TIDMIOG
RNS Number : 0898Y
Independent Oil & Gas PLC
17 August 2018
17 August 2018
Independent Oil and Gas plc
Harvey Appraisal Well Funding
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to announce the proposed funding of its 100% owned and operated
high-impact Harvey appraisal well and updates on preparations for
spudding the well in Q4 2018.
Highlights
-- Non-binding term sheet for a new non-convertible loan
facility ("Harvey Facility") signed with London Oil and Gas Limited
("LOG") of GBP15 million, principally to fund the upcoming Harvey
appraisal well.
o Proceeds of the Harvey Facility to also fund other costs in
the run-up to IOG's gas development project sanction, including
full repayment of final remaining Skipper liabilities.
o Loan will carry an interest rate of LIBOR+9% per annum;
o The Company would also issue 20,000,000 warrants exercisable
at 32.18p, a 10% premium to the closing price of IOG shares on 16
August 2018.
-- Advanced preparation work is ongoing on the Harvey appraisal
well, targeting spudding in December 2018.
-- The well aims to prove gas across the entire Harvey
structure. The November 2017 Harvey CPR estimates Low/Mid/High
resources of 45/114/286 BCF with a 50% Geological Chance of
Success.
-- Harvey area 3D-seismic reprocessing is complete, already
fulfilling the 30(th) Licensing Round commitment. Seismic
reinterpretation and remapping is expected to conclude in August
2018.
-- Well management, rig and services discussions are very well
advanced, with contracts to be agreed in coming weeks, further
details of which will be announced once signed.
-- The Harvey appraisal well lies in close proximity to IOG's
100% owned Thames pipeline and on success any gas produced would be
exported via the pipeline.
Andrew Hockey, CEO of IOG commented:
"A successful Harvey appraisal well could nearly double the
proven reserves in our Southern North Sea gas portfolio in the high
case of 286 BCF, which the Board of IOG considers to be a
reasonably likely outcome. The 114 BCF mid-case result would still
make it our largest gas asset, significantly enhancing the
Company's value. This would enable a fast-track Harvey development
to follow in direct continuation from Phase 1 of the development of
our proven gas assets at the Blythe Hub and Vulcan Satellites Hub,
which is approaching Final Investment Decision ("FID"). A Harvey
development would benefit from very strong synergies with our
imminent development project, which would also ensure a healthy
economic value for Harvey even in the 44 BCF low case appraisal
result. The re-interpretation of the reprocessed 3D seismic to
Pre-Stack Depth Migration ("PSDM"), to be completed very shortly,
will further de-risk the appraisal well.
Being fully funded for the Harvey appraisal well, with its
excellent risk-return profile, provides a very exciting catalyst
for the Company to come soon after FID on the development assets.
Investors will now enjoy significant near-term upside on top of the
high-value development project, without being required to fund it.
I look forward to providing further updates on the well
preparations in due course."
Harvey Facility
The term sheet for the Harvey Facility carries an initial
interest rate of LIBOR+9% per annum and will be repayable 36 months
after the date of drawdown. The Harvey Facility would be secured
against the Company, its assets and its three subsidiaries; IOG
North Sea Limited, IOG UK Limited and IOG infrastructure Limited.
Upon signing of the Harvey Facility, the Company will issue
20,000,000 warrants to LOG, exercisable at 32.18p, a 10% premium to
closing price of IOG shares on 16 August 2018. The warrants to have
an expiry date of 5 years from the date of drawdown of the Harvey
Facility.
Agreed purposes for use of the Harvey Facility include drilling
of the Harvey appraisal well, payment of final remaining Skipper
liabilities, development project costs and G&A. The Harvey
Facility contains standard conditions precedent, representations
& warranties and covenants which are customary for a
transaction of this nature.
