Seismic Remapping Underway in Southern North Sea

RNS Number : 9034M

Independent Oil & Gas PLC

12 May 2015

 

12 May 2015

Independent Oil and Gas plc

Seismic Remapping Underway in Southern North Sea

Independent Oil and Gas plc ("IOG"), (AIM:IOG.L), the North Sea focused oil and gas company, is pleased to announce that is has commenced the 3D seismic remapping project over its Southern North Sea gas portfolio on a phased basis, with the first results expected by the end of May.

IOG has decided to complete the remapping work over its portfolio in three phases as follows:-

1)  Core SNS area including Elgood, Cronx and Blythe

2)  Skipper oil licence area

3)  Prospective SNS area including Truman, Harvey and Hambleton

1)  Core SNS area including Elgood, Cronx and Blythe

IOG has commissioned Baker Hughes Incorporated's Reservoir Development Services (RDS), which maximizes profitability for E&P operators by providing the expertise to improve reservoir understanding, engineer value-added solutions and efficiently manage a field, to complete this remapping project on the 3D seismic data it purchased last year as part of IOG's successful 28^th Licensing Round application.  The output will be a consistent set of maps across the whole area showing the Rotliegendes, Carboniferous and Hauptdolomit hydrocarbon bearing horizons.

Cronx and Elgood

The work should remove uncertainties relating to the mapping and commercial volumes in both discoveries.  IOG anticipates that this work would subsequently facilitate an upgrade from 2C resources to 2P reserves.  This would be subject to an updated Competent Persons Report (CPR) and would be expected also to require demonstration of a commercial development plan and funding to allow such an upgrade.

IOG estimates that its 2P reserves could be more than doubled by this remapping project.  Currently IOG's 2P reserves in Blythe are 17.2 BCF or 3 MMBOE (net share).

IOG continues to work on the potential co-development of Cronx and Elgood and, as previously advised, is in discussions regarding the funding of the well on Cronx, which is required for the completion of the Cronx acquisition.

Blythe

The remapping work commissioned by IOG will also provide a better understanding of the gas in the Carboniferous beneath Blythe and the oil in the Hauptdolomit above Blythe.  The evaluation of these horizons is being carried out by IOG and is not part of the joint venture work programme.

In addition to the commercial rates tested (in excess of 15 MMcfd) from the Blythe discovery from the Rotliegend interval, gas has tested to surface from the Carboniferous beneath the Blythe field at rates up to 1 MMcfd from three separate zones, rates which have previously been considered non-commercial.  However, similar Carboniferous reservoirs elsewhere in the SNS have been fracture stimulated in horizontal wells with multiple intervals to achieve very significant improvements in flow rates.  A better understanding of this gas bearing horizon will add to IOG's Hub strategy if commercial in place volumes can be demonstrated.

The Hauptdolomit horizon above Blythe has tested oil to surface at rates up to 1,000 bopd in two separate wells.  These rates may be commercial and the remapping work should help establish the size of this resource.

The operator of Blythe remains on track to submit the FDP application for the proven reserves in the Rotliegendes horizon on Blythe by September 2015.

2)  Skipper Oil Licence Area

IOG is considering a similar 3D seismic remapping project with Baker Hughes RDS on Skipper.  There is a potential Lista/Heimdal channel sand beneath the Skipper discovery between the two prospects in the Maureen and Dornoch which are beneath the Skipper discovery.  This is an analogue of the main hydrocarbon bearing interval in the Mariner field which is just 35km to the north of Skipper.  IOG anticipates commissioning and completing this remapping project before finalising the Skipper appraisal well design.

The primary aim of the Skipper appraisal well is to obtain good quality oil and core samples from the Skipper reservoir.  If the work on the potential new channel sand is encouraging this will also be tested along with the prospects in the Maureen and Dornoch intervals.

3)  Prospective SNS area including Truman, Harvey and Hambleton

This additional work is also expected to be completed by Baker Hughes RDS in due course.  The high level objectives would be to demonstrate commerciality or otherwise of the Harvey and Hambleton discoveries and to better define the Truman prospect.

Mark Routh, CEO and Interim Executive Chairman of IOG said:

"We are delighted to progress this essential remapping work with the geophysical experts at Baker Hughes RDS.  If successful, and subject to a new CPR and funding, our 2P reserves could be more than doubled.  The remapping of the Blythe Carboniferous gas is also very exciting.  I have experience of gas developments in the Carboniferous.  The Kew field which flowed at similar rates (0.4 MMcfd from a vertical unstimulated well) produced at rates in excess of 40 MMcfd after a successful horizontal multi-zone fracture stimulated well.  We look forward to sharing the results of our technical work in due course and also news of our funding plans."

-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.  The combined estimate of 2P reserves and 2C resources net to IOG is 25.5 million barrels of oil equivalent ("MMBoe").  (Sources itemised below.)

Post completion of the Cronx acquisition IOG will have five licences in the North Sea:  The Blythe and Skipper licences are co-owned 50% with Alpha Petroleum Resources (formerly ATP Oil and Gas UK Ltd).  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.  The Blythe owners are preparing for the submission of the Blythe Field Development Plan.

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 ("CPR") dated September 2013.)

The partnership is working towards submitting a Field Development Plan for Blythe by September 2015.

About Skipper:

The Skipper oil discovery is in Block 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 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 holds 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 2015, 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 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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