Company Name (Ticker)#
Independent Oil & Gas (IOG LN) has announced that it has now completed the acquisition of the Thames Pipeline. The pipeline provides a ready built, secure and wholly owned export route for gas from the Blythe and Vulcan Satellite hubs, saving IOG significant development capital and enhancing the economics of the Southern North Sea gas project. In addition, IOG has announced that it intends to acquire the onshore reception facilities at the Perenco Bacton Terminal where the Thames Pipeline ends. A period of exclusivity has been agreed until the end of September 2018.
IOG is now the operator of the 100% owned Thames Pipeline which at peak production is expected to carry 180mmcfd; although since this would not fully utilise the pipeline’s capacity (300mmcfd in total) IOG is considering opportunities for additional third party gas.
Currently IOG is conducting an intelligent pigging programme to confirm the state of the pipeline. However, since the pipeline was decommissioned in 2015 with an estimated 25-40 years of life remaining we expect it to be in good condition with any necessary remedial work likely to be limited in nature. Results are expected in early May. We also note a potential modification to the pipeline which is currently being considered. This could reduce the time and cost of the pigging programme by using a new tie in point for the Southwark platform which is in the Vulcan Satellites hub.
This announcement reflects a key milestone for IOG and the company continues to make strong progress towards the Final Investment Decision due in August 2018.
We reiterate our Buy recommendation and 72p price target.