Independent Oil & Gas PLC Harvey Licence Valuation Update (1179W)
10 November 2017 - 6:00PM
UK Regulatory
TIDMIOG
RNS Number : 1179W
Independent Oil & Gas PLC
10 November 2017
10 November 2017
Independent Oil and Gas plc
Harvey Licence Valuation Update
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to announce the recent Competent Persons Report ("CPR") by ERC
Equipoise Limited ("ERCE"), has been updated to include a fully
risked, expected monetary value ("EMV") for the Harvey licence.
Highlights
-- Fully risked EMV for the 100%-owned Harvey licence of GBP79 million.
-- Best estimate gross unrisked post-tax NPV10 of GBP159 million
for the overall Harvey structure and GBP126 million for the
licence.
-- The EMV has been calculated on the mean of the Low/Best/High
estimates of the prospective resources following the derivation of
Harvey production profiles. Low/Best/High estimates of unrisked
prospective gas resources are 45/114/286 BCF on the Harvey
structure, 36/90/226 BCF on licence.
-- Firm commitment made to drill the Harvey well within 2 years,
subject to acceptance and a licence extension by the OGA. Well
scheduling under consideration.
EMV is an economic metric used to evaluate investment
opportunities and ensure that project economics justify both
initial and overall expenditure. The CPR author estimates dry hole
costs of the planned Harvey well at GBP8.5 million, versus a
licence EMV of GBP79 million. IOG therefore sees a compelling case
for drilling Harvey and is actively considering the timing. In the
CPR success case, the EMV assumes an appraisal well in H1 2018,
Final Investment Decision in H1 2019 and first gas in Q1 2021. The
calculation is on a standalone post-tax basis without accounting
for IOG's existing tax loss position. The EMV is based on
equivalent economic assumptions to the recent Blythe hub and Vulcan
Satellites hub CPR. The executive summaries of both CPRs are
available on the IOG website: -
http://www.independentoilandgas.com
The unrisked NPV10 post tax values and prospective resources are
as follows: -
Harvey Gross (on structure) Net (on licence)
--------------- ------------------------ ----------------------------
Prospective Prospective
NPV10 Resources NPV10 Resources
(BCF) (BCF)
--------------- ---------- ------------ -------------- ------------
GBP24
Low estimate million 45 GBP19 million 36
--------------- ---------- ------------ -------------- ------------
GBP159 GBP126
Best estimate million 114 million 90
--------------- ---------- ------------ -------------- ------------
GBP462 GBP365
High estimate million 286 million 226
--------------- ---------- ------------ -------------- ------------
The Geological Chance of Success of 50% has been applied to the
mean of these values to calculate the EMV.
As advised previously the Competent Person estimates that
approximately 21% of the Harvey structure is not on IOG's licence.
Plans are underway to licence all the Harvey resources.
Mark Routh, CEO and Interim Chairman of IOG commented: -
"We are delighted with the result of the CPR and the EMV of the
Harvey structure on our licence being determined at GBP79 million.
This clearly validates our commitment to drill the well on what has
the potential to become our largest gas asset. The value of Harvey
is strengthened by the synergies with our Southern North Sea gas
development hubs, notably shared use of a fully owned Thames
Pipeline gas export route. Alongside these two hubs, the Harvey
appraisal opportunity therefore represents very material upside to
IOG even on the mid case volumes. We are therefore actively
considering how soon we can drill the well. We look forward to
updating all stakeholders in due course."
-ENDS-
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Enquiries:
Independent Oil and Gas plc
Mark Routh (CEO) +44 (0) 20 3879
James Chance (CFO) 0510
finnCap Ltd
Christopher Raggett / Anthony
Adams +44 (0) 20 7220
(Corporate Finance) 0500
Camarco +44 (0) 20 3757
Georgia Edmonds / Tom Huddart 4980
Notes
About Independent Oil and Gas:
IOG owns substantial low risk, high value gas Reserves in the UK
Southern North Sea. The Company is targeting a 2P peak production
rate in excess of 200 MMcfd (c. 35,000 Boe/d) from its substantial
current portfolio via an efficient hub strategy. Alongside this it
continues to pursue value accretive acquisitions, to generate
significant shareholder returns. All of IOG's licences are owned
100% and operated by IOG.
About ERC Equipoise Limited:
ERCE is an independent consultancy specialising in geoscience
evaluation and engineering and economics assessment. Except for the
provision of professional services on a time-based fee basis, ERCE
has no commercial arrangement with any other person or company
involved in the interests which are the subject of this report.
ERCE has the relevant and appropriate qualifications, experience
and technical knowledge to appraise the assets professionally and
independently. ERCE considers that the scope of the CPR is
appropriate and includes and discloses all information required to
be included therein and was prepared to a standard expected in
accordance with the AIM Rules.
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 document. 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.
Further information can be found on
www.independentoilandgas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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