06 Nov 2014
Result of UK’s 28th Offshore Licensing RoundIndependent Oil and Gas plc (“IOG”), (AIM:IOG.L), the North Sea focused oil and gas company, is delighted to have been awarded the licence between Cronx and Blythe containing the Elgood discovery and Tetley and Rebellion prospects.
Typically the award of licences in this area are delayed due to environmental considerations, so to be awarded without the expected delay allows us to immediately consider co development options with Cronx and Blythe.
The Elgood discovery was drilled by Enterprise Oil in 1990. IOG's estimate of the recoverable reserves in Elgood is 2.5 million barrels of oil equivalent (“MMBOE”) with additional prospective resources of 5.3 MMBOE in the Tetley and Rebellion prospects. Reprocessing of existing 3D seismic is required to determine whether Elgood connects to Cronx which would boost recoverable reserves significantly. IOG will now work on the potential development plans and commission a Blythe, Cronx and Elgood CPR to confirm the resources.
Mark Routh, CEO and Interim Executive Chairman of IOG said:
Whilst very pleased with the award, we are also disappointed to have been outbid by two major oil companies on our other applications who also bid firm wells. It is a credit to our technical team to have selected these optimal blocks. “The 28th round has been a success and the outcome is good news for UK Plc, UK oil jobs and eventually oil related tax revenues. In order to derive those benefits the industry needs tax cuts and most importantly tax clarity in the short term. With the North Sea, there is life in the old dog yet.
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.
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 awarded in the 27th licensing round. One is to the west of and adjacent to Skipper, which contains the Theakston and Moorhouse prospects and the other is to the east of Blythe containing the Truman prospect and Harvey discovery. Both these 100% owned licences have potential resources that could be tied back to developments at Skipper and Blythe respectively. The Blythe owners are preparing for the submission of the Blythe Field Development Plan.
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 dated September 2013.)
The partnership is working towards submitting a Field Development Plan for Blythe as soon as possible. IOG is targeting first gas from the Blythe field in Q4 2016 or Q2 2017 (depending on whether a platform is required) but the final development schedule has yet to be formalised.
The Skipper oil discovery is in Blocks 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 Competent Person’s Report dated September 2013.)
The Cronx acquisition (IOG 100%) 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 Competent Person’s Report (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 pilot well in 2015, subject to rig availability, the necessary permits and funding, which IOG currently estimates to be £6.1m. 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. The well would be reused and extended into a producing well as part of the field development. IOG is currently evaluating options for the development and export of the Cronx gas.