Independent Oil & Gas crashes on well postponement

Independent Oil & Gas shares crashed after the company said it was delaying the Skipper appraisal well in the North Sea "until there is greater stability and clarity in the oil market".

The AIM-listed company said it made the decision following the oil price's continued tumble to around $30 a barrel. It also cited bad weather in the North Sea that would lead to likely delays.

IOG said it had secured £10m more of convertible debt funding from London Oil and Gas, which has already provided £3.55m of loans in December, to facilitate the Skipper rescheduling and provide "capital for potential acquisitions" created by the oil market turmoil.

Of the new loan, £3m is set aside to help with general and administrative expenses, which management expect will give it "financial security until at least mid-2018", and the remaining £7m for adding value organically and via acquisitions.

On Skipper, the original plan to drill Skipper in the first quarter of 2016 would have required loans and contractor deferral funding to be repaid by IOG at the end of 2016.

"IOG now considers this refinancing risk to be increased due to the very weak commodity prices and negative market sentiment towards oil and gas," it said.

In light of the bad news, the board said they believed that drilling in a more favourable weather window, "with at least some improvement in market sentiment", would be prudent, which is expected to be later this year.

IOG will now need its principal lenders and contractors to agree to the revised timetable, as well as the UK Oil and Gas Authority to extend the Skipper licence beyond 30 March 2016.

These discussions are ongoing, the company confirmed.

Shares in IOG were down 41% to 5.07p by 1010 GMT, down from their recent spike above 15p and a 12-month high in June of 21.6p.