Independent Oil & Gas PLC Completion of the Skipper Appraisal Well (6046H)

TIDMIOG

RNS Number : 6046H

Independent Oil & Gas PLC

19 August 2016

19 August 2016

Independent Oil and Gas plc

Completion of the Skipper Appraisal Well

Independent Oil and Gas plc ("IOG" or the "Company"), the development and production focused Oil and Gas Company, is pleased to announce the completion of its first operated appraisal well on the Skipper oil discovery which lies in Block 9/21a in licence P1609 in the Northern North Sea, of which IOG is 100% owner and operator.

The well was successfully drilled to a total vertical depth of 5,578ft with no safety incidents and achieved its primary objective of retrieving good quality reservoir condition oil samples from the Skipper reservoir in order to optimise the Skipper field development plan. The oil viscosity of the samples appears likely to be within the 50cP - 150cP range expected by the IOG management, much better than Competent Persons Report ("CPR") estimates. The samples are now being analysed in Aberdeen, with initial results expected in September 2016. Should these properties be confirmed the development of the Skipper field will require fewer development wells thereby improving the development economics.

The well's secondary objective, to drill two mapped reservoir structures beneath the Skipper oil field in the Lower Dornoch and Maureen formations is now complete. The well did not encounter hydrocarbons in these horizons and will now be plugged and abandoned. The initial licence commitment on P1609 is to drill a well into the Maureen formation to a minimum depth of 1,700m (5,578ft). This commitment has therefore now been fulfilled.

Mark Routh, CEO of IOG commented:

"We are extremely pleased to have achieved drilling success at the Skipper well, our first operated well. We are encouraged by the good quality oil samples retrieved, the well's primary objective. Initial observations strongly suggest we have a better oil viscosity than the CPR estimates. Whilst the exploration prospects did not encounter hydrocarbons, I am increasingly confident that the commerciality of the Skipper field has been confirmed now that we have the data we need to progress to the field development planning."

"I am very grateful for the support we have received from all of the contractors involved in our Skipper project. We look forward to working with them during the Skipper development phase."

-ENDS-

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Enquiries:

 
 Independent Oil and Gas plc 
  Mark Routh (CEO)                  [phone] 
  Peter Young (CFO)                  1565 
 finnCap Ltd 
  Matt Goode/Christopher Raggett    [phone] 
  (Corporate Finance)                0500 
 Camarco                            [phone] 
  Billy Clegg / Georgia Mann         4980 
 

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 are 40.2 MMBoe.

Upon completion of the Cronx acquisition IOG will have five licences in the North Sea. All of these licences will be owned 100% and operated by IOG.

Further information can be found on www.independentoilandgas.com

About Blythe:

The Blythe gas discovery in the Rotliegendes Leman formation straddles Blocks 48/22b and 48/23a in the Southern North Sea in licence P1736. The Blythe Leman needs no further appraisal and has independently verified 2P reserves of 34.3 BCF (6.1 MMBoe). (Source: ERC Equipoise Competent Person's Report ("CPR") dated September 2013.)

Gas tested to surface from three separate intervals in the Carboniferous beneath the Blythe Leman gas discovery from one of the Blythe discovery wells, 48/23-3 drilled by Arco in 1987. The maximum rate achieved was 0.9 MMcfd from an unstimulated vertical test. (Source: End of well report 48/23-3 - November 1987.) This was deemed uncommercial at the time, before the advent of horizontal multi-fracture stimulated wells. Further technical work including seismic reprocessing and remapping needs to be completed to evaluate this potential resource to refine the gas-in-place estimates which are between 70 BCF and 310 BCF. (Source: Tullow Oil 48/23a Relinquishment Report - May 2009.)

Oil has flowed to surface from the naturally fractured Zechstein Carbonates in the Hauptdolomit formation above the Blythe Leman gas discovery from two wells. Well 48/22-1 drilled by Burmah in 1966 flowed 39deg API oil at rates up to 2,000 barrels per day (Source: Composite well log 48/22-1 - October 1966) and well 48/23-3 drilled by Arco in 1987 at flowed 38deg API oil at a maximum rate of 1,128 barrels of oil a day. (Source: End of well report 48/23-3 - November 1987.) The extent of the structure and potential oil resources in the Hauptdolomit remains unknown. Previous estimates considered that the mapped closure was probably small. Oil-in-place has been estimated between 2 MMBbls and 4 MMBbls. (Source: Tullow Oil 48/23a Relinquishment Report - May 2009.) Further evaluation and re-mapping is now warranted now that a development will proceed on the main Blythe gas discovery.

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 and is the Operator. In August 2016 the Company successfully drilled its first operated appraisal well and retrieved good quality oil samples, which are currently undergoing testing, in order to design the optimum field development plan. Initial results of the samples are due in September 2016. 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%. (Source: AGR Tracs CPR dated September 2013.) Successful flow tests from nearby heavy oil fields substantiate the company's estimate of a 25% recovery factor. Recovery factor estimates will be revised during the full field reservoir simulation studies which will follow receipt of the oil analysis results.

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 well in 2016, 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 Truman and Harvey:

IOG has a 100% working interest in a licence awarded in the 27th licensing round to the east of Blythe containing the Truman prospect and Harvey discovery. IOG estimates potential resources in this licence of 16 BCF or 3.1 MMBoe. These 100%-owned fields have potential resources that could be tied back to nearby infrastructure being developed for the Blythe development.

About Elgood and Hambleton:

IOG has a 100% working interest in a licence awarded in the 28th licensing round to the west of Blythe containing the Elgood discovery (Block 48/22c, licence P2260). Elgood 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 and reinterpretation of existing 3D seismic across 48/22a and 48/22c is ongoing 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 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.

This information is provided by RNS

The company news service from the London Stock Exchange

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August 19, 2016 02:00 ET (06:00 GMT)