Independent Oil and Gas (IOG) plc posted losses of more than £21million last year after writing down a North Sea field.
The London-listed operator said the bulk of the loss came from a failure to add significant resources to the Skipper field East of Shetland.
Despite initial success with a drilling campaign, further work in the region to find hydrocarbons in secondary targets drew a blank.
IOG has now decided to focus on its Southern North Sea gas hub assets instead, having taken on 100% ownership in the Blythe hub and Vulcan satellite fields off the east coast of England.
The firm said the Vulcan satellite fields hold independently estimated 2C resources of 320.7 BCF.
Other 2016 highlights included successful 3D-seismic reprocessing of the wider Blythe area, which increased internal estimates of P50 probabilistic gas resources from 382 BCF to 490 BCF (85 MMBoe).
The company has also acquired the 300 MMcfd capacity Thames Pipeline to export all of the Company’s gas resources to shore.
IOG say it will be be 100% owned and operated, giving the company control from field to market and significantly reducing project capex and opex.
A £10 million convertible loan facility from LOG provided additional working capital and access to funding for acquisitions, augmenting the firms’s pre-existing facilities of £2.75 million and £0.8 million.
Cash balance at year end was £247,000, a significant increase on 2015’s £23,000.
At 31 December 2016, approximately £8.0 million remained to be drawn of the aggregate availability of £13.55 million from LOG.
Loss for the year was £21.4 million compared to 2015’s £5.3 million profit.
Annual impairment test resulted in a write-down of £22.1 million relating to Skipper, offset by a write-back of £2.1 million in relation to Blythe.
There are ongoing negotiations with Skipper well creditors seeking agreement for the conversion of up to £6.5 million of outstanding creditor balances to equity.
Field development plans for the Blythe and Vulcan fields are expected later this year.
Mark Routh, chief executive of IOG, said:”2016 was a year of substantial progress for IOG. We established a sizeable resource base as part of our strategy to create high-value gas hubs in the UK Southern North Sea and we acquired a viable potential export route following the negotiation to acquire the Thames pipeline.
“We have a busy work programme over the coming 12 months and the newly strengthened management and operations team are focused on successfully delivering our gas hub strategy and creating value for all our stakeholders.”