11 Sep 2019 07:00
11 September 2019
Independent Oil & Gas plc
Harvey Update
Independent Oil and Gas plc ("IOG" or the "Company"), the development and production company focused on becoming a substantial UK gas producer, is pleased to provide an update on the Harvey appraisal well 48/24b-6 in the UK Southern North Sea Gas Basin.
The well has reached a total depth of 7,537 ft Measured Depth (MD) in the Permian Leman Sandstone reservoir, meeting the work commitment for Licence P2085. The top of the Leman Sandstone was encountered at 7,086 ft MD. Two 90 ft cores have been acquired in the reservoir along with a full suite of wireline logs, including pressure test and fluid samples, as well as Vertical Seismic Profiling (VSP). Initial analysis of the wireline data demonstrates the presence of a 49ft gas column at the top of the reservoir.
The comprehensive wireline dataset acquired in the well will now be analysed along with core data and integrated into a revised technical assessment of reservoir gas volumes and deliverability, meeting the primary objectives of the well. This analysis will include full seismic remapping based on the results of the VSP.
This assessment will be used to analyse the options for a potential Harvey development. Harvey is centrally located within IOG's asset portfolio, close to the Thames Pipeline export route. In the event that Harvey is of a size commensurate with a low-cost subsea development, it lies well within tie-back range to the Blythe platform which is a key part of the Core Project Phase 1 infrastructure.
The Maersk Resilient jack-up drilling rig currently remains on location and is forecast to go off contract on or around the 18 September, which would give a total well duration of 49 days, well within the planned two months.
On completion of the farm-out transaction announced on 26 July 2019 ("Farm-out") the Company's designated Core Project partner, CalEnergy Resources Limited ("CER"), will have the option to acquire 50 per cent of the Harvey licences within three months of completion of the appraisal well. If this option is exercised, CER will pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER's life-of-field net gas production from Harvey. This would maintain full alignment between IOG and CER across IOG's entire SNS Assets.
Andrew Hockey, CEO of IOG, commented:
"We have now confirmed a gas discovery at Harvey and are kicking off the analysis required to reach a definitive view on resource range, reservoir quality and deliverability. We will then evaluate Harvey's development potential in the context of our Core Project, which will be fully-funded at Farm-out completion. Our gas hub strategy implies a relatively low commerciality threshold for this discovery, which lies in the heart of our core asset base close to the Thames Pipeline. We are also pleased to report that the drilling rig has seen no HSE incidents to date."
Enquiries:
Independent Oil and Gas plc +44 (0) 20 3879 0510
Andrew Hockey (CEO)
James Chance (CFO)
Rupert Newall (Head of Corporate Finance)
finnCap Ltd +44 (0) 20 7220 0500
Christopher Raggett, Simon Hicks (Corporate Finance)
Camille Gochez (Corporate Broking)
Peel Hunt LLP +44 (0) 20 7418 8900
Richard Crichton
David McKeown
Vigo Communications +44 (0) 20 7390 0230
Patrick d'Ancona
Chris McMahon
Simon Woods
About Independent Oil and Gas:
Subject to completion of the farm-out transaction announced on 26 July 2019, IOG will own and operate a 50% stake in substantial low risk, high value gas reserves in the UK Southern North Sea. The Company's Core Project targets a gross 2P peak production rate of 146 MMCF/d (c. 25,000 Boe/d) from gross 2P gas Reserves of 302 BCF¹ + 2C gas Contingent Resources of 108 BCF², via an efficient hub strategy. In addition to the independently verified 2P reserves at Blythe, Elgood, Southwark, Nailsworth and Elland and 2C Contingent Resources at Goddard, IOG also has independently verified best estimate gross unrisked prospective gas resources of 73 BCF² at Goddard and is in the process of updating its management estimate of gas resources at Harvey. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns.
Competent Person's Statement
In accordance with the AIM Note for Mining and Oil and Gas Companies, IOG discloses that Andrew Hockey, IOG's CEO, is the qualified person that has reviewed the technical information contained in this document. Andrew Hockey has an MSc in Petroleum Geology and has been a member of the Petroleum Exploration Society of Great Britain since 1983. He has over 35 years' operating experience in the upstream oil and gas industry. Andrew Hockey consents to the inclusion of the information in the form and context in which it appears.
¹ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression
²ERC Equipoise Goddard Competent Persons Report: October 2018