Final Results

RNS Number : 9940I

Independent Oil & Gas PLC

06 June 2014

 

6 June 2014

Independent Oil and Gas plc

Audited Results for the year ended 31 December 2013

Independent Oil and Gas plc ("IOG") (AIM: IOG.L), the North Sea focused Oil and Gas Company, is pleased to announce the audited results for the year ended 31 December 2013.

Chief Executive's Review

I am delighted to be providing a review of our progress over the last year, our first as a listed company and also providing a strategic report which restates and updates the Company's blueprint on how the Board plans to deliver value to our shareholders in the years ahead.

Extension of Key Licences and Recapitalisation of Licence Partner

IOG joined AIM on 30 September 2013 and whilst we were confident of a positive outcome, we were waiting for our key Blythe and Skipper licences to be extended which was contingent upon our partner and operator of these licences ATP Oil and Gas UK Ltd ("ATP UK") being sold and recapitalised to the satisfaction of the Department of Energy and Climate Change ("DECC"). It is very significant that these licences have now been extended to 30 September 2015 and ATP UK has been acquired by a private equity firmPetroleum Equity LLP thus removing the restrictions imposed by its US parent's insolvency proceedings. The operating company has been renamed Alpha Petroleum Resources Ltd and is fully funded for the development and appraisal activity on Blythe and Skipper.

Significant Portfolio Growth Delivered at Modest Cost

IOG has delivered significant growth in its portfolio at only modest cost with the award of a new licence to the east of Blythe (adding 42 BCF1 prospective net resources) and the pending Cronx acquisition (adding 17.6 BCF2 contingent net resources). We have applied to DECC to operate the Cronx licence and have put in place the necessary Health, Safety and Environmental systems and personnel required to operate. We have also invested heavily in three licence applications in the UK 28th Licence Round, all of which contain discoveries and could very significantly increase IOG's resources. The announcement of the 28th Round awards is expected later this year.

Significant progress made on funding, strengthening the board and key Third party agreements

We are pleased to have agreed a $50m senior loan facility with a large US lender, which is at the final documentation stage. This is expected to be used to part fund our Blythe development which is scheduled to deliver first production to the Company in 2016. It may also be used to fund the potential acquisition of producing assets or other assets in the portfolio.

We have strengthened the Board significantly with the recruitment of Paul Murray who has already made a significant contribution. Paul is the ex FD of LASMO which was a FTSE 100 oil and gas company prior to being acquired by ENI in 2001. He also has an extensive career as a non- executive director and is a founder shareholder of IOG.

We are pleased to strengthen further our relationship with BP by signing a gas marketing agreement with BP Gas Marketing to offtake our gas from the Blythe field development. This is in additional to the crude sales agreement we have in place for Skipper.

Value and Milestones

Your Board believes that based upon independent reserve reports, IOG's assets are worth considerably more than its current market capitalisation and accordingly the directors intend to explore all forms of potential fundraising including at asset level.

We are excited by the significant near term milestones ahead for the Company including submission of the Blythe Field Development Plan ("FDP"), securing a rig for the Skipper appraisal well, becoming an approved operator and completing the Cronx acquisition along with potential transformational licence awards in the 28th Round and potential acquisitionof producing assets.

The strategy adopted by the Company is a proven one and we remain committed to delivering significant value to shareholders by building a significant development and production business focused on the UK Continental Shelf ("UKCS").

STRATEGIC REPORT

IOG's strategy is to target 'stranded' assets and dormant discoveries, especially those near to existing and ideally, owned infrastructure (the "Hub Strategy"). These are assets that are marginal for the Major oil companies but are potentially profitable developments which can be beneficially developed by a smaller independent company, focused on the North Sea.

The aim is to build on the existing development assets in order to achieve a diversified, balanced, portfolio of near and long term developments with exploration upside that complement the existing operations. This will include the acquisition of producing fields or near- term production if the risk is positively assessed and the acquisition price results in value accretion.

The Directors believe that there is a significant opportunity for the Company to exploit given that there are over 400 undeveloped and underdeveloped assets in the UKCS and in addition, the Majors are in long term exit mode.

