Independent Oil & Gas buys licences in Southern North Sea for £5m

AIM-listed Independent Oil & Gas has bought the shares of Oyster Petroleum, a subsidiary of Vereus Petroleum, which holds licences in the Southern North Sea for about £5m.

The licences, which contain the Vulcan East, Vulcan North West and Vulcan South fields, collectively known as the Vulcan Satellites, are part of the company’s strategy to become a significant operator in the Southern North Sea.

The company will pay £1m, which was funded by a drawing down loan facilities, upfront, £750,000 in nine months after the acquisition is completed and then further payments of up to £3.25m when certain milestones met.

The acquisition increases the company’s 2C recoverable resources by 320.7bn cubic feet or 53.45m barrels of oil equivalent.

The company is in talks about an export route for its Southern North Sea gas hubs and will be able to build on the current preliminary field development plan in order to submit the Vulcan Satellites plan next year.

Oyster also has $25.6m UK pre-trading expenditure which would reduce the future amount of tax payable.

Chief executive Mark Routh said the acquisition of the Southern North Sea assets more than doubling the company’s proven and probable reserves, and best estimate of contingent resources (2P+2C) at a price of $0.22 per barrel of oil equivalent.

“The acquisition is a very good fit for Independent Oil & Gas alongside our Blythe hub and is a vital step forward in the company's plan to become a significant operator in the Southern North Sea.

“We are confident the acquisition will help us deliver our strategy of developing existing discoveries through common infrastructure and capturing valuable synergies.”

Shares in Independent Oil & Gas were up 8.63% to 17.11p at 1121 BST.