REG - Independent Oil &Gas - Extension of Skipper Licence <Origin Href="QuoteRef">IOG.L</Origin>

IogAnnouncement

28/01/2016 07:10

RNS Number : 2313N
Independent Oil & Gas PLC
28 January 2016
28 January 2016
Independent Oil and Gas plc
Extension of Skipper Licence
Independent Oil and Gas plc ("IOG" or the "Company") (AIM: IOG.L), the North Sea focused oil and gas company, is pleased to announce that following discussions with the UK Oil & Gas Authority ("the OGA"), the Skipper Licence P1609 Block 9/21a has been formally extended until 31 December 2016. As previously indicated, IOG intends to drill the appraisal well as soon as economic conditions allow.
Separately, the Company has today issued 444,989 new Ordinary Shares (the "New Ordinary Shares") to VSA Capital and an independent third party consultant as payment for advisory services received. Such New Ordinary Shares were issued to VSA and the independent consultant at 8.73p and 8.38p per New Ordinary Share respectively being the Volume Weighted Average Price per Ordinary Share for the periods over which the services were provided. 
The Company has applied to the London Stock Exchange for admission of the New Ordinary Shares to trading on AIM ("Admission"). Admission is expected to occur on 2 February 2016. Following Admission there will be 79,162,684 Ordinary Shares in issue. Accordingly, this number may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure and Transparency Rules. 
Mark Routh CEO of IOG commented:
"In the context of this very severe oil price downturn, we are grateful for the OGA's pragmatic and supportive stance in extending the Skipper licence which we anticipate will enable us to drill the appraisal well later in 2016. Constructive dialogue with the various contractors and funders are progressing well and we anticipate confirming that arrangements remain in place for a rapid resumption of the well drilling process once it makes economic sense to proceed."
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Enquiries:
Independent Oil and Gas plc
Mark Routh (CEO)
Peter Young (CFO)
+44 (0) 20 3206 1565
finnCap Ltd
Matt Goode/Christopher Raggett
(Corporate Finance)
+44 (0) 20 7220 0500
Camarco
Billy Clegg / Georgia Mann
+44 (0) 20 3757 4980


Notes
About Independent Oil and Gas:
IOG is an oil and 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. The Company's combined estimate of 2P reserves in Blythe and 2C resources in Skipper net to IOG will be 37.1 million barrels of oil equivalent ("MMBoe").
Post completion of the Cronx acquisition IOG will have five licences in the North Sea. Four of these licences will be owned 100% by IOG and subject to DECC/OGA approval will be operated by IOG. The Blythe licence is co-owned 50% with Alpha which is the operator. IOG has a 100% working interest in two other licences, one awarded in the 27th licensing round and another in the recent 28th licensing round. One is to the east of Blythe containing the Truman prospect and Harvey discovery and the other is between the Blythe and Cronx licences which contains the Elgood and Hambleton discoveries and the Tetley and Rebellion prospects. Both these 100% owned licences have potential resources that could be tied back to nearby infrastructure or to the Blythe development.
Further information can be found on www.independentoilandgas.com
About Blythe:
The Blythe gas discovery straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736 which is 50% co-owned by IOG and Alpha (operator). Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 BCF (6.1 MMBoe) which is 17.2 BCF (3.0 MMBoe) net to IOG. (Source: ERC Equipoise Competent Person's Report ("CPR") dated September 2013.)
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. Skipper needs further appraisal by drilling a well to retrieve an oil sample in order to design the optimum field development plan. Skipper has independently verified gross 2C resources of 26.2MMBbls. IOG management estimates that the recoverable oil from Skipper is 34.1 MMBbls based on a recovery factor of 25%, compared to the historic CPR estimate of 19%. Successful flow tests from nearby heavy oil fields substantiate the company's estimate of a 25% recovery factor. The appraisal well will also target two exploration prospects directly beneath the Skipper oil discovery which may contain oil in place of 46MMBbls. (Source: AGR Tracs CPR dated September 2013.)
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 in which IOG owns 50%. 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 3.4MMBOE 2C resource. IOG anticipates drilling a well in 2016, subject to rig availability, the necessary permits and funding. IOG expects the well to confirm the recoverable resources, which IOG believes has the potential to be larger than the 17.6 BCF base case in the CPR. IOG is currently evaluating options for the development and export of the Cronx gas.
About Elgood and Hambleton:
The Elgood discovery (IOG 100%) (Block 48/22c, licence P2260) 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 26BCF.
There are prospective resources on licence P2260 of 5.3 MMBoe in the Tetley and Rebellion prospects. Reprocessing of existing 3D seismic across 48/22a and 48/22c is required 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 and Interim Executive Chairman 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.

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