In addition to targeting stranded assets, IOG is also following and developing the Hub Strategy model successfully developed originally in the Gulf of Mexico and subsequently and similarly successfully deployed by Venture Production, Dana Petroleum and CH4 Energy in the North Sea. The Hub Strategy targets dormant discoveries and exploration prospects nearby owned infrastructure where tariffs are already agreed and ullage is available in the offtake route for the production. IOG has already delivered on this strategy by the successful award of the Skipper West Area Licence and the Blythe East Area Licence and by agreeing to acquire the Cronx discovery, which is subject to completion.

IOG believes it has the skills and competencies to become an operator and this will be instrumental in achieving the aforementioned growth and we are very pleased to have lodged with DECC our application to operate the Cronx licence.

Operator status gives a licensee more control over the field development plan and its execution. This also makes it easier to deliver on the Hub Strategy because as the operator of owned infrastructure, third party consents to tie in additional discoveries are easier to facilitate. Also, as the Majors continue to divest late life producing assets they often prefer to assign operatorship and redeploy their own resources and so additional opportunities arise. In the UK licensing rounds, certain licences will only be made available to pre-qualified operators.

Overall, the Board is confident that the Company has the management, experience and technical expertise to create and seize new opportunities for future growth.

Independent Oil and Gas plc ("IOG") and its wholly owned subsidiary IOG North Sea Ltd ("IOGNS") is a 50% licensee on two Traditional Licences and a 100% licensee on two Promote Licences all in the North Sea:

•              P 1736 covering blocks 48/22b and 48/23a in which lies the Blythe gas field;

•              P1609 covering block 9/21a in which lies the Skipper oil discovery;

•              P1941 covering blocks 8/20a and 8/25a; and

•              P2085 covering blocks 48/23c and 48/24b.

Licences P1736 and P1609 are operated by Alpha Petroleum Resources Ltd ("Alpha") which has the remaining 50% of each licence. IOG is the licence administrator on licences P1941 and P1609 and currently has applied to operate licence P1737 covering block 48/22a (containing Cronx) to the west of the proposed Blythe field development. This application is subject to the completion of the acquisition of the licence from Swift Exploration Ltd.

As the non-operator on licences P1736 and P1609, IOG pays the operator to carry out the technical work required to bring the Blythe gas field and the Skipper oil field into production. However, the IOG Technical Team brought both the Blythe and Skipper opportunities to Alpha (previously named ATP Oil & Gas UK Ltd) and contributed a significant amount of work to the original licence applications. This collaborative approach has continued during the work programmes of both licences.

Statement of Reserves and Resources

The Group's Proved, Probable and Possible reserves and resources for the Blythe and Skipper Hubs as at 31 December 2013 were as follows:-

Blythe Hub Reserves and Resources

Net (Bcf)	1P	2P	3P
*Blythe	11.2	17.2	23.7
Net (Bcf)	1C	2C	3C
*Cronx	7.7	17.6	40.4
† Blythe - Carboniferous	21	30	90
‡ Truman	-	25	-
‡ Harvey	-	16	-
Total Blythe Hub	40	106	154

* ERC Equipoise CPRs September 2013 & July 2012

† Tullow 48/23a Relinquishment Report May 2009

‡ IOG internal view May 2014

Skipper Hub Resources

Net (MMBbls)	1C	2C	3C
Skipper	9.0	12.9	17.5
Skipper - Maureen	1.8	3.3	5.6
Skipper - Dornoch	1.2	2.0	3.1
*Theakston	1	4	24
*Moorhouse	13	24	31
Total Skipper Hub	26	46	82

Sources: AGR Tracs CPR September 2013 except * IOG internal view May 2014

Operational Update

Blythe

The Blythe gas discovery straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736 which is 50% co-owned by IOG and Alpha Petroleum Resources Ltd (operator). Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 BCF (6.1 MMBoe) which is 17.2 BCF (3.0 MMBoe) net to IOG. (Source: ERC Equipoise Competent Person's Report dated September 2013.)

The partnership is working towards submitting a Field Development Plan for Blythe by 4Q 2014. IOG is targeting first gas from the Blythe field in mid-2016 but the final development schedule has yet to be formalised.

The Blythe operator Alpha Petroleum Resources Ltd has received tenders for the pipeline route and site survey for the Blythe field development and now expects the survey results to be available in Q3 2014. This means that the submission of the Field Development Plan ("FDP") for Blythe will now occur in Q4 2014. First gas from the field is now targeted in mid-2016.

Under the agreement signed with BP Gas Marketing Ltd in February, IOG is now well positioned to be able to sell its 50% share of the gas produced from the Blythe gas field development.

