TIDMIOG
RNS Number : 1238C
Independent Oil & Gas PLC
11 April 2017
11 April 2017
Independent Oil and Gas plc
Acquisition of SNS Pipeline
Independent Oil and Gas plc ("IOG" or the "Company") (AIM:
IOG.L), the development and production focused Oil and Gas Company,
is pleased to announce it has signed a Sale and Purchase Agreement
("SPA") regarding the acquisition of the recently decommissioned
Thames Gas Pipeline in the Southern North Sea ("SNS") for a nominal
consideration from Perenco UK Limited, Tullow Oil SK Limited and
Centrica Resources Limited. The pipeline will provide the proposed
export route for IOG's Southern North Sea assets.
Highlights:
-- The strategically important pipeline will allow the Blythe
and Vulcan Satellite hubs to export gas to the Bacton Gas
Terminal.
-- Estimated initial capacity of the 24-inch Thames pipeline is
300 million cubic feet per day ("MMcfd").
-- IOG will own 100% and operate the pipeline giving the Company control from field to market.
-- No tariff will be payable for the transportation of the gas
to Bacton. A processing tariff will be payable to Perenco, the
terminal owner.
-- Completion is subject to regulatory consents and provision of
security to Perenco to cover the cost of additional pipeline
integrity surveys that may be required in the future (estimated
maximum cost of GBP500,000).
Upon completion of the acquisition IOG will undertake an
intelligent pigging inspection to ensure the pipeline's integrity
for safe re-use. When completed, the Company intends to export gas
from IOG's Blythe and Vulcan Satellite hubs once they are in
production. These two hubs require an estimated maximum throughput
of approximately 150 MMcfd - well within the pipeline's anticipated
capacity. The Company therefore expects the pipeline to have
sufficient capacity to accommodate the export of gas from the
Harvey discovery, subject to its successful appraisal.
Ahead of first gas, the Company intends to acquire the onshore
reception facilities at the Perenco Bacton terminal. A period of
exclusivity has been agreed until the end of September 2018. IOG
anticipates using and upgrading the facilities in the meantime
during the intelligent pigging works, subject to a Construction and
Tie In Agreement ("CTIA") which is now being drawn up.
Under the terms of the acquisition additional security to be
held by Perenco, the current Thames pipeline operator, for future
decommissioning will be required before commencement of gas export
(not expected to exceed GBP2.5 million including the pipeline
integrity surveys). Additional security will be provided post
completion of the onshore facilities, prior to first gas from IOG's
gas hubs.
Mark Routh, CEO and Interim Chairman of IOG, commented:
"I am delighted to have signed the Sale and Purchase Agreement
for this strategically important acquisition. We acquired most of
our SNS gas portfolio at low cost because the assets in this area
were considered stranded without a viable export route. This
acquisition allays those concerns and is therefore of great
importance to IOG as we now have a route to market for our gas.
Subject to completion and remediation it will enable us to deliver
up to half a trillion cubic feet of gas resources to the UK market
over a period of fifteen to twenty years from the end of next year.
We are also open to work with third parties who may wish to use our
export facilities for a tariff. We believe this is the kind of
innovation required to breathe new life into the Southern North Sea
and is entirely in line with the principles of Maximising Economic
Recovery, as championed by the UK Oil and Gas Authority."
-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 +44 (0) 20 3879
Mark Routh (CEO) 0510
finnCap Ltd
Christopher Raggett / Anthony
Adams +44 (0) 20 7220
(Corporate Finance) 0500
Camarco
Billy Clegg / Georgia Edmonds +44 (0) 20 3757
/ Tom Huddart 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, 320.7 BCF 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. The Company is
preparing Field Development Plans for these three fields which will
form a gas hub. 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. The Company submitted a draft field
Development Plan to the Oil & Gas Authority in December 2016.
Subject to completion of the pipeline acquisition, the Company
intends to submit the full field development plan on a combined
Blythe and Elgood development in the first half of 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 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. Recent 3D seismic reprocessing and remapping by
Beagle Geoscience Limited has led to an improved understanding of
the complex faulting that exists in the overlying strata. Based on
this work, the internal management probabilistic estimates of the
P90/P50/P10 gas initially in place for Harvey are 77/176/403 BCF
and probabilistic estimates of the P90/P50/P10 resources are
44/113/290 BCF.
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 pipeline as the Blythe and Vulcan Satellite hubs.
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 to be
submitted in conjunction with the Blythe field development plan and
will commission a CPR to confirm the resources over this area.
Based on the work undertaken by Beagle, the internal management
probabilistic estimates of the P90/P50/P10 gas initially in place
for Elgood are 26/35/48 BCF and probabilistic estimates of the
P90/P50/P10 resources are 15/22/31 BCF.
SNS portfolio:
The probabilistic Gas Initially in Place and resources estimates
for IOG's SNS portfolio of Blythe, Elgood, Harvey and the Vulcan
Satellites are 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.
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 are now underway.
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
ACQGMGMDNGFGNZM
(END) Dow Jones Newswires
April 11, 2017 02:00 ET (06:00 GMT)
Iog (LSE:IOG)
Historical Stock Chart
From Apr 2024 to May 2024
Iog (LSE:IOG)
Historical Stock Chart
From May 2023 to May 2024