20 Mar 2015
Award of New Discovery in Southern North SeaIndependent Oil and Gas plc (“IOG”), (AIM:IOG.L), the North Sea focused oil and gas company, is pleased to announce that further to the award of block 48/22c in the UK 28th offshore licensing round, the licence area has been increased by 42 km2 to the South and now contains the Hambleton discovery.
On 6th November 2014 the Company was awarded 100% of block 48/22c containing the Elgood discovery and requested the Department of Energy and Climate Change (“DECC”) increase the licence area to include the Hambleton discovery. This has now been confirmed and the licence has been formally awarded.
Hambleton was discovered by Century Exploration in 2005 and has a base case of recoverable resources of 6 BCF. IOG believes that the reprocessing of existing 3D seismic data could increase recoverable resources up to 26 BCF and could therefore be potentially tied-back to the nearby Blythe development that is 50% owned by IOG. IOG is currently in discussions with several parties regarding the reprocessing of the 3D seismic data.
IOG continues to work on the potential co-development of Cronx and Elgood and is in asset level discussions regarding the funding of a well on Cronx, which is required for the completion of the Cronx acquisition. Discussions regarding the funding of other assets in the portfolio are also ongoing. The operator of Blythe remains on track to submit the FDP application by September 2015.
Mark Routh, CEO and Interim Executive Chairman of IOG said:
We are delighted to be awarded the increased area we requested on this licence which potentially increases the commercial resources within our Southern North Sea gas hub. With gas prices remaining strong and rig rates and other service costs coming down, we believe this is the right time to be increasing our gas resources as part of our gas hub strategy.
We are encouraged by the discussions that we are having regarding funding at an asset level and look forward to providing further updates in due course.
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 25.4 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 27th licensing round and another in the recent 28th 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 the development Blythe. The Blythe owners are preparing for the submission of the Blythe Field Development Plan.
Further information can be found on www.independentoilandgas.com.
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.
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.)
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.