Skipper

The Skipper oil discovery is in Blocks 9/21a in the Northern North Sea in licence P1609 which is 50% co-owned by IOG and Alpha Petroleum Resources Ltd (operator). Skipper needs further appraisal by drilling a well to retrieve core and oil samples in order to design the optimum field development plan for the field. Skipper has independently verified gross 2C resources of 26.2 MMBbls which is 13.1 MMBbls net to IOG. 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 Competent Person's Report dated September 2013.)

An appraisal well on the Skipper licence is expected to take place in Q2/Q3 2015. The well will appraise the Skipper discovery and target two exploration prospects directly beneath the Skipper discovery.

Cronx (Acquisition subject to completion)

The acquisition of 100% of the Cronx licence, as previously announced, remains ongoing. The licence has been extended by the Department of Energy and Climate Change ("DECC") to the end of 2014, providing additional time for completion. Completion is subject to funding a pilot well, which allows IOG to qualify as an 'exploration operator' in the UKCS. IOG submitted its application to operate this licence in March 2014.

The Cronx gas discovery is 14km north-west of the Blythe field in which IOG holds 50%. Cronx was discovered in 2007 by well 48/22b-6 drilled by Perenco UK Ltd. Subject to agreement with the co-owner of the Blythe field, Alpha Petroleum Resources Ltd and the successful development of Blythe, the gas export of Cronx would be via the Blythe hub which will be 50% owned by IOG.

IOG commissioned an independent Competent Person's Report (CPR) by ERC Equipoise on Cronx in July 2012 which shows a base case expected gas recovery of 17.6 BCF or 3.4 MMBOE 2C resource. IOG anticipates drilling a pilot well in Q4 2014, subject to rig availability, the necessary permits and funding, which IOG currently estimates to be £6.25m. IOG expects the well to confirm the recoverable resources, which IOG believes has the potential to be larger than the 17.6 BCF base case in the CPR. The well would be reused and extended into a producing well as part of the field development.

Further information and maps of the Cronx field may be found on IOG's website.

28th Licensing Round

In line with the Company's hub strategy, IOG made applications for three licences in the 28th Seaward Licensing Round. The licences applied for are all discoveries and would add significant resources to the Company's portfolio.

Asset Acquisitions

IOG is now also considering the acquisition of producing assets to support the wider development and growth of the business.

Finance Review

The Group made a loss of £1.03 million during 2013 (2012 - £0.45 million) of which £0.29 million comprised ongoing administrative costs (2012 - £0.39 million), £0.24 million comprised costs related to the Company's listing on AIM (2012 - nil), £0.36 million comprised non-cash provisions for the issue of share options (2012 - nil) and £0.17 million comprised interest (2012 - £0.1 million), principally on loan notes which were converted into ordinary shares upon AIM listing. These charges were partially offset by a £0.02 million exchange gain (2012 - £0.05 million).

Capital expenditures incurred during the year were limited to £0.08 million (2012 - £0.39 million) whilst the operator of two of IOG's field interests, ATP Oil and Gas (UK) Limited, completed its sale to Alpha Petroleum (UK) Holdings Limited.

Cash used in operations totalled £0.82 million (2012 - £0.20 million), after adjustments for non-cash items, whilst cash deployed on the purchase of fixed assets totalled £0.10 million (2012 - £0.43 million). Group financial resources were improved through the issue of £0.17 million of loan notes (2012 - £0.44 million) and the raising of £2.0 million in new equity subscriptions concurrent with the Company's admission to AIM. The admission, which was completed on 30 September 2013, comprised the listing of 51,126,049 existing ordinary shares and admission of a further 8,405,800 ordinary shares at the listing price of 23.7931p for £2.0 million, less costs of £0.17 million. At the same time all outstanding loan notes and accrued interest were converted into ordinary shares leaving £1.12 million of available cash at 31 December 2013.

To strengthen the Group's financial position further the Group recently announced a loan and equity swap and is in process of negotiating a new senior debt facility.

Darwin Loan and Equity Swap

On 4th June 2014 IOG entered into a Loan and equity swap with Darwin Strategic Limited ("Darwin"). The Loan amount of £517,500 is immediately available to the company for working capital purposes. The company issued 5,526,000 shares at a price of 32p to Darwin in exchange for an equivalent number of Loan Notes. Darwin will sell the shares in the market under direction from IOG with the proceeds being used to redeem the Loan Notes. Once the Loan has been repaid the proceeds from the equity sales will be available to IOG for working capital purposes.

