TIDMIOG
RNS Number : 6775N
Independent Oil & Gas PLC
28 October 2016
28 October 2016
Independent Oil and Gas plc
Completion of Vulcan Satellites Acquisition
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to announce that it has completed the acquisition (the
"Acquisition") of 100% of the shares of Oyster Petroleum Limited
("Oyster") a subsidiary of Verus Petroleum Holding Limited. Oyster
holds the Southern North Sea licences containing the Vulcan East,
Vulcan North West and Vulcan South fields, collectively the Vulcan
Satellites.
The details of the Acquisition remain unchanged from the
announcement made on the 13 June 2016. There is an initial
consideration of GBP1 million (which was funded by drawing down on
the Company's available loan facilities), GBP0.75 million payable
nine months after completion and then further payments of up to
GBP3.25 million upon the achievement of certain milestones as
further detailed in the announcement of 13 June 2016.
The Acquisition increases IOG's 2C recoverable resources by
320.7 BCF or 53.45 million barrels of oil equivalent. The Vulcan
Satellites require no further appraisal and IOG is progressing
exclusive discussions regarding an export route for its SNS gas
hubs. Management will now be able to build on the current
preliminary Field Development Plan ("FDP") preparation work, with a
view to submitting the Vulcan Satellites FDP next year.
Oyster also has $25.6 million in UK pre-trading expenditure
which can reduce the future amount of tax payable.
Mark Routh CEO of IOG commented:
"We are very pleased to have completed the acquisition of these
sizeable and attractive assets in the UK Southern North Sea, more
than doubling our 2P+2C recoverable resources at a compelling price
of $0.22/Boe. The acquisition is a very good fit for IOG alongside
our Blythe hub and is a vital step forward in IOG's plan to become
a significant operator in the Southern North Sea."
"We are confident the acquisition will help us deliver our
strategy of developing existing discoveries through common
infrastructure and capturing valuable synergies. I look forward to
updating shareholders on field developments plans in the near
future.
-S-
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Enquiries:
Independent Oil and Gas plc
Mark Routh (CEO) +44 (0) 20 3879
Peter Young (CFO) 0510
finnCap Ltd
Matt Goode/Christopher Raggett +44 (0) 20 7220
(Corporate Finance) 0500
Camarco +44 (0) 20 3757
Billy Clegg / Georgia Edmonds 4980
Notes
About Independent Oil and Gas:
IOG is an oil and gas company with established assets in 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. Following the Vulcan
Satellites acquisition, the Company's combined estimate of 2P
reserves in Blythe and 2C resources in the Vulcan Satellites and
Skipper net to IOG are 93.65 MMBoe.
All of IOG's licences are owned 100% and operated by IOG.
Further information can be found on
www.independentoilandgas.com
About the Vulcan Satellites:
The Vulcan Satellites consist of three fields, Vulcan East,
Vulcan North West and Vulcan South, which hold independently
estimated 2C resources of 77.4 BCF, 131.3 BCF and 112.0 BCF
respectively. These fields lie in Block 49/21a (Licence P039),
Block 49/21d (Licence P2122), Block 48/25b (Licence P130) and Block
49/21c (Licence P1915) in the UK sector of the Southern North Sea.
They lie approximately 30-45km east of IOG's 100%-owned Blythe
field and are considered ready for development with no further
appraisal required. IOG is progressing exclusive discussions
regarding an export route for these fields and once that is in
place the Company will prepare a Field Development Plan. IOG has
assumed liability for decommissioning a suspended well on Vulcan
East, which in April 2015 was independently estimated to cost
GBP3.0 million as part of a development campaign, based on
prevailing rig rates at that time.
The acquisition of the Vulcan Satellites is for an initial
consideration of GBP1 million payable at Completion, subject to
interim period adjustments for the period between the Effective
Date and Completion, followed by GBP0.75 million payable nine
months after Completion, GBP1.75 million payable within 30 days of
OGA approval of a Field Development Plan on the licences, and
GBP1.5 million payable within 30 days of the production of first
gas from the licences (defined as a minimum period of seven days of
continuous production). The aggregate consideration, allowing for
any interim period adjustments, is therefore GBP5 million.
About Blythe:
The Blythe gas discovery in the Rotliegendes Leman formation
straddles Blocks 48/22b and 48/23a in the Southern North Sea in
licence P1736. The Blythe Leman reservoir needs no further
appraisal and has independently verified 2P reserves of 34.3 BCF
(6.1 MMBoe). (Source: ERC Equipoise Competent Person's Report
("CPR") dated September 2013.)
Gas tested to surface from three separate intervals in the
Carboniferous beneath the Blythe Leman gas discovery from one of
the Blythe discovery wells, 48/23-3 drilled by Arco in 1987. The
maximum rate achieved was 0.9 MMcfd from an unstimulated vertical
test. (Source: End of well report 48/23-3 - November 1987.) This
was deemed uncommercial at the time, before the advent of
horizontal multi-fracture stimulated wells. Further technical work
including seismic reprocessing and remapping needs to be completed
to evaluate this potential resource to refine the gas-in-place
estimates which are between 70 BCF and 310 BCF. (Source: Tullow Oil
48/23a Relinquishment Report - May 2009.)
Oil has flowed to surface from the naturally fractured Zechstein
Carbonates in the Hauptdolomit formation above the Blythe Leman gas
discovery from two wells. Well 48/22-1 drilled by Burmah in 1966
flowed 39deg API oil at rates up to 2,000 barrels per day (Source:
Composite well log 48/22-1 - October 1966) and well 48/23-3 drilled
by Arco in 1987 at flowed 38deg API oil at a maximum rate of 1,128
barrels of oil a day. (Source: End of well report 48/23-3 -
November 1987.) The extent of the structure and potential oil
resources in the Hauptdolomit remains unknown. Previous estimates
considered that the mapped closure was probably small. Oil-in-place
has been estimated between 2 MMBbls and 4 MMBbls. (Source: Tullow
Oil 48/23a Relinquishment Report - May 2009.) Further evaluation
and re-mapping is now underway now that a development will proceed
on the main Blythe gas discovery.
About Skipper:
The Skipper oil discovery is in Block 9/21a in the Northern
North Sea in licence P1609. IOG owns 100% of the Skipper licence
P1609 and is the Operator. In July/August 2016 the Company
successfully drilled its first operated appraisal well and
retrieved oil samples, in order to design the optimum field
development plan. Skipper has independently verified gross 2C
resources of 26.2 MMBbls. Following the results from the appraisal
well, IOG management's estimates of the oil in place in the Skipper
reservoir are minimum/most likely/maximum 119.3/142.6/168.3 MMBbls.
Recovery factor estimates will be revised during the full field
reservoir simulation studies which will now commence.
About Cronx:
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. 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 completing the Cronx
acquisition by the end of October 2016. IOG is currently evaluating
options for the development and export of the Cronx gas.
About Truman and Harvey:
IOG has a 100% working interest in a licence awarded in the 27th
licensing round to the east of Blythe containing the Truman
prospect and Harvey discovery. IOG estimates potential resources in
this licence of 16 BCF or 3.1 MMBoe. These 100%-owned fields have
potential resources that could be tied back to nearby
infrastructure being developed for the Blythe development.
About Elgood and Hambleton:
IOG has a 100% working interest in a licence awarded in the 28th
licensing round to the west of Blythe containing the Elgood
discovery (Block 48/22c, licence P2260). Elgood 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 and
reinterpretation of existing 3D seismic across 48/22a and 48/22c is
ongoing 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 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 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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