TIDMIOG
RNS Number : 7457A
Independent Oil & Gas PLC
14 September 2018
14 September 2018
Independent Oil and Gas plc
Completion of Harvey Funding, Seismic Reinterpretation Results
and Harvey Appraisal Well Preparation
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to confirm that the funding of its 100% owned and operated Harvey
appraisal well has now closed, with terms as announced on 17 August
2018. The Company is also pleased to provide an update on the
results of the Pre-Stack Depth Migration ("PSDM") seismic
reinterpretation work as well as preparations for spudding the
well.
Highlights
-- GBP15 million non-convertible loan facility (the "Harvey
Facility") now closed with London Oil and Gas Limited ("LOG"), on
terms as previously announced:
o Proceeds to fund Harvey appraisal well and other corporate and
project costs, including full repayment of final remaining Skipper
liabilities.
o Five-year maturity and interest rate of LIBOR+9% per
annum;
o 20,000,000 warrants issued, exercisable at 32.18p, a 10%
premium to the closing price of IOG shares on 16 August 2018.
-- The Harvey appraisal well aims to prove gas across the entire
structure and is expected to spud in January 2019. New PSDM seismic
reinterpretation work has yielded the following management
estimates:
o Geological Chance of Success: 63% (November 2017 CPR: 50%)
o Low/Mid/High resources: 85/129/199 BCF (CPR: 44/114/286
BCF)
o Unrisked mid-case NPV(10): GBP232 million (CPR: GBP159
million)
-- This analysis has also informed the optimal location for the
appraisal well. Further ongoing PSDM work is focused on the Redwell
discovery and Woodforde and Norada prospects, all of which lie in
the Harvey licence area.
-- IOG has contracted Fraser Well Management to manage and
operate the Harvey appraisal well. Both the rig and offshore
service provider have been provisionally agreed and expected to be
confirmed shortly.
-- IOG's nearby 100%-owned Thames pipeline would be the main gas
export route for the Harvey development.
Andrew Hockey, CEO of IOG commented:
"A successful Harvey appraisal well would be a game changer for
IOG, providing a major increase to our existing 303 BCF 2P proven
gas reserves in the Southern North Sea. Our new seismic
reinterpretation work has given us more definition of the structure
and more confidence in the resource range, well location, and most
importantly the geological chance of success, which is now up to
63%.
Crucially, we now estimate even the low case to be 85 BCF, which
would make a very attractive development at nearly double the
November 2017 CPR's 44 BCF low case. Our 129 BCF mid-case
management estimate is also an improvement on the CPR's 114 BCF
mid-case and, if successfully appraised, we see potential for a
streamlined development, benefitting from very strong synergies
with our other assets. This results in a GBP232m NPV, nearly 50%
more than the CPR number, transforming the company's overall
economics.
Closing the Harvey Facility is an important step forward,
confirming an exciting near-term value catalyst for investors
within the wider context of our high-value development project. We
are also very pleased to have engaged Fraser Well Management to
operate this well, given their wealth of relevant experience in
this basin. Further updates will be provided as we confirm other
contractors and the spud date in due course."
Harvey Appraisal Well
The main Harvey licence, P2085, was awarded to IOG at 100%
Working Interest in December 2013 in the 27(th) Licensing Round and
contains the majority of the Harvey gas discovery. In May 2018, IOG
announced that its application for the licence to the east of
Harvey in Block 48/24a in the 30(th) Offshore Licensing Round was
successful. This is Licence P2441. This licence award secures 100%
of the Harvey structure. The November 2017 Harvey CPR estimates
Low/Mid/High resources of 45/114/286 BCF with a 50% Geological
Chance of Success.
Following the successful conclusion of the Harvey 3D seismic
reprocessing project carried out by Schlumberger Western Geco,
which commenced in March 2018, IOG has now completed the
interpretation and mapping of this new data set which has been
reprocessed to deliver a PSDM 3D seismic volume. This work has led
to the optimisation of the appraisal well location, which therefore
further de-risks this appraisal project.
The well will fulfil a 27(th) Round Licence commitment and will
target the confirmation of IOG's view that the Harvey structure
already has proven gas from well 48/23-2 drilled by Arco in 1984.
The new mapping shows that this discovery well intersects the flank
of the Harvey structure in each of the low case, mid case and high
case maps, thereby adding further confidence to this appraisal
project.
IOG is targeting spudding the Harvey appraisal well in January
2019 with the objective of testing and proving up the upside gas
resource estimates.
The necessary safety and environmental site surveys are due to
be carried out in early October.
IOG has appointed Fraser Well Management to manage and operate
this well. Their appointment to be the Well Operator on Harvey is
subject to regulatory approvals and is expected in the coming
weeks. The selection of the drilling rig contractor and well
services contracts will be finalised shortly thereafter.
-ENDS-
Certain information communicated in this announcement was, prior
to its publication, inside information for the purposes of Article
7 of Regulation 596/2014.
Enquiries:
Independent Oil and Gas plc
Andrew Hockey (CEO)
James Chance (CFO) +44 (0) 20 3879 0510
finnCap Ltd
Christopher Raggett
Anthony Adams +44 (0) 20 7220 0500
Peel Hunt LLP
Richard Crichton
David McKeown +44 (0) 20 7418 8900
Camarco
Georgia Edmonds/ Tom Huddart/ Monique Perks +44 (0) 20 3757 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 IOG's licences are owned 100%
and operated by IOG.
About Harvey:
IOG considers that the Harvey structure is a discovery in which
gas has been proven by well 48/23-2 drilled by Arco in 1984. The
Harvey licence, P2085, was awarded to IOG at 100% Working Interest
in December 2013 in the 27(th) Licensing Round. The Oil and Gas
Authority ("OGA") has confirmed the continuation of licence P2085,
which contains the Harvey discovery, until 20 December 2019. A
commitment to drill an appraisal well on the Harvey structure has
been made and the well must commence by 20 September 2019. In May
2018 IOG announced the successful award of the licence to the east
of Harvey in Block 48/24a. This is Licence P2441. This licence
award secured 100% of the Harvey structure on the mid-case and
upside cases of the mapped structure.
In November 2017, ERC Equipoise Limited completed a Competent
Person's Report on Harvey which estimated unrisked prospective
resources on the Harvey structure as 45/114/286 BCF (Low/Best/High
case) based on gas initially in place of 71/176/437 BCF
(Low/Best/High). The CPR assigned a Geological Chance of Success of
50%.
Harvey is located in the well understood Leman Sandstone
Formation play. If successfully appraised, it has the potential to
be the largest gas discovery in the IOG portfolio and could
significantly enhance the economics of IOG's Southern North Sea
business.
Competent Person's Statement
In accordance with the AIM Note for Mining and Oil and Gas
Companies, IOG discloses that Mark Routh, IOG's Chairman 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
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END
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