Independent Oil and Gas gets funding ahead of Harvey spudding

(Sharecast News) - Independent Oil and Gas announced the proposed funding of its 100% owned-and-operated Harvey appraisal well on Friday, as well as updates on its preparations for spudding the well in the fourth quarter.The AIM-traded company said a non-binding term sheet for a new non-convertible loan facility had been signed with London Oil and Gas for £15m, primarily to fund the upcoming Harvey appraisal well.It said the proceeds of the Harvey facility would also fund other costs in the run-up to its gas development project sanction, including full repayment of final remaining Skipper liabilities.The loan would carry an interest rate of LIBOR +9% per annum, with the company also issuing 20,000,000 warrants exercisable at 32.18p - a 10% premium to the closing price of IOG shares on 16 August.It explained that advanced preparation work was ongoing on the Harvey appraisal well, targeting spudding in December.The well aimed to prove gas across the entire Harvey structure, with the November 2017 Harvey CPR estimating low/mid/high resources of 45/114/286 bcf, with a 50% geological chance of success.Harvey area 3D-seismic reprocessing was now complete, the company said, already fulfilling the 30th Licensing Round commitment.Seismic reinterpretation and remapping was expected to conclude this month.Well management, rig and services discussions were "very well advanced", the board said, with contracts to be agreed in coming weeks, further details of which would be announced once signed.The company said the Harvey appraisal well lay in close proximity to its 100%-owned Thames pipeline, and on success, any gas produced would be exported via the pipeline."A successful Harvey appraisal well could nearly double the proven reserves in our Southern North Sea gas portfolio in the high case of 286 BCF, which the board considers to be a reasonably likely outcome," said Independent Oil & Gas chief executive officer Andrew Hockey."The 114 BCF mid-case result would still make it our largest gas asset, significantly enhancing the company's value."This would enable a fast-track Harvey development to follow in direct continuation from Phase 1 of the development of our proven gas assets at the Blythe Hub and Vulcan Satellites Hub, which is approaching final investment decision."Hockey said a Harvey development would benefit from "very strong" synergies with the company's imminent development project, which would also ensure a "healthy" economic value for Harvey even in the 44 bcf low case appraisal result."The re-interpretation of the reprocessed 3D seismic to pre-stack depth migration, to be completed very shortly, will further de-risk the appraisal well."Being fully funded for the Harvey appraisal well, with its excellent risk-return profile, provides a very exciting catalyst for the company to come soon after final investment decision on the development assets."Investors will now enjoy significant near-term upside on top of the high-value development project, without being required to fund it."