Independent Oil and Gas plc, (AIM: IOG.L), the North Sea focused oil and gas company, is pleased to provide an operational and funding update for the upcoming well on Skipper.

  • IOG is at the advanced stages of planning the Skipper well. This will be a vertical well drilled to 5600ft with the primary objective of retrieving good quality reservoir condition oil samples in order to optimise the Skipper field development. The Directors believe an approved field development plan on Skipper would convert the Board’s estimated 34.1 MMBbls of contingent resources into 2P reserves. The AGR Tracs’ historical CPR estimate for Skipper is 26.2 MMBbls 2C resources, using a 19% recovery factor.
  • The secondary well objective is to drill two mapped reservoir structures beneath the Skipper oil field in the Lower Dornoch and Maureen formations, in which the CPR authors have mapped structures which could contain an additional 46 MMBbls of oil in place. If oil is present in these structures these accumulations would be co-developed with Skipper in line with the Company’s hub strategy
  • IOG is progressing discussions and documentation with a major North Sea rig provider to use a semi-submersible drilling rig to drill the Skipper appraisal well, with costs to be met on a mostly deferred basis. The base case is a 25 day contract. Subject to finalisation of contract and funding the rig is ready to mobilise at short notice. This remains subject to their board approval.
  • Commencement of drilling is contingent upon the timing of approvals relating to well permitting, completion of well funding, completion of the acquisition of the other 50% of Skipper, and transfer of operatorship. All technical and environmental submissions including well permits are progressing with the OGA and DECC.
  • Terms have been agreed with GE Oil and Gas to provide wellheads and related equipment for this well and additional subsea equipment for the subsequent Skipper development.
  • GE has approval to provide a £2 million loan to part fund the Skipper appraisal well. The formal documentation is now close to completion.
  • Discussions are ongoing with other service providers for the rig as well as vessels, helicopters and logistics support. The Directors currently expect discussions to be concluded and the necessary contracts entered in to in short order.
  • Weatherford Technical Services Limited has agreed to extend the repayment date of its existing US$2 million loan from September 2016 to December 2016.
  • There is agreement in principal to defer all or part of their costs for the well, with the exception of AGR Well Management (‘AGR’) which will be part paid in equity on terms to be finalised. The issue of any shares to AGR may require shareholder approval at an EGM unless existing authorities are utilised. All such parties and Weatherford will share in security over the Company and its assets and will be repaid in parallel by the end of 2016. These agreements remain subject to appropriate documentation.
  • AGR has been providing significant well planning support to IOG and subject to OGA approval, will be the Well Operator for Skipper.
  • IOG continues to progress discussions to raise sufficient additional capital with the aim of ensuring that the Skipper well is fully funded, including an appropriate contingency. Completion of the acquisition of the other 50% of Skipper and transfer of operatorship are contingent on full well funding.
  • An updated presentation has been uploaded to the Company’s website today. The main change is the inclusion of management’s view of the expected Skipper recoverable resources. 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.
  • Based on the Company view of 34.1 MMBbls recoverable resources, the breakeven Brent oil price for the project is estimated at $34/bbl. This is the NPV10 = 0 estimate using the Company’s cost estimates for a 13 well FPSO development.

Mark Routh, CEO of IOG commented:

LNG Supply Outlook Workshop

Course Summary The LNG supply industry is rapidly developing with new technology, supplies and contractual arrangements. Drawing on MJMEnergy’s comprehensive, recently published LNG Supply Handbook, the LNG Supply Outlook Workshop…

More information and prices

‘Despite the challenging market conditions, we are making great progress towards drilling this transformational well for IOG. Drilling this well on Skipper secures the licence, allows IOG to complete the agreed acquisition of 50% of the licence from Alpha and subject to OGA and DECC approval, will see IOG become a Licence Operator in the UKCS. The results from the well should allow us to prepare the field development plan, which upon approval will convert this contingent resource into proven reserves. This would see a more than ten-fold increase in IOG’s proven reserves.

We are absolutely committed to the future of the North Sea and whilst this may be seen as a counter cyclical investment, we are confident that the economics are robust at today’s prices and will only improve if and when commodity prices recover.’

Article Tags

Independent Oil and Gas
United Kingdom
West Europe

Operations Update
North Sea


This article is for information and discussion purposes only and does not form a recommendation
to invest or otherwise. The value of an investment may fall. The investments referred to in this
article may not be suitable for all investors, and if in doubt, an investor should seek advice from
a qualified investment adviser. More

Related News

Join 80,000 oil and gas professionals who receive our weekly newsletter.

You may unsubscribe at any time with one click.

Upcoming OilVoice Training Course

Petroleum Systems of West Africa

Summary Course is split into two sections, namely a regional review of West Africa’s geological development through time (including numerous paleogeographic paleotectonic and source rock maps) and a review of the elements of several discrete basin categories, with a type example used for each. Inclu…

All OilVoice Training Courses

Source link