Independent Oil & Gas (IOG)# has completed operations on the Skipper appraisal well. Whilst IOG had already confirmed it had completed the primary objective of the well by retrieving good quality reservoir condition oil samples from Skipper, it has now completed the well’s secondary objective by drilling the two exploration prospects in the Lower Dornoch and Maureen formations below Skipper. The well did not encounter any hydrocarbons in either of the two horizons and will now be plugged and abandoned.
As previously stated we did not attribute any value to either of these prospects and any exploration success here would have represented upside to our valuation. Therefore, overall we view the well as a success as the early indications from the Skipper oil samples indicate the oil viscosity to be better than anticipated in the Competent Persons Report (CPR).
As Skipper is a heavy oil development this means that should these results be confirmed by testing the oil will be more mobile in the reservoir and require fewer development wells thereby improving the project economics. We maintain our BUY recommendation and 124p TP.