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IOG hails year of 'progress' on North Sea core projects

Bosses at Independent Oil and Gas (IOG) hailed 2018 as a year of progress for the firm’s southern North Sea (SNS) portfolio.

IOG completed the purchase of the Thames Pipeline, filed environmental studies for its core project, was awarded new SNS licences and reprocessed seismic for the Harvey field.

But the London-listed firm did have to defer some of its key plans.

IOG had hoped to drill the Harvey appraisal well at the end of 2018, but advised in September that the Ensco 72 rig wouldn’t start work until the first quarter of 2019.

The schedule has since been revised again, with drilling expected to get going in mid-2019.

The field is thought to hold 129 billion cubic feet (bcf) of gas and would be incorporated into IOG’s “core” development project, which comprises the Blythe, Goddard and Vulcan assets.

Blythe and Vulcan hold combined proven and probable reserves of 302 bcf of gas.

IOG originally intended to make a final investment decision (FID) on its core project in the fourth quarter of 2018, but oil price volatility led to a delay.

An FID is currently slated for the first half of this year, with production scheduled for early 2021.

The company says it is making progress with its efforts to secure a partner for the development.

Bosses at IOG have been fending off attempts by RockRose Energy to take over the business.

RockRose tried to buy IOG’s debt with a bid of more than £50m.

But it withdrew the offer this week after IOG revealed plans to raise £16.6m through a share placing and restructure its loan arrangements with its main lender, London Oil and Gas, which is in administration.

Speaking after IOG reported pre-tax losses of £5.6m for 2018, compared to £2.75m the previous year, chief executive Andrew Hockey said: “I’m pleased to report that 2018 was a year of progress across our SNS portfolio.

“We continued to advance development plans for our core project and wider SNS portfolio.

“The purchase of the Thames Pipeline in April 2018 and its subsequent recommissioning has also been key to unlocking the value of our SNS portfolio, providing us with a secure, low-cost export route to bring our gas onshore at the Bacton Terminal.

“Looking forward, two key catalysts to value growth should come to fruition in 2019.

“We look forward to concluding our core project development discussions and expect to be in a position to select our preferred party to deliver either a farm-in or capital markets solution to reach FID on the core project in 1H 2019.

“The second near term value catalyst is the high-impact Harvey appraisal well which could significantly enhance the value of our SNS development.

“In addition to this we [expect to submit / will continue to progress] our field development plan for Goddard which will add significant incremental value to our core project.”

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