Independent Oil & Gas (LON:IOG) has told investors that a contract has now been signed with AGR Well Management for the planned Skipper appraisal well.
The well is expected to spud in late January or early February, the company confirmed.
AGR is to be paid partially in IOG shares and partially in cash.
"We are delighted to have signed the well management contract with AGR and are working hard to finalise the rig contract in the near term,” said Mark Routh, IOG chief executive.
“We look forward to updating shareholders in due course."
On Monday, IOG announced it had secured the necessary funding arrangements to go ahead with the Skipper project and that it would have sufficient working capital to last the next twelve months.
IOG sees Skipper as a ‘transformational’ project and it is planned to be the first step in the group’s strategy to build production through hub developments.
Speaking with Proactive Investors, Routh described Skipper as “an extremely low risk appraisal”. He explains that the primary objective is to retrieve an oil sample from the known reservoir, which will be used to help optimise the future oilfield development.
He also highlighted that with an estimated break-even price of around US$34 per barrel and the project would be economically viable even at current crude prices.
Additionally, assuming the appraisal is a success, the project would be confirmed as having up to 35mln barrels of reserves (the oil is currently defined as 2C resources).
“At Skipper, from our point of view, is about when we develop rather than if we develop,” he said earlier this week.
“The Skipper field will be the jewel in our crown because 35mln barrels of reserves is a big number for a company of our size, and in fact would be a big number for companies much larger than us.
“And, of course, we’ll be looking at other deals and other routes to ensuring we can finance our activity without having to issue too many more shares.”