Independent Oil and Gas Plc (LON:IOG) has unveiled a deal to acquire assets in the UK’s Southern North Sea.
The assets, referred to collectively as the Vulcan Satellites, are located close to the group’s Blythe gas project and do not require any further appraisal.
It will see the AIM quoted, independent North Sea company gain 320bn cubic feet of gas resources – which is equivalent of 53.45mln barrels of oil.
"We are extremely pleased to have agreed this major transaction, to acquire a number of attractive assets, in what remains a challenging market,” said chief executive Mark Routh.
He added: “This acquisition expands our hub strategy; to gain control over a number of dormant discoveries that can be developed through common existing infrastructure, thereby generating significant economies and capturing many synergies.”
They are being acquired from the Oyster Petroleum subsidiary of Verus. IOG is to pay £1mln up front, and up to £4mln in subsequent payments. The effective cost of the transaction works out as US$0.22 per barrel.
Routh highlighted that the transaction more than doubles the company’s current recoverable resources at what he described as a “very compelling” price.
“Once all announced transactions have completed, we should have more than 100 MMBoe of low risk resources in our portfolio,” he added.
“This will be approximately two thirds gas and one third oil which provides an excellent springboard for us to become a significant development and production company. The additional scale will further enable IOG to contribute positively to UK energy security, in line with the principle of Maximising Economic Recovery for the UK North Sea.
“We remain confident that with the right approach, there is considerable value remaining in the North Sea and I look forward to making further updates on the Vulcan Satellites development plans in due course."
IOG is now advancing talks about possible gas export routes for it Southern North Sea gas interests, and it subsequently intends to proceed with field development planning.
Broker SP Angel, in a note, said: “Today's news that they have secured further working interests, in return for shares and deferred considerations, is the start to gain critical mass.
“In taking the tough decisions last year, the company have been able to start to see the fruit of those choices are starting to materialise.”
--UPDATE, added background and broker comments--