TIDMIOG
RNS Number : 0265S
Independent Oil & Gas PLC
16 December 2016
16 December 2016
Independent Oil and Gas plc
Southern North Sea Resources Increase and Licence Extensions
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to announce a significant increase in its internal resource
estimates for Elgood and Harvey based on work undertaken by a third
party contractor. The Company is also pleased to announce that it
has secured licence extensions for Harvey and Skipper to allow more
work on both licences prior to the Company undertaking any further
work commitments.
Highlights:
-- Significant increase in the Company's internal P50
probabilistic gas resources from 382 BCF to 490 BCF. While these
estimates are internal at present they follow the completion of
detailed interpretation and remapping of the 3D seismic
reprocessing project by Beagle Geoscience.
- The P50 resources at Harvey have increased to 113 BCF (previously 16 BCF).
- The P50 resources at Elgood have increased to 22 BCF (previously 11 BCF).
-- This is an increase in P50 resources of 108 BCF or approximately 18 MMBoe.
-- Three month extension to the Harvey licence.
-- Two year extension to the Skipper licence.
Southern North Sea ("SNS") Resources Upgrades
Earlier this year, IOG completed a 3D seismic reprocessing
project across the wider Blythe area and acquired additional 3D
seismic data covering an area to the east of the Harvey well
drilled in 1984. IOG then contracted Beagle Geoscience Limited
("Beagle") to carry out detailed interpretation and remapping of
these new data sets. This project has resulted in a significant
increase in the Company's internal resource estimates as detailed
below.
Harvey
Prior to this work the Harvey discovery (drilled by Arco in
1984, well 48/23-2) and the Truman prospect were considered
separate structures with resources of 16 BCF and 25 BCF
respectively. The new data has led to improved understanding of the
complex faulting that exists in the overlying strata, which
provides management with a new significantly different
interpretation of what it believes is a single, larger Harvey
structure. The comparison of the probabilistic Gas Initially in
Place ("GIIP") and the probabilistic resources numbers are
presented below.
Gas Initially Estimated resources
in Place
---------------------------- ------------------ ------------------------
Field (BCF) (BCF)
---------------------------- ------------------ ------------------------
P90 P50 P10 P90 P50 P10
---------------------------- ----- ----- ---- ------- ------- ------
Harvey (previous estimate) 8 22 36 6 16 26
---------------------------- ----- ----- ---- ------- ------- ------
Harvey (new estimate) 77 176 403 44 113 290
---------------------------- ----- ----- ---- ------- ------- ------
Increase 69 154 367 38 97 264
---------------------------- ----- ----- ---- ------- ------- ------
These are internal management estimates based on the work
undertaken above by Beagle. IOG is now considering committing to a
firm appraisal well on Harvey which would be required before a
reservoir model could be built and a development plan could be
prepared. If an appraisal well was to be drilled successfully and
Harvey was subsequently developed, the Company believes that it
could be tied back to the same export route as the Blythe and
Vulcan Satellite hubs.
Elgood
The Elgood discovery was drilled by Enterprise in 1991, well
48/22-4 and tested gas to surface at rates up to 17.6 MMcfd. The
new mapping work completed by Beagle has resulted in a modest
increase in management's internal resource estimates.
The comparison of the probabilistic Gas Initially in Place
("GIIP") and the probabilistic resources numbers for Elgood are
presented below.
Gas Initially Estimated resources
in Place
---------------------------- ------------------ ------------------------
Field (BCF) (BCF)
---------------------------- ------------------ ------------------------
P90 P50 P10 P90 P50 P10
---------------------------- ----- ----- ---- ------- ------- ------
Elgood (previous estimate) 6 14 18 4 11 14
---------------------------- ----- ----- ---- ------- ------- ------
Elgood (new estimate) 26 35 48 15 22 31
---------------------------- ----- ----- ---- ------- ------- ------
Increase 20 21 30 11 11 17
---------------------------- ----- ----- ---- ------- ------- ------
As above, these are internal management estimates based on the
work undertaken by Beagle. The Company expects that Elgood will be
co-developed with the Blythe gas field and would have a single well
tied back to the unmanned platform and producing well at Blythe.
Some further pre-development technical work is now being undertaken
on Elgood prior to an anticipated Field Development Plan being
completed and submitted.
