Independent Oil & Gas' (LON:IOG)# FY 2015 results showed a total profit for the year of £5.3m (vs a loss of £12.1m in 2014) largely due to the reversal of impairment provisions. Its cash position was £23k at the end of the period.
Further Funding Completed Since Year End
Following the completion of the £5.5m funding from London Oil & Gas and GE Oil & Gas UK in December 2015, IOG secured an additional £10m convertible loan facility from London Oil & Gas in March 2016. The proceeds from these loans will be used to drill the appraisal well on the Skipper discovery, provide funding for G&A costs and also allow IOG to pursue an acquisition strategy to add value to IOG’s existing portfolio.
IOG became 100% owner and operator of the Skipper licence after acquiring the other 50% in December 2015 increasing its 2C resources on the asset to 26.2mmboe. Whilst the Skipper well was postponed from Q1 2016 the project remains a priority for IOG and it has extended the Skipper licence until 31 December 2016 so it can be re-scheduled for the earliest viable opportunity. IOG signed a rig contract with Transocean in December 2015 for the drilling of the Skipper well and this remains in place for the re-scheduling and has appointed AGR Well Management as the well operator.
Blythe Acquisition
Following the £10m funding from London Oil & Gas in March 2016 IOG signed an SPA to acquire the remaining 50% of the Blythe discovery to become the sole owner and double its independently verified 2P reserves on the asset to 34.3BCF.
Recommendation and Target Price
We maintain our BUY recommendation and update our TP to 76p to reflect the recent acquisition of the remainder of the Blythe discovery in line with our core NAV.