Independent Oil & Gas PLC CPR Confirms Significant Reserves Upgrade (3782T)

TIDMIOG

RNS Number : 3782T

Independent Oil & Gas PLC

12 October 2017

12 October 2017

Independent Oil and Gas plc

CPR Confirms Significant Reserves Upgrade

Independent Oil and Gas plc ("IOG" or the "Company"), the development and production focused Oil and Gas Company, is pleased to announce the results of a Competent Person's Report ("CPR") on the Vulcan Satellites, Blythe and Elgood assets by ERC Equipoise Limited ("ERCE") as at 1 October 2017.

Highlights:

-- CPR confirms 2P gas Reserves of 303 BCF (54 MMBoe), previously 34 BCF, in IOG's UK Southern North Sea ("SNS") gas portfolio

-- 2P Reserves classification applied to all of IOG's development assets: the Vulcan Satellites, Blythe and Elgood

o Vulcan Satellites 2P Reserves of 248 BCF

o Blythe 2P Reserves of 33 BCF, in line with 2013 CPR

o Elgood 2P Reserves of 22 BCF

   --      CPR estimates a 2P peak production rate in excess of 200 MMcfd (c. 35,000 Boe/d) 
   --      Significant prospective resources in Harvey to be published in a forthcoming separate CPR 

CPR Process:

During 2017, IOG built its own proprietary static geological model based on interpretation of the reprocessed 3D seismic available from multiple surveys across the whole SNS portfolio. This resulted in a robust and consistent estimation of the gas in place volumes in all the Company's SNS gas assets. This was followed by dynamic reservoir modelling and optimal well design and placement, including hydraulic stimulation modelling for the Vulcan Satellite fields. This in turn enabled the development of production forecasts for each field. ERCE reviewed IOG's proprietary subsurface work, production forecasts, costs and economic assumptions. ERCE then made its own independent assessment of the recoverable Reserves from the portfolio, the project development and operating costs and the resultant economics as summarised below.

The CPR presents the economic Reserves and valuation of IOG's five development fields as at 1 October 2017 using data and information available up to 30 September 2017 and applying the PRMS standard. The table below shows the CPR estimates of Reserves and Net Present Values, both undiscounted and discounted at 10% ("NPV(10) ") for IOG's 100% interests in the fields.

 
            Vulcan Satellites, Blythe 
                    and Elgood                     1P    2P     3P 
------------------------------------------------  ----  ----  ------ 
     Economic Gas Reserves            (BCF)        201   303    435 
-------------------------------  ---------------  ----  ----  ------ 
    Oil Equivalent Reserves 
       (incl. condensate)            (MMBoe)       36    54     77 
-------------------------------  ---------------  ----  ----  ------ 
    Post-Tax NPV(10) (incl. 
        IOG's tax losses)         (GBP million)    97    321    584 
-------------------------------  ---------------  ----  ----  ------ 
        Pre-Tax NPV(10)           (GBP million)    119   453    880 
-------------------------------  ---------------  ----  ----  ------ 
 Pre-Tax NPV(0) (undiscounted)    (GBP million)    295   843   1,530 
-------------------------------  ---------------  ----  ----  ------ 
 

A copy of the CPR executive summary is available on the IOG website: -

http://www.independentoilandgas.com/thirdpartyreports.html

Vulcan Satellite Field names:

As part of the field determination process, IOG has formally applied to register the field names for the Vulcan Satellite fields. Subject to the approval of the UK Oil and Gas Authority, Vulcan North West will become Nailsworth, Vulcan East will become Elland and Vulcan South will become Southwark. Nailsworth, Elland and Southwark will still collectively be known as the Vulcan Satellites.

Mark Routh, CEO and Interim Chairman of IOG commented:

"We are extremely pleased with the results of the CPR on our SNS development portfolio. IOG now holds independently verified 2P gas Reserves of 303 BCF / 54 MMBoe with a 2P peak production rate of more than 200 MMcfd and a 2P NPV(10) valuation of GBP321 million. This is a major landmark for our portfolio and clear vindication of our strategy of acquiring neglected and stranded assets at low cost, to be commercialised via our gas hub strategy using the Thames Pipeline export route.

