07 Aug 2019
Spudding of Harvey Appraisal WellIndependent Oil and Gas plc ("IOG" or the "Company"), the development and production company focused on becoming a substantial UK gas producer, is pleased to confirm that the Maersk Resilient rig spudded the Harvey appraisal well at 2230hrs BST on Tuesday 6 August 2019. As previously indicated, completion of the well is expected to take approximately two months in the success case.
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 Thames Pipeline export route. The primary objective of the 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.
On completion of the farm-out transaction announced on 26 July 2019 the Company’s designated partner, CalEnergy Resources Limited (“CER”), will have the option to acquire 50 per cent of the Harvey licences within three months of completion of the appraisal well. If this option is exercised, CER will pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER’s life-of-field net gas production from Harvey (equivalent to £61.3 million if Harvey produces IOG’s 129 BCF Best Estimate Prospective Resources). This would maintain full alignment between IOG and CER across IOG’s entire SNS Assets.
The Maersk Resilient is a modern, high-spec rig with a strong operating history and an excellent safety record. The designated well operator is Fraser Well Management, who have extensive experience in drilling successful wells in the UK Southern North Sea (“SNS”). In addition, Halliburton Manufacturing and Services Ltd have been contracted to provide offshore drilling services for the well.
Andrew Hockey, CEO of IOG, commented:
Spudding the Harvey appraisal well is an exciting development for IOG and potentially a major catalyst for the business. Our objective is to prove up a substantial, high-quality reservoir in the heart of our core asset base which would create significant shareholder value over and above our recently announced farm-out. Success at Harvey could trigger a further significant near-term cash payment plus valuable life-of-field royalties should our designated partner exercise its right to farm in. We are pleased with our choice of rig and contractors and look forward to drilling the well safely and successfully.
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, Simon Hicks (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:
Subject to completion of the farm-out transaction announced on 26 July 2019, IOG will own and operate a 50% stake in substantial low risk, high value gas reserves in the UK Southern North Sea. The Company’s Core Project targets a gross 2P peak production rate of 146 MMCF/d (c. 25,000 Boe/d) from gross 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 gross unrisked prospective gas resources of 73 BCF³ at Goddard and management estimated best estimate gross unrisked prospective gas resources of 129 BCF¹ at Harvey. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns.
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 Goddard Competent Persons Report: October 2018