of the licence and is the operator. Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 BCF (6.1 MMBoe).
Mark Routh, CEO of IOG commented:
Blythe is at the centre of our first gas hub so this licence extension is welcomed and is absolutely essential. We are on track to submit a draft Field Development Plan for Blythe before the end of the year. We will provide further updates on our other SNS licences in due course.
About Independent Oil and Gas:
IOG is an oil and gas company with established assets in 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.
All of IOG's licences are owned 100% and operated by IOG.
Further information can be found on www.independentoilandgas.com
About the Vulcan Satellites:
The Vulcan Satellites consist of three fields, Vulcan East, Vulcan North West and Vulcan South, which hold independently estimated 2C resources of 77.4 BCF, 131.3 BCF and 112.0 BCF respectively, 320.7BCF collectively. These fields lie in Block 49/21a (Licence P039), Block 49/21d (Licence P2122), Block 48/25b (Licence P130) and Block 49/21c (Licence P1915) in the UK sector of the Southern North Sea. They lie approximately 30-45km east of IOG's 100%-owned Blythe field and are considered ready for development with no further appraisal required. IOG is progressing exclusive discussions regarding an export route for these fields and once that is in place the Company will prepare a Field Development Plan. IOG has assumed liability for decommissioning a suspended well on Vulcan East, which in April 2015 was independently estimated to cost £3.0 million as part of a development campaign, based on prevailing rig rates at that time.
The acquisition of the Vulcan Satellites is for an initial consideration of £1 million payable at Completion, subject to interim period adjustments for the period between the Effective Date and Completion, followed by £0.75 million payable nine months after Completion, £1.75 million payable within 30 days of OGA approval of a Field Development Plan on the licences, and £1.5 million payable within 30 days of the production of first gas from the licences (defined as a minimum period of seven days of continuous production). The aggregate consideration, allowing for any interim period adjustments, is therefore £5 million.
About the Blythe Hub:
The Blythe hub licences comprise Blythe, Elgood, Hambleton, Truman and Harvey.
The Blythe gas discovery in the Rotliegendes Leman formation straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736. The Blythe Leman reservoir needs no further appraisal and has independently verified 2P reserves of 34.3 BCF (6.1 MMBoe). (Source: ERC Equipoise Competent Person's Report ("CPR") dated September 2013.)
Gas tested to surface from three separate intervals in the Carboniferous beneath the Blythe Leman gas discovery from one of the Blythe discovery wells, 48/23-3 drilled by Arco in 1987. The maximum rate achieved was 0.9 MMcfd from an unstimulated vertical test. (Source: End of well report 48/23-3 - November 1987.) This was deemed uncommercial at the time, before the advent of horizontal multi-fracture stimulated wells. Further technical work including seismic reprocessing and remapping needs to be completed to evaluate this potential resource to refine the gas-in-place estimates which are between 70 BCF and 310 BCF. (Source: Tullow Oil 48/23a Relinquishment Report - May 2009.)
Oil has flowed to surface from the naturally fractured Zechstein Carbonates in the Hauptdolomit formation above the Blythe Leman gas discovery from two wells. Well 48/22-1 drilled by Burmah in 1966 flowed 39Â° API oil at rates up to 2,000 barrels per day (Source: Composite well log 48/22-1 - October 1966) and well 48/23-3 drilled by Arco in 1987 at flowed 38Â° API oil at a maximum rate of 1,128 barrels of oil a day. (Source: End of well report 48/23-3 - November 1987.) The extent of the structure and potential oil resources in the Hauptdolomit remains unknown. Previous estimates considered that the mapped closure was probably small. Oil-in-place has been estimated between 2 MMBbls and 4 MMBbls. (Source: Tullow Oil 48/23a Relinquishment Report - May 2009.) Further evaluation and re-mapping is now underway now that a development will proceed on the main Blythe gas discovery.
About Truman and Harvey:
IOG has a 100% working interest in licence P2085 awarded in the 27th licensing round to the east of Blythe containing the Truman prospect and Harvey discovery (Blocks 48/23c & 48/24b). IOG estimates potential resources in this licence of 16 BCF or 3.1 MMBoe. These 100%-owned fields have potential resources that could be tied back to nearby infrastructure being developed for the Blythe development.
About Elgood and Hambleton:
IOG has a 100% working interest in a licence awarded in the 28th licensing round to the west of Blythe containing the Elgood discovery (Block 48/22c, licence P2260). Elgood 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 and reinterpretation of existing 3D seismic across 48/22a and 48/22c is ongoing 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.
The Skipper oil discovery is in Block 9/21a in the Northern North Sea in licence P1609. IOG owns 100% of the Skipper licence P1609 and is the Operator. In July/August 2016 the Company successfully drilled its first operated appraisal well and retrieved oil samples, in order to design the optimum field development plan. Skipper has independently verified gross 2C resources of 26.2 MMBbls. Following the results from the appraisal well, IOG management's estimates of the oil in place in the Skipper reservoir are minimum/most likely/maximum 119.3/142.6/168.3 MMBbls. Recovery factor estimates will be revised during the full field reservoir simulation studies which will now commence.
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 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.