14 Jul 2016
Skipper Update and Issue of New SharesIndependent Oil and Gas plc ("IOG" or the "Company"), the development and production focused Oil and Gas Company, is pleased to provide an update on the drilling of the appraisal well on the Skipper oil discovery which lies in Block 9/21a in licence P1609 in the Northern North Sea.
- Drilling of the appraisal well on the Skipper licence, of which IOG is 100% owner and operator, is anticipated to commence on 22 July 2016 and will be drilled by Transocean's Sedco 704 semi-submersible which is expected to come on contract on or around 20 July 2016.
- The well is expected to take 22 days to drill, with initial results mid-August.
- Skipper will be drilled to 5,600ft with the primary objective of retrieving good quality reservoir condition oil samples in order to optimise the Skipper field development plan and to drill two mapped reservoir structures beneath the Skipper oil field in the Lower Dornoch and Maureen formations.
- Directors believe an approved field development plan on Skipper would convert the Board's estimated 34.1 MMBbls of contingent resources into 2P reserves.
- The balance of the advance payment due to Transocean, the rig owner, and also the expected non deferred contribution to demobilisation of the rig has been settled via the issuance of 6,350,000 ordinary shares at 15.375p.
- 75,000 ordinary shares at 1p have been issued to another contractor following its notice to exercise 75,000 options relating to services prior to the Company's admission to AIM.
"We continue to make good progress towards the drilling of the Skipper appraisal well, which has received tremendous support from the North Sea community. We believe this well will be transformational for the Company and look forward to its imminent spudding."
Skipper Appraisal Well
Drilling of the Skipper appraisal well, of which IOG is 100% owner and operator, is anticipated to commence on 22 July 2016 and will be drilled by Transocean's Sedco 704 semi-submersible, which is expected to come on contract on or around 20 July 2016.
Skipper lies in Block 9/21a in licence P1609 in the Northern North Sea and IOG is the 100% owner and the appraisal well is expected to take approximately 22 days to drill. The vertical well will be drilled to 5,600ft with the primary objective of retrieving good quality reservoir condition oil samples in order to optimise the Skipper field development plan. The well will also drill two mapped reservoir structures beneath the Skipper oil field in the Lower Dornoch and Maureen formations. The directors of the Company believe an approved field development plan on Skipper would convert the Board's estimated 34.1 MMBbls of contingent resources, based on a 25% recovery factor, into 2P reserves.
Initial results from the well are expected mid-August.
Contracting and Financing Arrangements
As announced on 7th June 2016, part of the advance payment of $1,728,000 to the rig owner Transocean was satisfied by the issue of 2.7 million ordinary shares in the capital of the Company ("Ordinary Shares") at 18.375p.
The Company has elected to issue a further 6,350,000 Ordinary Shares (the "TransOcean Shares") at 15.375p per IOG Share to Transocean, to satisfy the balance of the required advance payment and estimated costs associated with the rig's demobilization.
Furthermore, 75,000 Ordinary Shares (the "Option Shares") have been issued at a price of 1p per Option Share to another contractor pursuant to the exercise of options granted in consideration for services provided prior to admission of the Company's Ordinary Shares to trading on AIM in 2013.
The Company has applied to the London Stock Exchange for admission of the TransOcean Shares and Option Shares to trading on AIM ("Admission"). Admission is expected to occur on 19 July 2016. Following Admission there will be 101,546,680 Ordinary Shares in issue. Accordingly, this number may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure and Transparency Rules.
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. Following the Blythe acquisition, the Company's combined estimate of 2P reserves in Blythe and 2C resources in Skipper net to IOG will be 40.2 MMBoe.
Upon completion of the Blythe and Cronx acquisitions IOG will have five licences in the North Sea. All of these licences will now be owned 100% by IOG and subject to OGA approval will be operated by IOG. 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 (IOG estimate 16 BCF or 3.1 MMBoe) 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
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. Skipper needs further appraisal by drilling a well to retrieve an oil sample in order to design the optimum field development plan. 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.)
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.