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IOG looks forward to Harvey well as it closes US$15mln funding deal

Andrew Hockey, IOG chief executive, described the closing of the loan facility as an important step forward and said the Harvey well is an “exciting near-term value catalyst”
oil and gas operations
IOG will pay interest at LIBOR plus 9% for the non-convertible loan

Independent Oil and Gas Plc (LON:IOG) confirmed it has closed a US$15mln funding deal with its partner London Oil and Gas (LOG), to pay for the planned Harvey appraisal well.

LOG is providing the funds via a non-convertible loan facility, with a five-year maturity and interest payable at LIBOR+9% per year – it will also receive 20mln share warrants, exercisable at 32.18p per share.

It is anticipated that the Harvey well will be drilled in January 2019.

IOG highlighted that Harvey is a relatively low risk well - the chance of success is stated at 63% - meanwhile, the target is estimated between 85 to 199 billion cubic feet of gas, with the mid-case set at 114bn.

Based on the mid-case, IOG said Harvey would be worth £232mln (a discounted net present value).

READ: Hurricane Energy moves tangibly closer to first production

Andrew Hockey, IOG chief executive, described the closing of the loan facility as “an important step forward” and said the Harvey well is an “exciting near-term value catalyst”.

"A successful Harvey appraisal well would be a game changer for IOG, providing a major increase to our existing 303 BCF 2P proven gas reserves in the Southern North Sea,” Hockey said. 

“Our new seismic reinterpretation work has given us more definition of the structure and more confidence in the resource range, well location, and most importantly the geological chance of success, which is now up to 63%.

He added: “Crucially, we now estimate even the low case to be 85 BCF, which would make a very attractive development at nearly double the November 2017 CPR's 44 BCF low case.

“Our 129 BCF mid-case management estimate is also an improvement on the CPR's 114 BCF mid-case and, if successfully appraised, we see potential for a streamlined development, benefitting from very strong synergies with our other assets.

“This results in a £232m NPV, nearly 50% more than the CPR number, transforming the company's overall economics.”

View full IOG profile View Profile

Independent Oil & Gas PLC Timeline

Newswire
January 04 2019

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