Independent Oil and Gas losses widen as it pursues production

Pre-revenue development and production-focussed oil and gas company Independent Oil and Gas reported a total loss of £4.61m for its first half on Thursday, widening from £2.56m year-on-year.

The AIM-traded firm said that made for a basic and diluted loss per share of 2.2p for the six month period ended 30 June, compared to 2.1p a year earlier.

On the operational front, the company noted that its SNS Core Project was expanded to include the 108 billion cubic feet of 2C contingent gas resources at Goddard.

It also said engineering and design work for the first phase of the Southwark and Blythe platforms progressed during the period, following the successful completion of geotechnical surveys.

Tendering processes had now been initiated for the first phase platform and SURF scopes.

Looking at its finances, Independent noted the institutional equity fundraise it conducted during the half, featuring a fully-subscribed open offer as well as a board and management subscription, raising gross aggregate proceeds of £18.9m.

It also saw the conversion and restructuring of London Oil and Gas (LOG) debt, and signed a relationship agreement with LOG.

The board rejected an indicative proposal from Rockrose Energy during the half-year, it added.

Looking at the board, Esa Ikaheimonen was appointed as senior independent non-executive director and chair of the audit committee, and Neil Hawkings as independent non-executive director and chair of the HSE and technical committee.

Since the period ended, Independent said it had signed definitive documents to farm out 50% of its portfolio, excluding Harvey, to CalEnergy Resources.

It also raised a €100m five-year bond, which would see the company fully-funded for the first phase of the core project.

The drilling of the Harvey appraisal well had occurred, and the company had signed a sale and purchase agreement to acquire the Thames Reception Facilities at Bacton Gas Terminal, as well as an area of mutual interest agreement with CalEnergy Resources.

Looking ahead, the board said it was anticipating the completion of the farm-out to CalEnergy Resources, as well as the final investment decision and the commencement of the first phase of its core project.

It was also expecting the full results from the Harvey appraisal well, as well as a limited option for CalEnergy Resources to farm in to Harvey.

“In challenging circumstances, the IOG team has achieved a series of very significant steps to unlock the value of our portfolio during 1H19 and thereafter,” said chief executive officer Andrew Hockey.

“Most notably we completed an institutional fund raise in April which, along with a board and management subscription and a fully subscribed open offer, raised gross proceeds of £18.9m.

“Other significant highlights include the restructuring and conversion of existing debt facilities, the successful defence from a possible hostile takeover, contractor bid processes for phase 1 platform and SURF contracts and strengthening of the board with two high-quality new non-executive directors in Esa Ikaheimonen and Neil Hawkings.”

Since the period ended, Hockey noted that the firm had signed the farm-out agreement with CalEnergy Resources, signed the sale and purchase agreement to acquire the Thames Reception Facilities at Bacton, and successfully raised a €100m bond to complete the balance of required first phase funding.

“We have also drilled the Harvey appraisal well in under two months with no HSE incidents, confirming a 49 foot gas column, and are currently assessing the detailed well results to generate updated volume estimates.

“I am immensely proud of everything the team has achieved to date this year.”

The company was continuing to focus its efforts on ensuring that all remaining farm-out completion conditions, which consisted of routine consents and agreements with third parties, were met as soon as possible, Hockey explained.

“At completion we will be fully funded for the phase 1 development execution phase and we remain as focused as ever on delivering value for our shareholders.”