--UPDATE, ADDS SHARE PRICE DETAILS AND BROKER COMMENT--
Shares in Independent Oil & Gas (LON:IOG) gained more than 20% in early deals after it revealed it had made significant progress towards drilling the planned Skipper well.
The North Sea oil and gas junior, which has been working to secure funding for a number of months, said it now has commitments amounting to around £7mln for the project.
Advanced discussions are ongoing with the oilfield service companies - such as the rig owner, well operator, subsea equipment supplier and an essential rig services provider – and they have all committed to either part-fund, defer payment or provide loans.
These commitments secure the contractors participation in the project, IOG said.
It added that project planning is now at an advanced stage, and essential long lead items have now been ordered. Drilling is, therefore, possible later this year.
Mark Routh, IOG chief executive, said: "I am very pleased with the indications of support we have had from the contractor and oil service community towards getting this transformational yet low risk well, funded and drilled, which could increase our reserves from 3mln barrels oil equivalent (MMBoe) to more than 30 MMBoe.”
IOG added that agreements with Alpha Petroleum – allowing the company to acquire Alpha’s 50% stake in Skipper – and a loan arrangement with Darwin Strategic have both been extended until December 7.
Talks are also ongoing with several potential investors to fund any shortfall in well costs.
"We are working hard to address our funding position with significant progress being made,” Routh added. “I look forward to providing an update shortly."
The objective of the planned Skipper well is to retrieve oil samples to enable optimisation of a field development plan. The well will also test two exploration prospects beneath the Skipper discovery, and those prospects could potentially yield some 46mln barrels of additional oil in place.
At around 11:00am in London the AIM quoted shares were up 0.88p, 15.22%, trading at 6.62p each.
“It is extremely encouraging to see the progress being made at Skipper and that the industry is being supportive,” said Dougie Youngson, analyst at FinnCap.
“A positive outcome from this process and ultimately the drilling of the well could be transformative for the company.”