Other SNS portfolio
There are no significant changes to management's estimate of the
Resources in the other assets within the Blythe hub. The
probabilistic GIIPs and resources estimates for IOG's SNS portfolio
of Blythe, Elgood, Harvey and the Vulcan Satellites are now as
follows: -
SNS Portfolio Gas Initially Estimated resources
in Place
--------------- ------------------ ------------------------
Field (BCF) (BCF)
--------------- ------------------ ------------------------
P90 P50 P10 P90 P50 P10
--------------- ----- ---- ----- ------- ------- ------
Blythe 39 52 84 22 34 48
--------------- ----- ---- ----- ------- ------- ------
Elgood 26 35 48 15 22 31
--------------- ----- ---- ----- ------- ------- ------
Harvey 77 176 403 44 113 290
--------------- ----- ---- ----- ------- ------- ------
Vulcan North
West 184 215 251 112 131 153
--------------- ----- ---- ----- ------- ------- ------
Vulcan East 104 124 145 64 77 91
--------------- ----- ---- ----- ------- ------- ------
Vulcan South 117 186 275 59 112 193
--------------- ----- ---- ----- ------- ------- ------
Totals 547 789 1206 315 490 806
--------------- ----- ---- ----- ------- ------- ------
This does not include other discoveries that may be
sub-commercial, or potential additional resources that could be
recovered from the carboniferous sections or other undrilled
prospects in the SNS portfolio.
Licence Extensions
IOG recently requested a 3-month extension to the end of March
2017 for the 100%-owned licence P2085, which includes the Harvey
discovery. The UK Oil & Gas Authority has granted this request,
thereby allowing IOG sufficient time to consider the significant
technical work that has been completed before deciding whether to
make a firm well commitment.
Furthermore, IOG has been granted a 2-year extension on licence
P1609 to 11 February 2019. This licence covering block 9/21a
contains the 100%-owned Skipper oil discovery to the east of
Shetlands. This is to allow field development options to be
considered once a reservoir model has been developed.
Mark Routh, CEO of IOG commented:
"We are delighted with the results of the excellent technical
work done by Beagle Geoscience. This has really vindicated our
strategy of acquiring licences containing overlooked discoveries
near to our existing assets and reworking the data using the very
best technical resource.
Our gas portfolio is now estimated at nearly half a trillion
cubic feet of P50 resources, or more than 82 million barrels of oil
equivalent ("MMBoe"), that we believe could all be developed via
our cost-efficient hub strategy utilising the same export
route.
Funding discussions are progressing well in parallel with the
technical work and we are pleased to have a number of large
institutions interested in partnering with us to deliver these
substantial gas resources to the UK market."
S
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.
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, 320.7BCF collectively. 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.
About the Blythe Hub:
The Blythe hub licences comprise Blythe, Elgood, Hambleton,
Truman and Harvey.
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.) The Blythe licence has been extended
to 31 December 2017.
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 continuing now that a development will proceed on
the main Blythe gas discovery.
About Truman and Harvey:
IOG has a 100% working interest in licence P2085 to the east of
Blythe (Blocks 48/23c & 48/24b) which was awarded in the 27th
licensing round. At the time of the application IOG identified the
Truman prospect with prospective resources of 25 BCF and the Harvey
discovery with contingent resources of 16 BCF. The 3D seismic
reprocessing and remapping project led to improved understanding of
the complex faulting that exists in the overlying strata. This
resulted in a map with one large structure instead of two. This
large structure is named Harvey. The complete range of
probabilistic GIIPs and resources for Harvey are presented
above.
About Elgood:
IOG has a 100% working interest in licence P2260 awarded in the
28th licensing round to the west of Blythe containing the Elgood
discovery (Block 48/22c). 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 is now working on the development plan for Elgood and will
commission a CPR to confirm the resources over this area. The
complete range of probabilistic GIIPs and resources for Elgood are
presented above.
About Hambleton:
The Hambleton discovery, to the south of licence P2260, was
drilled by Century Exploration in 2005 but also was not progressed
to development. IOG previously estimated that Hambleton had
P90/P50/P10 probabilistic resources of 2/6/26 BCF. The result of
the Beagle remapping project has not led to a significant increase
in estimated GIIPs or resources. Beagle has estimated the
P90/P50/P10 probabilistic resources at Hambleton of 4/8/17 BCF.
There are prospective resources on licence P2260 of 5.3 MMBoe in
the Tetley and Rebellion prospects.
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. The Skipper
licence has now been extended to 12 February 2019.
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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