32nd Round Licence Applications

RNS Number : 9377X

Independent Oil & Gas PLC

03 September 2020

 

3 Sep 2020

Independent Oil and Gas plc

Successful 32^nd Round Licence Applications

Independent Oil and Gas plc ("IOG" or "the Company"), (AIM: IOG.L), the development and production company focused on becoming a substantial UK gas producer , is pleased to announce that its fully-owned subsidiary IOG North Sea Limited ("IOGNSL") has been offered four new UK Southern North Sea ("SNS") blocks by the Oil and Gas Authority ("OGA") in the 32nd UKCS Licensing Round.  

Highlights:

· The four new blocks are all adjacent to IOG's existing assets and well within range of the Thames Pipeline, offering clear potential for accretive incremental gas hub investments 

· The Joint Venture ("JV") of IOGNSL (50%, Operator) and CalEnergy Resources (UK) Limited ("CER") (50%) has been offered a licence covering Blocks 49/21e and 49/22b

o  Block 49/21e, containing the Viper gas discovery lying 5km from Elland with initial management estimated mid-case recoverable gas resources of 46 billion cubic feet equivalent (Bcfe)

o  Block 49/22b, containing the Sinope South gas discovery with initial management estimated mid-case recoverable gas resources of 35 Bcfe

· IOGNSL (100%) has been offered Blocks 48/23d and 48/24c, between the Blythe and Harvey licences, containing the Allerdale, Driftwood and Bradfield prospects and a possible northwest extension of the Redwell field

· Formal licence awards will follow in due course; there are no firm well commitments

Panther Block 49/21e

The JV has been offered Block 49/21e, which lies in 30-40 metre water depth directly adjacent to the three IOG-operated Vulcan Satellites licences. The block contains the gas discovery hitherto known as Viper, which is to be renamed Panther upon confirmation of award. Viper is effectively a fourth Vulcan Satellite field located only 5km northwest of Elland and 10km north of Southwark, to which the 24-inch Thames Pipeline is set to be extended as part of the Phase 1 development.

Viper has initial management estimated mid-case recoverable resources of 46 Bcfe, based mainly on analysis of data from the 49/21-9Z well drilled by EOG Resources in 2004. This volume is commensurate with a two-well unmanned platform development, as intended with the nearby Elland field.

The work programme entails reprocessing of 79km² 3D seismic up to Pre-Stack Depth Migration ("PSDM") and reservoir modelling on Viper. This will help to refine the recoverable resource estimate, inform potential field development plans and evaluate possible further resources across the block.

Grafton Block 49/22b  

The JV has also been offered Block 49/22b, which lies directly east of Block 49/21e described above in 20-40 metre water depth. This block contains the field hitherto known as Sinope South, to be renamed Grafton upon confirmation of award, which was discovered by ConocoPhillips via the 49/22-8 well in 1990-91. Sinope South lies 16 km from the Southwark platform location, in the centre of Block 49/22/b which contains part or all of the Sinope North, Europa, Ganymede and Callisto fields from which ConocoPhillips previously produced aggregate gas volumes of approximately 456 Bcfe (80 mmboe) up to 2016.

Sinope South has initial management estimated mid-case prospective resources of 35 Bcfe, commensurate with a single-well unmanned platform development. The work programme entails reprocessing 100km² of 3D seismic up to PSDM. This will help refine the recoverable resource estimate, inform potential field development plans and evaluate possible further resources across the block, including the small additional Isca discovery.  

Allerdale 48/24c and Redwell Northwest 48/23d

IOGNSL has also been awarded two further blocks, 48/24c and 48/23d, on a 100% working interest basis. Block 48/24c contains a potential northwestern extension of the Redwell discovery which lies mainly in in Block 48/24a, also 100% held by IOG.

Block 48/23d, located between the JV's Blythe-Elgood hub and IOG's Harvey and Redwell licences in the centre of IOG's area of focus, contains the Allerdale, Driftwood and Bradfield prospects. Allerdale and Driftwood both lie within 7km of Blythe, which is being developed as part of Phase 1, and directly on trend to the northwest of Harvey. Well 48/23-1 drilled by Burmah in 1967 clipped the western edge of the Allerdale structure.

The work commitment on these two blocks, which lie in 20-30 metre water depth, is to undertake 61km² of 3D seismic reprocessing up to PSDM. This will refine the Company's view of the sub-surface potential and ties in with the additional 3D seismic reprocessing work currently underway on the Harvey and Redwell licences, results of which are expected later this year.

Formal licence awards for all the offered blocks are expected to be confirmed later this year, with no firm well commitments.

Andrew Hockey, CEO of IOG, commented:  

"The OGA's offer of these highly synergistic licences is excellent news for IOG, further validating our focus on licence rounds as a highly cost-effective route to enhance our portfolio. We specifically targeted only blocks adjacent to our substantial Core Project that offer clear potential for accretive additions and we are delighted to have achieved a 100% success rate once again. With several existing gas discoveries, these new licences fit straight into our focused strategy of cost-efficient production hubs delivered through co-owned infrastructure, providing opportunities to drive up shareholder returns.

We are grateful for the OGA's continued support for our strategy of revitalising the Thames Pipeline catchment area, which we believe will contribute positively to its Maximising Economic Recovery and Net Zero targets. We are also delighted to deepen our collaboration with our partner CalEnergy Resources (UK) Limited with our successful joint application for Blocks 49/21e and 49/22b under our Area of Mutual Interest agreement."

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) Rupert Newall (CFO) James Chance (Head of Corporate Finance & IR)	[phone]
finnCap Ltd Christopher Raggett (Corporate Finance) Simon Hicks (Corporate Finance)	[phone]
Peel Hunt LLP Richard Crichton (Corporate Finance) David McKeown (Corporate Finance)	[phone]
Vigo Communications Patrick d'Ancona Chris McMahon Simon Woods	[phone]

About IOG:

IOG owns and operates 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 140 MMcfe/d (c. 24,000 Boe/d) from gross 2P gas Reserves of 302 Bcfe¹ + 2C gas Contingent Resources of 108 Bcfe², 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 Bcfe² at Goddard. Alongside this IOG has management estimated mid-case recoverable gas volumes of 40 Bcfe and 100 Bcfe at the Harvey and Redwell licences and 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.

¹ ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression

² ERC Equipoise Competent Persons Report: October 2018

 

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