In addition to confirming substantial volumes, the classification as reserves is a key step towards securing development funding. Our submission of the Field Development Plan for the Vulcan Satellites hub, expected later this month, will be the next important step in that regard. We also expect to confirm further key project contractors in the coming weeks.

In addition, we shortly expect to receive a further CPR on the Harvey structure which provides very material upside to our portfolio."

-S-

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] 
  James Chance (CFO)                0510 
 finnCap Ltd 
  Christopher Raggett / Anthony 
  Adams                            [phone] 
  (Corporate Finance)               0500 
 Camarco                           [phone] 
  Georgia Edmonds / Tom Huddart     4980 
 

Glossary

 
 
 "1P"           the Proved Reserves; 
 
 "2P"           the sum of Proved plus Probable Reserves; 
 
 "3P"           the sum of Proved plus Probable plus 
                 Possible Reserves; 
 
 "BCF" or       billion (10(9) ) standard cubic feet; 
  "bscf" 
 "Boe"        barrels of oil equivalent. One barrel 
                 of oil is approximately the energy 
                 equivalent of 5,800 standard cubic 
                 feet of natural gas; 
 
 "Boe/d"        Barrels of oil equivalent per day; 
 
 "MMBoe"        millions (10(6) ) of barrels of oil 
                 equivalent; 
 
 "MMcfd"        millions (10(6) ) of standard cubic 
  or "MMscfd"    feet per day; 
 
 "Proved        those quantities of petroleum which, 
  Reserves"      by analysis of geological and engineering 
                 data, can be estimated with reasonable 
                 certainty to be commercially recoverable, 
                 from a given date forward, from known 
                 reservoirs and under current economic 
                 conditions, operating methods and 
                 government regulations. Proved reserves 
                 can be categorised as developed or 
                 undeveloped. If deterministic methods 
                 are used, the term reasonable certainty 
                 is intended to express a high degree 
                 of confidence that the quantities 
                 will be recovered. If probabilistic 
                 methods are used, there should be 
                 at least a 90% probability that the 
                 quantities actually recovered will 
                 equal or exceed the estimate; 
 
 "Probable      those unproved reserves which analysis 
  Reserves"      of geological and engineering data 
                 suggests are more likely than not 
                 to be recoverable. In this context, 
                 when probabilistic methods are used, 
                 there should be at least a 50% probability 
                 that the quantities actually recovered 
                 will equal or exceed the sum of estimated 
                 Proved plus Probable reserves; 
 "Possible      those additional reserves which analysis 
  Reserves"      of geological and engineering data 
                 suggests are less likely to be recoverable 
                 than Probable Reserves. In this context, 
                 when probabilistic methods are used, 
                 there should be at least a 10% probability 
                 that the quantities actually recovered 
                 will equal or exceed the sum of estimated 
                 Proved plus Probable plus Possible 
                 reserves; 
 
 "PRMS"         The SPE/WPC/AAPG/SPEE Petroleum Resources 
                 Management System for Reserves and 
                 Resources Classification; 
 
 "Reserves"     those quantities of hydrocarbons which 
                 are anticipated to be commercially 
                 recovered from known accumulations; 
 "standard      standard cubic feet measured at 14.7 
  cubic feet"    pounds per square inch and 60 degrees 
  or "scf"       Fahrenheit 
 

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 of IOG's licences are owned 100% and operated by IOG.

About ERC Equipoise Limited:

ERCE is an independent consultancy specialising in geoscience evaluation and engineering and economics assessment. Except for the provision of professional services on a time-based fee basis, ERCE has no commercial arrangement with any other person or company involved in the interests which are the subject of this report.

ERCE has the relevant and appropriate qualifications, experience and technical knowledge to appraise the assets professionally and independently. ERCE considers that the scope of the CPR is appropriate and includes and discloses all information required to be included therein and was prepared to a standard expected in accordance with the AIM Rules.

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 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

This information is provided by RNS

The company news service from the London Stock Exchange

END

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October 12, 2017 02:00 ET (06:00 GMT)