Independent Oil & Gas makes progress on Harvey well, core project

UK-focussed development and production company Independent Oil and Gas updated the market on the Harvey appraisal well and other key corporate activities on Tuesday, reporting that its preparations to drill Harvey with the Maersk Resilient jack-up rig were now “well-advanced”.

The AIM-traded firm described the Maersk Resilient as a “modern, high-spec” rig with a “strong” operating history and an “excellent” safety record.

It was currently on contract with another operator, drilling a well in the Central UK North Sea, which was expected to finish in late July.

Allowing for mobilisation to the Southern North Sea, IOG said it currently expected the Maersk Resilient to be on location at Harvey by the end of July.

In the success case, the well was forecast to take up to two months.

In the meantime, IOG and its designated well operator, Fraser Well Management, were completing final procurement, regulatory and other preparatory processes ahead of the well, all of which it said were proceeding on schedule.

Harvey was centrally located within IOG's asset portfolio in the UK Southern North Sea Blocks 48/23c, 48/24a, and 48/24b, the board explained, close to the IOG owned-and-proven 550 MMcfd capacity Thames Pipeline.

The primary objective of the Harvey appraisal well was to confirm gas volumes, which management estimated at 85/129/199 billion cubic feet prospective resources in the low/best/high case, with a 63% geological chance of success, and secondly to demonstrate reservoir deliverability.

If successfully appraised, the additional scale and synergies of a Harvey development could “substantially enhance” the portfolio's overall value and returns, the board said.

On the ongoing farm-out process, IOG said it had continued to work “intensively” on it for its core project, which comprised 410 billion cubic feet of 2P+2C reserves and resources across six discovered Southern North Sea gas fields.

The firm said the process had progressed “substantially”, with it aiming to be in a position to release further updates during July.

It said the farm-out was intended to provide a “significant” amount of development funding, adding that it represented a “major milestone” towards final investment decision on the first phase of the core project, which was planned at the earliest possible time.

In addition, IOG said it remained in “advanced exclusive discussions” to acquire the Thames Reception Facilities at the Bacton Gas Terminal from its joint owners, the Thames Partners.

As it had previously indicated, the process of agreeing the required documentation had highlighted certain legal complexities relating to land title, which had required co-ordinated input from several parties.

IOG said it had been working “constructively” with the Thames Partners in a dedicated process, and expected to resolve those outstanding issues and sign the agreement at the earliest feasible time.

“We are pleased to confirm that we are on schedule to drill our exciting appraisal well at Harvey,” said Independent Oil & Gas chief executive officer Andrew Hockey.

“The well is a major catalyst for IOG, potentially proving up a substantial, high-quality reservoir in the heart of our core area, close to our fully-owned Thames Pipeline.

“Final preparations are underway and the summer drilling slot should help to minimise weather-related operational risks in executing the well.”

Hockey said the company’s primary focus remained to progress the funding of its core project to final investment decision, and in particular, the farm-out process.

He said the board was “highly motivated” to deliver a farm-out transaction that could enable the company to progress to final investment decision in the summer.

“We look forward to updating our shareholders on progress on these key milestones for the company.”