10 Nov 2017
Harvey Licence Valuation UpdateIndependent Oil and Gas plc ("IOG" or the "Company"), the development and production focused Oil and Gas Company, is pleased to announce the recent Competent Persons Report (“CPR”) by ERC Equipoise Limited ("ERCE"), has been updated to include a fully risked, expected monetary value (“EMV”) for the Harvey licence.
- Fully risked EMV for the 100%-owned Harvey licence of £79 million.
- Best estimate gross unrisked post-tax NPV10 of £159 million for the overall Harvey structure and £126 million for the licence.
- The EMV has been calculated on the mean of the Low/Best/High estimates of the prospective resources following the derivation of Harvey production profiles. Low/Best/High estimates of unrisked prospective gas resources are 45/114/286 BCF on the Harvey structure, 36/90/226 BCF on licence.
- Firm commitment made to drill the Harvey well within 2 years, subject to acceptance and a licence extension by the OGA. Well scheduling under consideration.
The unrisked NPV10 post tax values and prospective resources are as follows: -
|Harvey||Gross (on structure)||Net (on licence)|
|Prospective Resources (BCF)||
|Prospective Resources (BCF)|
|Low estimate||£24 million||45||£19 million||36|
|Best estimate||£159 million||114||£126 million||90|
|High estimate||£462 million||286||£365 million||226|
As advised previously the Competent Person estimates that approximately 21% of the Harvey structure is not on IOG’s licence. Plans are underway to licence all the Harvey resources.
Mark Routh, CEO and Interim Chairman of IOG commented:
We are delighted with the result of the CPR and the EMV of the Harvey structure on our licence being determined at £79 million. This clearly validates our commitment to drill the well on what has the potential to become our largest gas asset. The value of Harvey is strengthened by the synergies with our Southern North Sea gas development hubs, notably shared use of a fully owned Thames Pipeline gas export route. Alongside these two hubs, the Harvey appraisal opportunity therefore represents very material upside to IOG even on the mid case volumes. We are therefore actively considering how soon we can drill the well. We look forward to updating all stakeholders in due course.
About Independent Oil and Gas:
IOG owns substantial low risk, high value gas Reserves in the UK Southern North Sea. The Company is targeting a 2P peak production rate in excess of 200 MMcfd (c. 35,000 Boe/d) from its substantial current portfolio via an efficient hub strategy. Alongside this it continues to pursue value accretive acquisitions, to generate significant shareholder returns. All of IOG's licences are owned 100% and operated by IOG.
About ERC Equipoise Limited:
ERCE is an independent consultancy specialising in geoscience evaluation and engineering and economics assessment. Except for the provision of professional services on a time-based fee basis, ERCE has no commercial arrangement with any other person or company involved in the interests which are the subject of this report.
ERCE has the relevant and appropriate qualifications, experience and technical knowledge to appraise the assets professionally and independently. ERCE considers that the scope of the CPR is appropriate and includes and discloses all information required to be included therein and was prepared to a standard expected in accordance with the AIM Rules.
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, is the qualified person that has reviewed the technical information contained in this document. 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.
Further information can be found on www.independentoilandgas.com