Independent Oil & Gas (LON:IOG) has told investors it is now at the advanced stages of planning for the Skipper appraisal well in the North Sea.
Subject to formalisation of contracts and funding the drilling rig is ready to mobilise, the company said.
The company has been working on these plans with the support of oil services partners. The rig contractor has agreed to take deferred payment, other contractors will provide loans or accepted to be paid in equity to help fund their work.
IOG, meanwhile, continues its efforts to secure sufficient additional capital to make sure the project is fully funded, including contingencies, and to complete the acquisition of the other 50% of the project and transfer operatorship.
Chief executive Mark Routh said: "Despite the challenging market conditions, we are making great progress towards drilling this transformational well for IOG.
“We are absolutely committed to the future of the North Sea and whilst this may be seen as a counter cyclical investment, we are confident that the economics are robust at today's prices and will only improve if and when commodity prices recover."
Skipper would be drilled down to a depth of 5,600 feet and its primary objective will be to retrieve good quality reservoir samples which will support field development planning. A successful result could lead to the conversion of some 34.1mln barrels of oil resources into reserves.
The well will also test an exploration target beneath the main Skipper reservoir, and that is estimated to contain around 46mln barrels of potential oil-in-place.
“The results from the well should allow us to prepare the field development plan, which upon approval will convert this contingent resource into proven reserves,” Routh added.
“This would see a more than ten-fold increase in IOG's proven reserves.”
IOG estimates the field, if its developed, would have a breakeven oil price of around US$34 per barrel.