25 Jun 2015
Corporate UpdateIndependent Oil and Gas plc ("IOG" or the “Company”), (AIM: IOG.L), the North Sea focused oil and gas company, is pleased to provide a corporate update to shareholders.
- Remapping work over the core Southern North Sea (“SNS”) gas portfolio with Baker Hughes RDS has helped remove uncertainties relating to commercial volumes in both Cronx and Elgood discoveries. This work will be further enhanced with new data purchased by IOG and the work scope has accordingly been extended.
- The Carboniferous resource play beneath Blythe is encouraging and appears to be a larger structure than first anticipated, with further analysis to be undertaken ahead of the final report from Baker Hughes RDS expected in July 2015.
- Initial results suggest that Cronx and Elgood are not linked, but nonetheless the Directors anticipate that the final report will support the Directors’ expectations that following the completion of a new CPR, IOG’s proven reserves which are currently 3.0 MMBOE could more than double.
- The additional Baker Hughes work to evaluate the prospectivity beneath the Skipper discovery and also to evaluate other SNS prospects and discoveries including Truman, Harvey, Hambleton, Tetley & Rebellion is expected to commence once the final report is completed and subject to IOG’s funding.
- The Company has signed a Memorandum of Understanding (MOU) with Baker Hughes for the provision of oilfield services on the Skipper development and IOG’s other projects.
- Discussions regarding a rig contract for Skipper are ongoing between the Company and a third party, targeting a commitment well in mid-2016.
- In parallel, discussions with certain FPSO providers are ongoing for the Skipper field development.
- The Cronx SPA has been extended to December 2015 and is expected to complete shortly after IOG’s long term funding is secured.
We are pleased to strengthen our relationship with Baker Hughes as the initial results from the seismic remapping work are positive. We expect that the resource plays beneath the Blythe and Cronx/Elgood fields are larger than first anticipated, and with additional reservoir understanding we can more than double our proven reserves.
Scott Reeves, President of Baker Hughes RDS commented:
We believe that the added field remapping will help to better predict resource potential and accessibility. By understanding the critical reservoir properties we’ll be able to recommend and engineer a development plan to help maximize profitable recovery.
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 Petroleum Resources Ltd. (“Alpha”) and the previously announced Cronx acquisition, the combined estimate of 2P reserves and 2C resources net to IOG will be 38.6 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 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 to the Blythe development.
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 (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. 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. 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. 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 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 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.