IOG expects ‘game-changing’ Harvey well to spud in January

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Independent Oil and Gas (IOG) has completed its deal for a £15million loan to drill the “game-changing” Harvey appraisal well.

The southern North Sea prospect is estimated to hold up to 286billion cubic feet of gas.

Fraser Well Management, which has offices in Aberdeen and Great Yarmouth, has been contracted to operate and manage the well, which is expected to spud in January.

The firm had previously said the well would be drilled in December.

IOG has secured the £15m loan from London Oil and Gas in return for shares at a premium rate and loan interest.

The firm estimates the well has a 63% chance of success, with a low case of at least 85billion cubic feet of gas.

IOG said the well’s net present value is £232million.

In a statement, IOG said the rig and offshore service provider have been provisionally agreed and are expected to be confirmed “shortly”.

The company’s nearby Thames pipeline will be the main export route.

Work is also being carried out to assess the Redwell discovery and Woodforde and Norada prospects which are within  the same license.

CEO Andrew Hockey said: “A successful Harvey appraisal well would be a game changer for IOG, providing a major increase to our existing 303 BCF 2P proven gas reserves in the Southern North Sea.  Our new seismic reinterpretation work has given us more definition of the structure and more confidence in the resource range, well location, and most importantly the geological chance of success, which is now up to 63%.

“Crucially, we now estimate even the low case to be 85 BCF, which would make a very attractive development at nearly double the November 2017 CPR’s 44 BCF low case.

“Our 129 BCF mid-case management estimate is also an improvement on the CPR’s 114 BCF mid-case and, if successfully appraised, we see potential for a streamlined development, benefitting from very strong synergies with our other assets.

“This results in a £232m NPV, nearly 50% more than the CPR number, transforming the company’s overall economics.

“Closing the Harvey Facility is an important step forward, confirming an exciting near-term value catalyst for investors within the wider context of our high-value development project.

“We are also very pleased to have engaged Fraser Well Management to operate this well, given their wealth of relevant experience in this basin.

“Further updates will be provided as we confirm other contractors and the spud date in due course.”

IOG was awarded the Harvey license in 2013 during the 27th offshore licensing round.