7 May 2019
Independent Oil & Gas plc
Harvey Appraisal Well 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 preparations to drill the high-impact Harvey appraisal well.
Harvey well contracting & permitting
The Company has signed a Letter of Intent with a view to contracting with Maersk Drilling UK Ltd for the Maersk Resilient jack-up rig to drill the Harvey appraisal well. Built in 2008, the Maersk Resilient is a high-spec rig with a strong operating history and an excellent safety record. The well is planned to follow on directly from the rig's current campaign, with the spud date at Harvey currently expected to be in July. In the success case, with full coring and testing, the well would be expected to take approximately two months.
The Company is also close to finalising a contract with Halliburton Manufacturing and Services Ltd to provide offshore drilling services on the Harvey well. As previously announced, Fraser Well Management Ltd has been appointed as Well Operator for the well. The relevant geophysical and geotechnical surveys for the Harvey well have already been carried out by Fugro GB Marine Ltd in late 2018.
Following the Company's successful equity fundraise in April 2019, required long-lead items have been ordered and the relevant regulatory approvals and permits reflecting the choice of the Maersk Resilient are being submitted to the OGA for final approvals. These are expected to be granted at the relevant times ahead of the spud date to ensure timely operations.
Harvey well objective & rationale
The primary objective of the Harvey appraisal well is to confirm gas resource volumes which management estimate at 85/129/199 BCF Prospective Resources in the Low/Best/High case, with a 63% Geological Chance of Success¹. These estimates are the result of Pre-Stack Depth Migration (PSDM) 3D seismic reprocessing undertaken during 2018 which provided a more accurate map of the Harvey structure, which is held 100% by the Company following the successful acquisition of the Harvey East licence in the 30th Licence Round. The PSDM work also showed up prospects in the Harvey and Harvey East licences that could be matured into further step-out exploration opportunities drillable from a future Harvey platform. The Harvey East licence also contains the Redwell discovery on which further technical work is ongoing to establish commerciality.
Harvey is centrally located within IOG's asset portfolio, close to the fully-owned and proven 550 MMcfd capacity Thames Pipeline. If successfully appraised, the additional scale and synergies of a Harvey development could substantially enhance the portfolio's overall value and returns.
Alongside preparations for Harvey, the Company's focus remains firmly on reaching Final Investment Decision (FID) at the earliest feasible time on its Core Project, which comprises 410 BCF²,³ of 2P+2C reserves and resources across six discovered Southern North Sea (SNS) gas fields. A number of well-funded potential partners are progressing their work as part the previously announced farm-out process. On success, this process could provide valuable funding optionality via a development carry which would significantly reduce the new capital required for its Core Project. Management expects to select a preferred partner in 1H 2019, thereby enabling an optimal choice between an industrial and/or capital markets funding solution for Final Investment Decision (FID). First Gas is planned to be delivered within 20 months of FID.
Andrew Hockey, CEO of IOG commented:
"We are very pleased to be working with Maersk Drilling, Halliburton and Fraser Well Management on the exciting high-impact Harvey appraisal well, which has the potential to significantly enhance our SNS gas project. The Maersk Resilient is an excellent rig which we have secured with a summer slot which, with typically more benign weather, should also help to minimise operational risks.
In parallel, we remain resolutely focussed on progressing the Core Project, and in particular pushing ahead with the farm-out process. We continue to be encouraged by the progress made with potential farm-in partners and are focused on delivering an attractive transaction that allows us to progress to FID this summer.
We look forward to updating our shareholders on progress on these key milestones for the Company."
Independent Oil and Gas plc
Andrew Hockey (CEO)
James Chance (CFO)
Rupert Newall (Head of Corporate Finance)
+44 (0) 20 3879 0510
Christopher Raggett, Anthony Adams (Corporate Finance)
Camille Gochez (Corporate Broking)
+44 (0) 20 7220 0500
Peel Hunt LLP
+44 (0) 20 7418 8900
+44 (0) 20 7390 0230
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 of 146 MMCF/d (c. 25,000 Boe/d) from its substantial Core Project (2P gas Reserves of 302 BCF² + 2C gas Contingent Resources of 108 BCF³) 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 unrisked prospective gas resources of 202 BCF¹,² in Harvey and Goddard. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns. All IOG's licences and the Thames Pipeline are owned 100% and operated by IOG.
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.
¹Updated management estimates based on interpretation and mapping of 3D seismic data reprocessed to Pre-Stack Depth Migration (PSDM) in 2018, subsequent to ERC Equipoise's 2017 Competent Persons Report
²ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression
³ERC Equipoise Competent Persons Report: October 2018
Certain information communicated in this announcement was, prior to its publication, inside information for the purposes of Article 7 of Regulation 596/2014.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.