Senior Loan Facility

This US$50 million senior loan facility is subject to completion of final documentation but has received the lender's credit committee approval.

US$25 million of the facility is expected to be available for the Blythe field development, contingent upon certain conditions, including the following:

•    the approval of a Field Development Plan;

•    execution of an agreed hedging programme;

•    standard security arrangements;

•    provision of the balance of development and cost overrun funding;

•    final confirmation of Capex and Opex being in line with the ERC Equipoise Competent Person's Report dated September 2013; and

•    finalisation of the lender's ongoing legal and technical due diligence review.

It is anticipated that the majority of IOG's equity contribution will be financed by equity and junior loans and will be spent on the Blythe field development prior to draw down of the senior loan facility.

Part or all of the balance of the facility will become available for drawdown by IOG upon the completion of the Blythe field development or sooner if appropriate assets are acquired by IOG and added to the borrowing base. The lender is supportive in principle of using the facility to acquire appropriate producing assets.

The facility is expected to have a tenor of five years and is subject to the entry into definitive documentation.

Looking forward, IOG will need additional funds to develop its portfolio by adding further assets and intends to explore options to achieve this at both a corporate and at an asset level.

Mark Routh

Chief Executive

6 June 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

	2013 £	2012 £
Other administrative expenses	286,303	391,587
Share-based payments	358.758	-
AIM listing costs	236,050	-
Exchange gain	(24,627)	(45,026)
Total administrative expenses	856,484	346,561
Operating loss	(856,484)	(346,561)
Finance expense	174,600	99,858
Loss before tax	(1,031,084)	(446,419)
Taxation	-	-
Total comprehensive loss attributable to owners of the parent	(1,031,084)	(446,419)
Loss per ordinary share - basic and diluted	(2.0p)	(0.9p)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2013

		2013 £	2012 £
Non-current assets
Exploration and evaluation assets		15,259,125	15,171,428
Current assets
Other receivables		116,422	30,206
Cash and cash equivalents		1,120,411	22,703
		1,236,833	52,909
Total assets		16,495,958	15,224,337
Current liabilities
Loan notes		-	(396,353)
Trade and other payables		(87,655)	(311,733)
		(87,655)	(708,086)
Non-current liabilities
Trade and other payables		(1,471,149)	(1,461,254)
Total liabilities		(1,558,804)	(2,169,340)
NET ASSETS		14,937,154	13,054,997
Capital and reserves
Called up equity share capital		595,319	473,235
Share premium account		15,424,619	13,078,402
Convertible debt option reserve		-	122,412
Share-based payment reserve		401,113	-
Retained deficit		(1,483,897)	(619,052)
		14,937,154	13,054,997

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2013

		2013 £	2012 £
Cash flows from operating activities
Cash used in operations		(820,318)	(198,935)
Net cash used in operating activities		(820,318)	(198,935)
Cash flows from investing activities
Purchase of intangible non-current assets		(100,028)	(428,648)
Net cash used in investing activities		(100,028)	(428,648)
Cash flows from financing activities
Proceeds from issue of ordinary shares		2,003,093	87,496
Costs of share issue		(157,431)	-
Proceeds from issue of loan notes		172,392	444,743
Net cash generated from financing activities		2,018,054	532,239
Increase/(decrease) in cash and cash equivalents in the year		1,097,708	(95,344)
Cash and cash equivalents at start of year		22,703	118,047
Cash and cash equivalents at end of year		1,120,411	22,703

NOTES

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards adopted by the European Union, International Accounting Standards and Interpretations (collectively "IFRSs") and with those parts of Companies Act 2006 applicable to companies preparing their accounts under IFRS.

Going concern

The Group had cash reserves of £133,652 at 1 June 2014 and will shortly receive an additional £517,500 from the drawdown of a loan with Darwin Strategic Ltd ("Darwin"), which will be paid on or before 12 June 2014.

