IOG.L Regulatory News (IOG)

30 March 2016

Independent Oil and Gas plc

Funding and Strategic Update

Independent Oil and Gas plc ("IOG" or the "Company") (AIM: IOG.L), the production and development focused oil and gas company, is pleased to announce that it has satisfied all outstanding conditions relating to the £13.55 million financing transactions with London Oil & Gas Ltd ("LOG") and therefore provides a strategic update.

Highlights

· The recently announced £13.55 million financing transactions with London Oil & Gas have now been completed and accordingly, IOG has a refined business strategy and strong partner to deliver future shareholder value:

- IOG is to pursue an acquisition strategy focusing on complementary near term oil and gas developments and low risk production assets in the North Sea.

- IOG will also consider compelling opportunities outside of the North Sea.

- A number of assets/opportunities have been identified and are undergoing due diligence.

· Several potential transactions are under consideration and one such transaction relating to a non-producing gas asset in the North Sea is at a particularly advanced stage. It is not anticipated that this transaction would constitute a reverse takeover pursuant to the AIM Rules. However, there can be no certainty that this acquisition or any others will complete or on what terms. Further announcements will be made in due course.

· Share Sales Agreement entered into with AGR Well Management relating to the 9,945,953 shares issued on the 11 February 2016. If any shares are sold on any day at an average price in excess of 9.675p the excess will be shared equally with IOG. This therefore allows IOG to benefit from any such share sales.

Refined business strategy

· The downturn in the oil and gas market has created a number of significant opportunities and as such IOG has refined its business strategy alongside LOG in order to take advantage of these opportunities and generate shareholder value.

· Alongside the development of its existing portfolio, IOG is therefore to pursue an acquisition strategy focusing on complementary near term, oil and gas, development and low risk production assets in the North Sea and potentially in other stable Western geographies if they meet internal criteria.

Mark Routh CEO of IOG commented:

"We are delighted to complete the LOG financing transactions. The Company is now well-funded with a strong balance sheet and access to finance to pursue a number of low risk, value accretive opportunities created in the current market conditions. We are working closely with LOG, who have an excellent track record and a wealth of experience to identify and progress near term opportunities and I look forward to updating shareholders on the Company's progress in due course."

LOG Loan Agreement

As referred to in the announcement of 22 February 2016, the Loan Agreements with LOG were subject to certain conditions precedent relating to consents from existing creditors and suppliers. The Company has now received all of the consents required by LOG and has satisfied all other conditions. Accordingly, the Company can now draw down on the sums available under the loans made by LOG in accordance with their terms and as further detailed in the announcement of 22 February 2016.

-ENDS-

Enquiries:

Notes

About Independent Oil and Gas:

IOG is an oil and gas company with established assets in the UK North Sea. The company's strategy is to deliver near term development and production assets in North West Europe, through its extensive technical and commercial expertise, whilst maintaining some exposure to exploration upside. The company is looking to grow both organically and through acquisition. Following the Blythe acquisition, the Company's combined estimate of 2P reserves in Blythe and 2C resources in Skipper net to IOG will be 40.2 MMBoe.

Post completion of the Cronx acquisition IOG will have five licences in the North Sea. Four of these licences will now be owned 100% by IOG and subject to OGA approval will be operated by IOG. The Blythe licence is co-owned 50% with Alpha which is the operator. IOG has a 100% working interest in two other licences, one awarded in the 27th licensing round and another in the recent 28th licensing round. One is to the east of Blythe containing the Truman prospect and Harvey discovery (IOG estimate 16 BCF or 3.1 MMBoe) and the other is between the Blythe and Cronx licences which contains the Elgood and Hambleton discoveries and the Tetley and Rebellion prospects. Both these 100%-owned licences have potential resources that could be tied back to nearby infrastructure or to the Blythe development.

Further information can be found on www.independentoilandgas.com 

About Blythe:

The Blythe gas discovery straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736 which is 50% co-owned by IOG and Alpha (operator). Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 BCF (6.1 MMBoe) with 50% owned by IOG. (Source: ERC Equipoise Competent Person's Report ("CPR") dated September 2013.)

About Skipper:

The Skipper oil discovery is in Block 9/21a in the Northern North Sea in licence P1609. IOG owns 100% of the Skipper licence P1609. Skipper needs further appraisal by drilling a well to retrieve an oil sample in order to design the optimum field development plan. Skipper has independently verified gross 2C resources of 26.2 MMBbls. IOG management estimates that the recoverable oil from Skipper is 34.1 MMBbls based on a recovery factor of 25%, compared to the historic CPR estimate of 19%. Successful flow tests from nearby heavy oil fields substantiate the company's estimate of a 25% recovery factor. The appraisal well will also target two exploration prospects directly beneath the Skipper oil discovery which may contain oil in place of 46 MMBbls. (Source: AGR Tracs CPR dated September 2013.)

About Cronx:

IOG has agreed to acquire 100% of Cronx (Block 48/22a, licence P1737) which is subject to completion. The Cronx gas discovery is 14km north-west of the Blythe field. Cronx was discovered in 2007 by well 48/22b-6 drilled by Perenco UK Ltd.

IOG commissioned an independent CPR by ERC Equipoise on Cronx in July 2012 which shows a base case expected gas recovery of 17.6 BCF or 3.4 MMBoe 2C resource. IOG anticipates drilling a development well in due course which is subject to rig availability, the necessary permits and funding. IOG expects the well to confirm the recoverable resources, which IOG believes has the potential to be larger than the 17.6 BCF base case in the CPR. IOG is currently evaluating options for the development and export of the Cronx gas.

About Elgood and Hambleton:

The Elgood discovery (IOG 100%) (Block 48/22c, licence P2260) was drilled by Enterprise Oil in 1991 and tested gas to surface at 17.6 MMcfd but was not progressed by Enterprise due to size and gas prices at that time. IOG's estimate of the recoverable reserves in Elgood is 2.1 MMBoe.

The Hambleton discovery, to the south of the same licence, was drilled by Century Exploration in 2005 but also was not progressed to development. IOG estimates that Hambleton has recoverable resources of 6 BCF (1 MMBoe). IOG believes that the reprocessing of existing 3D seismic data could increase recoverable resources up to 26 BCF.

There are prospective resources on licence P2260 of 5.3 MMBoe in the Tetley and Rebellion prospects. Reprocessing of existing 3D seismic across 48/22a and 48/22c is required to determine whether Elgood connects to Cronx which would boost recoverable reserves significantly. The new seismic interpretation will also determine the likely size of Hambleton. IOG is now working on the potential development plans and will commission a CPR‎ to confirm the resources over this area.

Competent Person's Statement:

In accordance with the AIM Note for Mining and Oil and Gas Companies, IOG discloses that Mark Routh, IOG's CEO and Interim Executive Chairman is the qualified person that has reviewed the technical information contained in this announcement. Mark Routh has an MSc in Petroleum Engineering and has been a member of the Society of Petroleum Engineers since 1985. He has over 35 years' operating experience in the upstream oil and gas industry. Mark Routh consents to the inclusion of the information in the form and context in which it appears.

About London Oil and Gas:

Further information can be found on http://www.londongroupplc.com/