LONDON (Alliance News) - Independent Oil & Gas PLC Thursday said the Skipper licence in the UK North Sea has been extended until the end of the year after the company made a decision to delay its plans for the Skipper appraisal well earlier this month.
The company pushed back its plans to drill an appraisal well on the licence in early January because it wanted to wait for economic conditions to improve. However, that meant the cash-strapped company had to secure an extension to the licence and support from its lenders.
On Thursday, Independent Oil said the Oil & Gas Authority has granted an extension to the licence until the end of 2016. Earlier this month, Independent said it would drill that appraisal well on Skipper "later this year", pushing it back from its original aim to drill that well before the end of 2015.
Independent Oil did not provide an update on when that well will be drilled this year.
"In the context of this very severe oil price downturn, we are grateful for the Oil & Gas Authority's pragmatic and supportive stance in extending the Skipper licence which we anticipate will enable us to drill the appraisal well later in 2016," said Chief Executive Mark Routh.
"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," he added.
In addition to the licence extension, Independent Oil issued 444,989 new shares on Thursday to VSA Capital and an independent third party consultant as payment for advisory services provided to the company, issued at a price of 8.73p and 8.38p respectively.
Independent Oil shares were trading up 11% to 5.39p on Thursday morning.
Investors may not be surprised that the company has paid for services using shares as the company is currently trying to negotiate a new agreement with its lenders in order to facilitate its new timetable for the asset.
When it delayed the drilling of the Skipper well earlier this month, the company was forced to return to London Oil and Gas PLC for an additional GBP10.0 million worth of convertible debt funding, which already supplied two other tranches of funding worth GBP2.8 million and GBP800,000 each back in December.
That GBP10.0 million convertible debt facility was secured against Independent Oil's assets and can be converted into shares at a conversion price of 10.0p per share. Around GBP3.0 million of the facility was used to cover administrative and licence fee costs with the other GBP7.0 million to be used to "used to add value" to the company's portfolio.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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