On 5 June 2014, the Company announced an additional new funding arrangement with Darwin pursuant to which Darwin has subscribed for 5,625,000 ordinary shares of the Company at a price of 32 pence each. The aggregate issue price of £1,800,000 is to be satisfied by the issue of 1,800,000 redeemable subscription notes of £1 each by Darwin to the Company conditional upon the new shares being admitted to trading on AIM on or before 12th June 2014. Over the course of the 36 months following admission the Company will, at its sole discretion, instruct Darwin to sell the shares and redeem the subscription notes. As noted above, Darwin has also made a loan of £517,500 available to the Company which is to be repaid from the sale of subscription shares over the next twelve months. The repayment amount will be £575,000 if paid within 6 months. An additional 5% will be payable on any outstanding balance if paid within 12 months.

In addition, the Company is currently in negotiation for a $50 million finance facility. The Directors are confident that this facility will be agreed as they understand that it has already received the lender's credit committee approval. This facility would be available, subject to a range of conditions precedent, to fund part of the Group's Blythe field development and potentially, other future development programmes or the acquisition of a producing asset.

The directors also expect to direct Darwin to sell shares issued under an equity swap that would provide additional cash once the Darwin Loan has been repaid. The directors expect, although cannot guarantee, that this will be sufficient to cover overheads and a minimum work programme on the assets for the next twelve months. In order to meet all of the licence commitments by the end of September 2015, the Group needs to raise further funds or to secure a farm out partner.

 

Loss per share

	2013 £	2012 £
Loss for the year attributable to shareholders	(1,031,084)	(446,419)
Weighted average number of ordinary shares	50,434,060	47,290,496
Loss per share - pence	(2.0p)	(0.9p)

As the Group was loss making in both the current and prior years, any potentially dilutive instruments are considered to be anti-dilutive and therefore are not included in the calculation. Therefore the diluted EPS is equal to the basic EPS. As at 31 December 2013, potentially dilutive instruments in issue were 11,942,408 (2012 - 2,420,611).

Subsequent events

On 5 March 2014 the Company announced an agreement to acquire 100% of UK licence block 48/22a, which includes a gas discovery to be named Cronx, for £468,000 subject to the satisfaction of certain conditions. The acquisition must be completed not later than 31 December 2014.

On 5 June 2014, the Company announced a new funding arrangement with Darwin Strategic Limited ("Darwin") pursuant to which Darwin has subscribed for 5,625,000 ordinary shares of the Company at a price of 32 pence each. The aggregate issue price of £1,800,000 is to be satisfied by the issue of 1,800,000 redeemable subscription notes of £1 each by Darwin to the Company conditional upon the new shares being admitted to trading on AIM on or before 12th June 2014. Over the course of the 36 months following admission the Company will, at its sole discretion, instruct Darwin to sell the shares and redeem the subscription notes. Darwin has also made a loan of £517,500 available to the Company which is to be repaid from the sale of subscription shares over the next twelve months. The repayment amount will be £575,000 if paid within 6 months. An additional 5% will be payable on any outstanding balance if paid within 12 months.

The Company has also agreed to issue 326,087 warrants over ordinary shares to Darwin at the exercise price of 47 pence, expiring on 12 June 2017.

On 5 June 2014 the Company announced that Weatherford Technical Services Ltd had agreed to extend the maturity date on its loan to the Company from March 2015 to September 2016.

Notice of Annual General Meeting

The Annual General Meeting of the Company will be held at 2:30 pm, on 30 June 2014 at One America Square, Crosswall, London, EC3N 2SG.

Preliminary statement

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined by section 434 and 435 of the Companies Act 2006. The financial information for the period ended 31 December 2013 has been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498(2) or 493(2) of the Companies Act 2006.

The statutory accounts for the period ended 31 December 2013 will be posted to shareholders on 6 June 2014 and made available on our website www.independentoilandgas.com.

In due course, they will be delivered to the Registrar of Companies. The statutory accounts for the period ended 31 December 2012 have been delivered to the Registrar of Companies.

Enquiries:

Independent Oil & Gas plc:
Mark Routh (CEO) Peter Young (CFO)		[phone]
Charles Stanley Securities: (Nominated Adviser) Philip Davies		[phone]
Bell Pottinger:
Philip Dennis	[e-mail]	[phone]
Mark Antelme	[e-mail]	[phone]

Competent Person's Statement:

In accordance with AIM Note for Mining and Oil & Gas Companies IOG discloses that Mark Routh, IOG's CEO 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 33 years' operating experience in the upstream oil and gas industry.

About Independent Oil and Gas:

IOG is an oil and gas company with established assets focused on 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.

