Rig contract signed

RNS Number : 8875I

Independent Oil & Gas PLC

14 December 2015

 

14 December 2015

Independent Oil and Gas plc

Rig Contract Signed - Funding Secured for Skipper Drilling in the New Year

Independent Oil and Gas plc ("IOG" or the "Company"), (AIM: IOG.L), the North Sea focused oil and gas company, is pleased to announce it has signed a Rig Contract with Transocean Drilling U.K. Limited ("Transocean") to procure the Transocean John Shaw semi-submersible rig to drill the Company's fully funded appraisal well on the Skipper oil discovery in Block 9/21a in the Northern North Sea in licence P1609. 

IOG anticipates that the rig will commence drilling operations at Skipper in late January or early February 2016 with the objective of retrieving good quality reservoir condition oil samples in order to design the optimum field development plan for the Skipper field.  The rig will drill a vertical well to 5,600ft which is expected to take approximately 25 days.

Skipper is an offshore heavy oil field located in the Northern North Sea with independently verified gross 2C resources of 26.2 MMBbls.  IOG management estimates that Skipper has 34.1 MMBbls of recoverable oil based on a recovery factor of 25%, compared to the historic CPR estimate of 19%.  The well will also target two exploration prospects directly beneath the Skipper oil discovery in the Lower Dornoch and Maureen formations, in which the CPR authors have mapped structures which could contain an additional 46 MMBbls of oil in place.  (Source: AGR Tracs CPR dated September 2013.)  If oil is present in these structures, it would be co-developed with Skipper in line with the Company's hub strategy.

IOG intends to drill the Skipper well as 100% owner, which requires completion of the Sale and Purchase agreement to acquire 50% of the licence from Alpha Petroleum Ltd ("Alpha").  As previously announced, the deadline for the completion of this agreement has been extended to 21 December 2015.  The Company also requires the Oil and Gas Authority ("OGA") to approve IOG North Sea Limited as licence operator and AGR Well Management Limited ("AGR") as well operator.

Mark Routh, CEO of IOG commented:

"Following our recent funding, the signing of this semi-submersible rig contract with Transocean is the breakthrough we've been waiting for.  This allows us to drill the Skipper well in the New Year which will enable us to optimise the Skipper Field Development Plan in addition to targeting two exploration prospects at low cost.  We hope to provide further updates regarding approvals from the OGA in the near future."

-ENDS-

Enquiries:

Independent Oil and Gas plc Mark Routh (CEO) Peter Young (CFO)	[phone]
finnCap Ltd Matt Goode/Christopher Raggett (Corporate Finance)	[phone]
Camarco Billy Clegg / Georgia Mann	[phone]

Notes

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.  After the completion of the Skipper acquisition from Alpha, the combined estimate of 2P reserves in Blythe and 2C resources in Skipper net to IOG will be 37.1 million barrels of oil equivalent ("MMBoe").

Post completion of the Cronx acquisition IOG will have five licences in the North Sea.  Four of these licences will now be owned 100% by IOG and subject to DECC/OGA approval will be operated by IOG.  The Blythe licence is co-owned 50% with Alpha which is the operator.  IOG has a 100% working interest in two other licences, one awarded in the 27^th licensing round and another in the recent 28^th licensing round.  One is to the east of Blythe containing the Truman prospect and Harvey discovery and the other is between the Blythe and Cronx licences which contains the Elgood and Hambleton discoveries and the Tetley and Rebellion prospects.  Both these 100% owned licences have potential resources that could be tied back to nearby infrastructure or to the Blythe development.

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 (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 ("CPR") dated September 2013.)

The partnership is working towards submitting a draft Field Development Plan for Blythe by the end of 2015.

About Skipper:

The Skipper oil discovery is in Block 9/21a in the Northern North Sea in licence P1609.  Skipper needs further appraisal by drilling a well to retrieve an oil sample in order to design the optimum field development plan.  Subject to the completion of the previously announced acquisition of Skipper from Alpha, IOG can now progress to the appraisal and development stage of this asset.  Skipper has independently verified gross 2C resources of 26.2 MMBbls.  IOG management estimates that the recoverable oil from Skipper is 34.1 MMBbls based on a recovery factor of 25%, compared to the historic CPR estimate of 19%.  Successful flow tests from nearby heavy oil fields substantiate the company's estimate of a 25% recovery factor. 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 CPR dated September 2013.)

About Cronx:

IOG has agreed to acquire 100% of Cronx (Block 48/22a, licence P1737) which is subject to completion.  The Cronx gas discovery is 14km north-west of the Blythe field in which IOG owns 50%.  Cronx was discovered in 2007 by well 48/22b-6 drilled by Perenco UK Ltd.

IOG commissioned an independent 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 well in 2016, subject to rig availability, the necessary permits and funding.  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.  IOG is currently evaluating options for the development and export of the Cronx gas.

About Elgood and Hambleton:

The Elgood discovery (IOG 100%) (Block 48/22c, licence P2260) was drilled by Enterprise Oil in 1991 and tested gas to surface at 17.6 MMcfd but was not progressed by Enterprise due to size and gas prices at that time.  IOG's estimate of the recoverable reserves in Elgood is 2.1 MMBoe.

The Hambleton discovery, to the south of the same licence, was drilled by Century Exploration in 2005 but also was not progressed to development.  IOG estimates that Hambleton has recoverable resources of 6 BCF (1 MMBoe).  IOG believes that the reprocessing of existing 3D seismic data could increase recoverable resources up to 26 BCF.

There are prospective resources on licence P2260 of 5.3 MMBoe in the Tetley and Rebellion prospects.  Reprocessing of existing 3D seismic across 48/22a and 48/22c is required to determine whether Elgood connects to Cronx which would boost recoverable reserves significantly.  The new seismic interpretation will also determine the likely size of Hambleton.  IOG is now working on the potential development plans and will commission a CPR‎ to confirm the resources over this area.

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 and Interim Executive Chairman 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 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.

 

END

 

 

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