REG - Independent Oil &Gas - Funding Update <Origin Href="QuoteRef">IOG.L</Origin>

IogAnnouncement

07/08/2015 18:00

RNS Number : 5119V
Independent Oil & Gas PLC
07 August 2015
7 August 2015
Independent Oil and Gas plc
Funding Update
Independent Oil and Gas plc ("IOG" or the "Company"), (AIM: IOG.L), the North Sea focused oil and gas company, provides an update on its funding plans. 
IOG signed an LOI on 27th May with an internationally listed group with a multi-billion dollar market capitalisation for a $10m equity investment at 23.79p and attractively priced debt of $80m 1st tranche and contingent 400m 2nd tranche. Accordingly IOG advised the market that it was working on a transaction to fund the whole development portfolio to first production. As negotiations progressed IOG issued a circular to shareholders and called an EGM to approve the potential issue of new shares to allow the transaction to conclude without further delay and this was approved by shareholders on 31st July 2015.
Unexpectedly, the investor has advised us today that due to the renewed fall in commodity prices they have decided not to proceed with the investment at this stage.
Whilst the IOG team had confidence in this transaction closing it also felt it prudent to keep a number of alternative options open which it is now pursuing. The short term priority is to secure the funding for the Skipper commitment well which is necessary to secure a licence extension for Skipper and also to close the acquisition of 50% of Skipper from our partner in the licence, Alpha Petroleum.
IOG is funded up to 4th September 2015 when the Darwin loan of 358,000 is repayable.
Mark Routh, CEO of IOG commented:
"The decision from our potential investor is unexpected based on the progress made to date and clearly very disappointing. It is a decision based on external factors and not a reflection on our team and assets. Whilst we anticipated that the transaction was likely to conclude, we have continued to keep other opportunities open. We are now pursuing these opportunities with the aim of maximising value to shareholders." 
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Enquiries:
Independent Oil and Gas plc
Mark Routh (CEO)
Peter Young (CFO)
+44 (0) 20 3051 9632
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. After the completion of the Skipper acquisition from Alpha Petroleum Resources Ltd. ("Alpha") and the previously announced Cronx acquisition, the combined estimate of 2P reserves and 2C resources net to IOG will be 38.6 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 now 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.)
The partnership is working towards submitting a Field Development Plan for Blythe by September 2015.
About Skipper:
The Skipper oil discovery is in Block 9/21a in the Northern North Sea in licence P1609. Skipper needs further appraisal by drilling a well to retrieve core and oil samples in order to design the optimum field development plan for the field. Subject to the completion of the previously announced acquisition of Skipper from Alpha, IOG can now progress to the appraisal and development stage of this asset. Skipper has independently verified gross 2C resources of 26.2MMBbls. 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.

This information is provided by RNS
The company news service from the London Stock Exchange
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