(Alliance News) - Independent Oil & Gas PLC on Wednesday confirmed that the Maersk Resilient rig spudded the Harvey appraisal well, located in the UK North Sea, on Tuesday.
The development and production company said completion of the well is expected to take two months in the success case. The primary objective of the well is to confirm gas volumes, and secondly, to demonstrate reservoir deliverability.
If successfully appraised, the additional scale and synergies of a Harvey development could substantially enhance the portfolio's overall value and returns, Independent Oil said.
"Spudding the Harvey appraisal well is an exciting development for Independent Oil & Gas and potentially a major catalyst for the business. Our objective is to prove up a substantial, high-quality reservoir in the heart of our core asset base which would create significant shareholder value over and above our recently announced farm-out," said Chief Executive Andrew Hockey.
At the end of July, Independent Oil & Gas announced a farm-out agreement, upon completion of which, the company's designated partner CalEnergy Resources Ltd will have the option to acquire 50% of the Harvey licences within three months of completion of the appraisal well.
If this option is exercised, CalEnergy will pay an additional GBP20 million to Independent Oil & Gas and a 95 pence per 1,000 cubic feet royalty on all of CalEnergy's life-of-field net gas production from Harvey.
Independent Oil & Gas shares were flat on Wednesday in London at 19.00 pence each.