26 Sep 2014
MOU with Ping Petroleum regarding Joint Acquisition of Producing Assets
Independent Oil and Gas plc ("IOG"), (AIM:IOG.L), the North Sea focused Oil and Gas Company, is pleased to announce that it has signed a Memorandum of Understanding with Ping Petroleum (Bermuda) Limited ("Ping") to jointly evaluate and bid for producing assets in the UK Continental Shelf. Ping is a private independent exploration and production company based in SE Asia.
A key element of IOG's strategy is to acquire producing assets either as an operator or non-operator. The Ping senior management team are well known to IOG from their time at Newfield Exploration and the Companies have shared aims with regards to acquiring such assets. IOG and Ping have already evaluated several such properties and the MOU sets out the basis for ongoing collaboration. IOG's team has great experience of maximising revenues from mature producing assets and Ping has complementary experience from the Gulf of Mexico and South East Asia.
IOG has plans to drill wells on both its Cronx and Skipper assets next summer, subject to funding. The costs of these wells would generate significant capital allowances that could be offset against production revenues from acquired assets. IOG has already commenced work in conjunction with Ping to assess a number of potential acquisition opportunities. Such acquisitions should significantly reduce the amount of additional funding required. One joint bid already made by IOG and Ping had backing by a large institution to debt fund IOG's share and if successful may not require any additional equity funding.
Mark Routh, CEO of IOG said:
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.
Post completion of the Cronx acquisition IOG will have five licences in the North Sea: The Blythe and Skipper licences are co-owned 50% with Alpha Petroleum Resources (formerly ATP Oil and Gas UK Ltd). IOG has a 100% working interest in two other licences awarded in the 27th licensing round. One is to the west of and adjacent to Skipper, which contains the Theakston and Moorhouse prospects and the other is to the east of Blythe containing the Truman prospect and Harvey discovery. Both these 100% owned licences have potential resources that could be tied back to developments at Skipper and Blythe respectively. The Blythe owners are preparing for the submission of the Blythe Field Development Plan.
Further information can be found on www.independentoilandgas.com.
About Ping Petroleum:
Ping Petroleum has end to end upstream expertise and local relationships to identify opportunities and create value throughout the entire E&P lifecycle. Ping has the advantage of being agile to meet the needs of existing asset holders and monetize resources in a quick and effective fashion. Ping offers the following capabilities:
- Technical evaluation & expertise from seasoned oil finders with good track record of oil discoveries
- International commercial expertise to execute large scale mergers & acquisitions and unlocking value from multi party agreements
- Creative development concepts and efficient project delivery to exploit and rejuvenate assets
- Local know-how and relationships with host government, International Oil Companies (IOCs) and industry players in majority of SE Asia countries
Further information can be found on www.pingpetroleum.com.
The Cronx acquisition (IOG 100%) is subject to completion. The Cronx gas discovery is 14km north-west of the Blythe field in which IOG holds 50%. Cronx was discovered in 2007 by well 48/22b-6 drilled by Perenco UK Ltd.
IOG commissioned an independent Competent Persons Report (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 pilot well in 2015, subject to rig availability, the necessary permits and funding, which IOG currently estimates to be £6.25m. 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. The well would be reused and extended into a producing well as part of the field development. IOG is currently evaluating options for the development and export of the Cronx gas.
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 Petroleum Resources Ltd (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 Persons Report dated September 2013.)
The partnership is working towards submitting a Field Development Plan for Blythe as soon as possible. IOG is targeting first gas from the Blythe field in mid-2016 but the final development schedule has yet to be formalised.
The Skipper oil discovery is in Blocks 9/21a in the Northern North Sea in licence P1609 which is 50% co-owned by IOG and Alpha Petroleum Resources Ltd (operator). 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. Skipper has independently verified gross 2C resources of 26.2 MMBbls which is 13.1 MMBbls net to IOG. 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 Competent Person's Report dated September 2013.)