IOG has four licences in the North Sea:  In addition to the Blythe and Skipper licences co-owned 50% with Alpha Petroleum Resources Ltd., IOG has a 100% working interest in two licences awarded in the 27th licencing round.  One is to the west of and adjacent to Skipper, the other is to the east of Blythe.  Both these licences have potential resources that could be tied back to developments at Skipper and Blythe respectively.  IOG will have a fifth licence upon completion of the Cronx acquisition.

Further information can be found on www.independentoilandgas.com.

About Blythe:

The Blythe gas discovery straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736 which is 50% co-owned by IOG and Alpha Petroleum Resources Ltd (operator).  Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 BCF (6.1 MMBoe) which is 17.2 BCF (3.0 MMBoe) net to IOG.  (Source: ERC Equipoise Competent Person's Report dated September 2013.)

The partnership is working towards submitting a Field Development Plan for Blythe by 4Q 2014.  IOG is targeting first gas from the Blythe field in mid-2016 but the final development schedule has yet to be formalised.

Further information and maps of the Blythe field may be found on IOG's website on:-

http://www.independentoilandgas.com/blythe.html

The Blythe field CPR may be found at the following link:-

http://www.independentoilandgas.com/downloads/IOG_Blythe_CPR_Sept2013.pdf

About Skipper:

The Skipper oil discovery is in Blocks 9/21a in the Northern North Sea in licence P1609 which is 50% co-owned by IOG and Alpha Petroleum Resources Ltd (operator).  Skipper needs further appraisal by drilling a well to retrieve core and oil samples in order to design the optimum field development plan for the field.  Skipper has independently verified gross 2C resources of 26.2 MMBbls which is 13.1 MMBbls net to IOG.  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 Competent Person's Report dated September 2013.)

Further information and maps of the Skipper field may be found on IOG's website on:-

http://www.independentoilandgas.com/skipper.html

The Skipper field CPR may be found at the following link:-

http://www.independentoilandgas.com/downloads/IOG_Skipper_CPR%20_Sept2013.pdf

About Cronx:

The Cronx acquisition is subject to completion.

The Cronx gas discovery is 14km north-west of the Blythe field in which IOG holds 50%.  Cronx was discovered in 2007 by well 48/22b-6 drilled by Perenco UK Ltd.  Subject to agreement with the co-owner of the Blythe field, Alpha Petroleum Resources Ltd and the successful development of Blythe, the gas export of Cronx would be via the Blythe hub which will be 50% owned by IOG.

IOG commissioned an independent Competent Person's Report (CPR) by ERC Equipoise on Cronx in July 2012 which shows a base case expected gas recovery of 17.6 BCF or 3.4 MMBOE 2C resource.  IOG anticipates drilling a pilot well in Q4 2014, subject to rig availability, the necessary permits and funding, which IOG currently estimates to be £6.25m.  IOG expects the well to confirm the recoverable resources, which IOG believes has the potential to be larger than the 17.6 BCF base case in the CPR.  The well would be reused and extended into a producing well as part of the field development.

Further information and maps of the Cronx field may be found on IOG's website on:-

http://www.independentoilandgas.com/cronx.html

Glossary of key technical terms:

"2P" "2C"	the sum of Proved Reserves plus Probable Reserves; the best estimate of Contingent Resources;
"Bbl" or "Bbls"	a unit of volume measurement used for petroleum and its products (for a typical crude oil 7.3Bbls = 1 tonne, 6.29Bbls = 1 cubic metre);
"Block"	an areal subdivision of the UKCS of 10 minutes of latitude by 12 minutes of longitude measuring approximately 10 by 20 kilometres, forming part of a quadrant.  Each quadrant is divided into a grid five blocks wide and six deep, and numbered 1 to 30 from NW to SE;
"BCF"	billions of cubic feet (of natural gas);
"BOE" "Contingent Resources"	barrels of oil equivalent; those quantities of petroleum estimated to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies;
"MMBbls" "MMBOE"	millions of barrels of oil; millions of barrels of oil equivalent;
"Probable Reserves"	those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable.  In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable reserves;
"Proved Reserves"	those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods and government regulations.  Proved reserves can be categorised as developed or undeveloped.  If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered.  If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate; and
"Reserves"	those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.  Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial and remaining (as of the evaluation date) based on the development project(s) being applied.

 

END

 

 

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