IOG.L Regulatory News (IOG)

17 August 2018

Independent Oil and Gas plc

Harvey Appraisal Well Funding

Independent Oil and Gas plc ("IOG" or the "Company"), the development and production focused Oil and Gas Company, is pleased to announce the proposed funding of its 100% owned and operated high-impact Harvey appraisal well and updates on preparations for spudding the well in Q4 2018.

Highlights

· Non-binding term sheet for a new non-convertible loan facility ("Harvey Facility") signed with London Oil and Gas Limited ("LOG") of £15 million, principally to fund the upcoming Harvey appraisal well.

o Proceeds of the Harvey Facility to also fund other costs in the run-up to IOG's gas development project sanction, including full repayment of final remaining Skipper liabilities.

o Loan will carry an interest rate of LIBOR+9% per annum;

o The Company would also issue 20,000,000 warrants exercisable at 32.18p, a 10% premium to the closing price of IOG shares on 16 August 2018.

· Advanced preparation work is ongoing on the Harvey appraisal well, targeting spudding in December 2018.

· The well aims to prove gas across the entire Harvey structure. The November 2017 Harvey CPR estimates Low/Mid/High resources of 45/114/286 BCF with a 50% Geological Chance of Success.

· Harvey area 3D-seismic reprocessing is complete, already fulfilling the 30th Licensing Round commitment. Seismic reinterpretation and remapping is expected to conclude in August 2018.

· Well management, rig and services discussions are very well advanced, with contracts to be agreed in coming weeks, further details of which will be announced once signed.

· The Harvey appraisal well lies in close proximity to IOG's 100% owned Thames pipeline and on success any gas produced would be exported via the pipeline.

Andrew Hockey, CEO of IOG commented:

"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 of IOG considers to be a reasonably likely outcome. 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 ("FID"). A Harvey development would benefit from very strong synergies with our 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 ("PSDM"), 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 FID 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. I look forward to providing further updates on the well preparations in due course."

Harvey Facility

The term sheet for the Harvey Facility carries an initial interest rate of LIBOR+9% per annum and will be repayable 36 months after the date of drawdown. The Harvey Facility would be secured against the Company, its assets and its three subsidiaries; IOG North Sea Limited, IOG UK Limited and IOG infrastructure Limited. Upon signing of the Harvey Facility, the Company will issue 20,000,000 warrants to LOG, exercisable at 32.18p, a 10% premium to closing price of IOG shares on 16 August 2018. The warrants to have an expiry date of 5 years from the date of drawdown of the Harvey Facility.

Agreed purposes for use of the Harvey Facility include drilling of the Harvey appraisal well, payment of final remaining Skipper liabilities, development project costs and G&A. The Harvey Facility contains standard conditions precedent, representations & warranties and covenants which are customary for a transaction of this nature.

Harvey Appraisal Well

The main Harvey licence, P2085, was awarded to IOG at 100% Working Interest in December 2013 in the 27th Licensing Round and contains the majority of the Harvey gas discovery. In May 2018, IOG announced the successful application of the licence to the east of Harvey in Block 48/24a. This will be Licence P2441. This licence award secured 100% of the Harvey structure. The November 2017 Harvey CPR estimates Low/Mid/High resources of 45/114/286 BCF with a 50% Geological Chance of Success.

Following the successful conclusion of the Harvey 3D seismic reprocessing project carried out by Schlumberger Western Geco, which commenced in March 2018, IOG is now close to completing the interpretation and mapping of this new data set which has been reprocessed to deliver a pre-stack depth migration ("PSDM") volume. The aim of this project is to optimise the appraisal well location, which therefore further de-risks this appraisal project.

The well will fulfil a 27th Round Licence commitment and will target the confirmation of IOG's view that the Harvey structure already has proven gas from well 48/23-2 drilled by Arco in 1984 which clipped the flank of the newly mapped high case Harvey structure.

IOG is targeting spudding the Harvey appraisal well in December 2018 with the objective of proving up the upside resource estimate of 286 BCF.

The necessary safety and environmental site surveys are due to be carried out in early September.

IOG expects to appoint a well management contractor to be the Well Operator on Harvey subject to regulatory approvals in the coming weeks. The selection of the drilling rig contractor and well services contracts will be finalised shortly thereafter.

-ENDS-

Certain information communicated in this announcement was, prior to its publication, inside information for the purposes of Article 7 of Regulation 596/2014.

Enquiries:

Notes

About Independent Oil and Gas:

IOG owns substantial low risk, high value gas Reserves in the UK Southern North Sea. The Company is targeting a 2P peak production rate in excess of 200 MMcfd (c. 35,000 Boe/d) from its substantial current portfolio via an efficient hub strategy. Alongside this it continues to pursue value accretive acquisitions, to generate significant shareholder returns. All IOG's licences are owned 100% and operated by IOG.

About Harvey:

IOG considers that the Harvey structure is a discovery in which gas has been proven by well 48/23-2 drilled by Arco in 1984. The Harvey licence, P2085, was awarded to IOG at 100% Working Interest in December 2013 in the 27th Licensing Round. The Oil and Gas Authority ("OGA") has confirmed the continuation of licence P2085, which contains the Harvey discovery, until 20 December 2019. A commitment to drill an appraisal well on the Harvey structure has been made and must commence by 20 September 2019. In May 2018 IOG announced the successful application of the licence to the east of Harvey in Block 48/24a. This will be Licence P2441. This licence award secured 100% of the Harvey structure on the mid-case and upside cases of the mapped structure.

In November 2017, ERC Equipoise Limited completed a Competent Person's Report on Harvey which estimated unrisked prospective resources on the Harvey structure as 45/114/286 BCF (Low/Best/High case) based on gas initially in place of 71/176/437 BCF (Low/Best/High). The CPR assigned a Geological Chance of Success of 50%.

Harvey is located in the well understood Leman Sandstone Formation play. If successfully appraised, it has the potential to be the largest gas discovery in the IOG portfolio and could significantly enhance the economics of IOG's Southern North Sea business.

Competent Person's Statement

In accordance with the AIM Note for Mining and Oil and Gas Companies, IOG discloses that Mark Routh, IOG's Chairman is the qualified person that has reviewed the technical information contained in this document. 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.

Further information can be found on www.independentoilandgas.com