24 Dec 2013
Update on ATP Oil and Gas UK Ltd Sale Process, Skipper Rig Contract and Proposed Change of Blythe and Skipper Operator
Independent Oil and Gas plc (“IOG”) (AIM:IOG.L), the North Sea focused oil and gas company, announces it has been advised by ATP Oil and Gas UK Ltd (‘ATP UK’) that it no longer has a rig contract in place for the drilling of the planned Skipper appraisal well, which was scheduled for Q3, 2014. IOG has consequently commenced the process to replace ATP UK as the operator of the Skipper and Blythe licences, under the Joint Operating Agreements. IOG has also commenced the process with the Department of Energy and Climate Change (“DECC”) to meet their requirements to take over as operator.
IOG remains committed to the original drilling schedule, subject to contracting with an alternative rig provider. With the support of ATP UK, IOG has been in discussions with AGR Well Management Ltd (“AGR”) with regards to the ordering of long lead items for the Skipper appraisal well, based on the original timetable. AGR is now also assisting IOG in securing a replacement rig slot.
In addition, the Company has engaged AGR to assist with the process of qualifying as an operator. This is in line with IOG’s previously stated strategy and will be necessary if it is to carry out future drilling operations on its recently awarded 27th Round licences to the west of Skipper and to the east of Blythe or if any future acquisitions or licence awards require it.
IOG has also been leading discussions with a third party regarding the offtake route for the Blythe gas development, again with the support of ATP UK. IOG believes it can better represent the partnership’s interests in these discussions and accelerate the development as operator.
ATP UK is a subsidiary of ATP Oil & Gas Corporation, which entered into Chapter 11 bankruptcy protection in 2012. The board of IOG understands that a US court has now approved the sale of shares in ATP UK to Alpha Petroleum and that the required UK CVA process to complete the sale has now commenced. ATP UK owns 50% of each of the Blythe and Skipper licences with IOG owning the remaining 50%.
Mark Routh, CEO of IOG commented:
IOG is pleased that the sale of ATP UK is progressing. Whilst we continue to hold their team in the highest regard, they are restricted from making any significant commitments on our joint licences until the sale completion. We therefore had to take action to protect the schedules, particularly for the Skipper appraisal well, which is a licence commitment that would otherwise slip into 2015. I have experience of running a company which was a successful Production Operator in the North Sea and the Board is confident that IOG has the capabilities to repeat that success with Skipper and Blythe. The partnership with AGR enhances IOG’s capability to deliver its business plan on schedule and as operator of its assets.
We can now look forward to 2014, confident of realising shareholder value from our core assets and the wider portfolio.
About Independent Oil & Gas:
IOG is an oil & 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.
IOG has four licences in the North Sea: In addition to the Blythe and Skipper licences co-owned 50% with ATP UK, IOG has a 100% working interest in two licences awarded in the 27th licencing round. One is to the west of and adjacent to Skipper, the other is to the east of Blythe. Both these licences have potential resources that could be tied back to developments at Skipper and Blythe respectively.