Harvey Appraisal Well
The main Harvey licence, P2085, was awarded to IOG at 100%
Working Interest in December 2013 in the 27(th) Licensing Round and
contains the majority of the Harvey gas discovery. In May 2018, IOG
announced the successful application of the licence to the east of
Harvey in Block 48/24a. This will be Licence P2441. This licence
award secured 100% of the Harvey structure. The November 2017
Harvey CPR estimates Low/Mid/High resources of 45/114/286 BCF with
a 50% Geological Chance of Success.
Following the successful conclusion of the Harvey 3D seismic
reprocessing project carried out by Schlumberger Western Geco,
which commenced in March 2018, IOG is now close to completing the
interpretation and mapping of this new data set which has been
reprocessed to deliver a pre-stack depth migration ("PSDM") volume.
The aim of this project is to optimise the appraisal well location,
which therefore further de-risks this appraisal project.
The well will fulfil a 27(th) Round Licence commitment and will
target the confirmation of IOG's view that the Harvey structure
already has proven gas from well 48/23-2 drilled by Arco in 1984
which clipped the flank of the newly mapped high case Harvey
structure.
IOG is targeting spudding the Harvey appraisal well in December
2018 with the objective of proving up the upside resource estimate
of 286 BCF.
The necessary safety and environmental site surveys are due to
be carried out in early September.
IOG expects to appoint a well management contractor to be the
Well Operator on Harvey subject to regulatory approvals in the
coming weeks. The selection of the drilling rig contractor and well
services contracts will be finalised shortly thereafter.
-ENDS-
Certain information communicated in this announcement was, prior
to its publication, inside information for the purposes of Article
7 of Regulation 596/2014.
Enquiries:
Independent Oil and Gas plc
Andrew Hockey (CEO)
James Chance (CFO) +44 (0) 20 3879 0510
finnCap Ltd
Christopher Raggett
Anthony Adams +44 (0) 20 7220 0500
Peel Hunt LLP
Richard Crichton
David McKeown +44 (0) 20 7418 8900
Camarco
Georgia Edmonds/ Tom Huddart/ Monique Perks +44 (0) 20 3757 4980
Notes
About Independent Oil and Gas:
IOG owns substantial low risk, high value gas Reserves in the UK
Southern North Sea. The Company is targeting a 2P peak production
rate in excess of 200 MMcfd (c. 35,000 Boe/d) from its substantial
current portfolio via an efficient hub strategy. Alongside this it
continues to pursue value accretive acquisitions, to generate
significant shareholder returns. All IOG's licences are owned 100%
and operated by IOG.
About Harvey:
IOG considers that the Harvey structure is a discovery in which
gas has been proven by well 48/23-2 drilled by Arco in 1984. The
Harvey licence, P2085, was awarded to IOG at 100% Working Interest
in December 2013 in the 27(th) Licensing Round. The Oil and Gas
Authority ("OGA") has confirmed the continuation of licence P2085,
which contains the Harvey discovery, until 20 December 2019. A
commitment to drill an appraisal well on the Harvey structure has
been made and must commence by 20 September 2019. In May 2018 IOG
announced the successful application of the licence to the east of
Harvey in Block 48/24a. This will be Licence P2441. This licence
award secured 100% of the Harvey structure on the mid-case and
upside cases of the mapped structure.
In November 2017, ERC Equipoise Limited completed a Competent
Person's Report on Harvey which estimated unrisked prospective
resources on the Harvey structure as 45/114/286 BCF (Low/Best/High
case) based on gas initially in place of 71/176/437 BCF
(Low/Best/High). The CPR assigned a Geological Chance of Success of
50%.
Harvey is located in the well understood Leman Sandstone
Formation play. If successfully appraised, it has the potential to
be the largest gas discovery in the IOG portfolio and could
significantly enhance the economics of IOG's Southern North Sea
business.
Competent Person's Statement
In accordance with the AIM Note for Mining and Oil and Gas
Companies, IOG discloses that Mark Routh, IOG's Chairman is the
qualified person that has reviewed the technical information
contained in this document. 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.
Further information can be found on
www.independentoilandgas.com
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END
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