Independent Oil & Gas progresses in hunt for project partner

(Sharecast News) - Independent Oil and Gas updated on the funding and progress of its two-phase Southern North Sea (SNS) core project on Monday, reporting that its focus remained on reaching a final investment decision (FID) at the earliest feasible time on the project.The AIM-traded firm said the project comprised 410 billion cubic feet (bcf) of 2P+2C reserves and resources across six discovered gas fields in the southern North Sea.It explained that, since confirming Thames Pipeline integrity and technical final investment decision -readiness in the fourth quarter of 2018, it had received "extensive" industry interest in the project.Therefore, with the flexibility afforded by 100% core project ownership, IOG's management initiated a focussed farm-out process in late 2018 with a "carefully selected" shortlist of "motivated and well-funded" potential farm-in partners.It said that process was running in parallel with its stated capital markets funding plans, adding that it was "encouraged" by the level of serious interest shown to date.On success, the process could provide valuable funding optionality via a development carry, which would significantly reduce the new capital required by IOG for the core project."Management expects to select a preferred partner in the first half of 2019, thereby enabling an optimal choice between an industrial or capital markets final investment decision solution," the IOG board said in its statement."First gas is planned to be delivered within 20 months of FID."At Harvey, the company said it was progressing its plans to drill the appraisal well.The primary objective there was to confirm gas resource volumes, which management estimated at 85/129/199 bcf prospective resources in the low/best/high case, with a 63% geological chance of success.In the context of the wider funding process and availability of the selected rig, IOG said the well was now expected to spud in mid-2019.If successfully appraised, Harvey would be integrated into a further optimised core project with "significantly higher" value and returns.On the subject of the London Oil and Gas (LOG) facilities, IOG said it was continuing to utilise the September 2018 £15m LOG facility.Having drawn £3.93m in 2019, it currently had £2.9m in cash and a further £3.93m undrawn.The IOG board noted the recent appointment of Smith & Williamson as administrators of London Capital & Finance (LCF), and their appointment of a representative to the board of LOG, given LOG is a borrower from LCF.It said that representative also replaced the previous LOG observer on IOG's board, which was a role mandated under the terms of LOG's loans.The loans provided to IOG were understood to be "key assets" for LOG, given the company's high value portfolio, which was anticipated to be endorsed by a third-party due diligence report for LCF.IOG said it continued to have "positive discussions" with LOG, and fully expected them to continue to support the company, including in respect of managing 2019 maturities, as it progressed towards final investment decision."Having demonstrated our core project's technical readiness and proven the integrity of our high-capacity Thames Pipeline, we have created an excellent opportunity to bring in an established and well-funded industrial partner on competitive terms," said Independent Oil and Gas chief executive officer Andrew Hockey/"We are encouraged by the strong interest and engagement from a number of recognised parties to date as we focus on securing an attractive transaction which would fundamentally reduce our further funding needs for FID."Hockey said the IOG team continued to be "highly focussed and motivated" to reach final investment decision as soon as possible."While acutely conscious of timing, our core goal is to ensure we deliver best value for shareholders from our exciting Southern North Sea gas portfolio."Our updated funding strategy provides different potential pathways to achieve this - industrial or capital markets - and we are encouraged by improving debt and equity market conditions."In the meantime, we continue to engage constructively with LOG and are confident that they and their stakeholders will continue to support the realisation of full value from IOG's portfolio."