Independent Oil & Gas (LON:IOG)
Independent Oil & Gas (IOG)# has announced it has completed the acquisition of Oyster Petroleum which hold the Vulcan Satellites adding 2C resources of 320.7BCF (c53mmboe) to IOG and create a further Southern North Sea (SNS) hub.
The terms of the deal remain unchanged from when it signed the SPA under which IOG will pay an initial consideration of £1m, £750k nine months after completion with up to an additional £3.25m upon milestones being met in the development stage. The licences being acquired contain the Vulcan East, Vulcan North West and Vulcan South fields, known as the Vulcan Satellites and require no further appraisal. Oyster also has cUS$25.6m of losses which can be carried forward to reduce future taxes. The Vulcan Satellites lie 30-45km east of the Blythe field and IOG is in advanced discussions with regards to an export route for its SNS hubs, once these are arranged IOG will be able to prepare the FDPs. As part of the deal IOG will take on liability for decommissioning a suspended well on Vulcan East estimated to cost £3m. In our NAV we assign a value of 50p/sh to the Vulcan Satellites and maintain our BUY recommendation on the stock.