LONDON (Alliance News) - Independent Oil & Gas PLC on Friday said it swung to profit in 2015, due to a large impairment reversal on its oil and gas properties, and said it was well placed to secure the additional funding required to develop its licences.
The oil and gas exploration company posted a pretax profit of GBP5.3 million for the year ended December 31, from a loss of GBP12.1 million a year earlier, largely due to a GBP6.2 million impairment reversal of its oil and gas properties compared to a GBP8.3 million impairment charge a year earlier.
Following the significant fall in oil prices in late 2014, an impairment test was carried out on the carrying value of Independent Oil & Gas's exploration and evaluation assets and a charge of GBP8.3 million was recognised for 2014. This comprised GBP6.2 million for its Skipper assets and GBP2.1 million for the Blythe field interests.
On December, 22, Independent Gas & Oil then bought an additional 50% interest in licence P1609 containing the Skipper field, meaning it now owns 100% of the licence and field and has assumed operatorship.
In 2015, following a revised valuation of both assets, the Skipper impairment of GBP6.2 million was reversed and the gain was taken to the statement of comprehensive income.
The company is currently in an advanced stage of preparation for drilling the Skipper well, Independent Oil & Gas said.
During the year, Independent Oil & Gas also secured funding from London Oil & Gas Lts and GE Oil & Gas UK Ltd totalling GBP5.6 million, and following the year-end said it had secured a GBP10.0 million convertible loan facility from London Oil & Gas.
"2015 has been an important year of significant progress for Independent Oil and Gas. In spite of the exceptionally challenging ongoing market conditions, the company has successfully positioned itself for future growth and with the new financing arrangements has strengthened its position post period end," said Chief Executive Mark Routh.
"It is now well placed to pursue low risk, value accretive opportunities created in the current market environment. We plan to progress the Skipper appraisal well at the earliest opportunity and to pursue a Hub focussed strategy to create an established development and production focused operator delivering excellent value to shareholders over the coming years," Routh added.
Shares in Independent Oil & Gas were up 2.5% at 13.45 pence on Friday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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