Independent Oil and Gas has given the green light to the first phase of its flagship North Sea gas hub.
The “Core Project” has total resources of 410 billion cubic feet (BCF) of gas.
It comes as IOG completes a farm-out of 50% of the Core licences to CalEnergy Resources, with the Australia-headquartered firm paying an initial £40m plus up to £125m for the first two phases of the project.
CalEnergy will pay up £60m for Phase 1 which involves the development of Southwark, Blythe and Elgood in the Southern North Sea, with first gas targeted for July 2021.
The firm will then pay up to £65m for Phase Two, which consists of Goddard, Nailsworth and Elland.
The deal does not cover the Harvey discovery which was drilled last month, which CalEnergy has an option to acquire a 50% stake in.
After completing an £86m fundraiser last month, IOG said it is now “fully funded” for the project.
Chief executive Andrew Hockey said: “I am immensely proud of our team for delivering this major milestone and would like to thank our shareholders for their support.
“This is the culmination of a transformative year for IOG which begins a new phase in our growth. Our focus, as ever, is on delivering shareholder value. We have established a solid platform from which to generate cash flow from our existing portfolio through effective project execution.
“Our Southern North Sea gas business development strategy has clear competitive advantages: we have a very strong and well-aligned partner, we have our key export pipeline in place, we are an approved licence Operator, and we are fully funded to install our hub infrastructure.”
In July IOG signed a sale and purchase agreement for the Thames Pipeline reception facilities at the Bacton Gas Terminal which will serve the Core Project.
Core has 302 billion cubic feet of gas (BCF) in proven and probable reserves at the Blythe, Elgood, Southwark, Nailsworth and Elland fields, with another 108 bcf at in proven and probable contingent resources at the Goddard discovery.
Last month the firm posted a £3.7m pre-tax loss for the first half of the year as it progressed towards a final investment decision.
IOG said confirmation of full funding to the Oil and Gas Authority (OGA) will be submitted “shortly”.
Meanwhile the two firms plan to apply for a “number of blocks” in the OGA’s current 32nd licensing round.
Last month IOG confirmed a gas discovery from its Harvey appraisal well, which is estimated to hold 129bcf of gas.
CalEnergy Resources has the option to acquire 50% of the Harvey licences within three months of completion of the appraisal well.
If the deal is reached, CER will pay an additional £20 million to IOG.
CalEnergy is a subsidiary of Berkshire Hathaway Energy Company, which is headquartered in Des Moines, Iowa, US.
The group of operating companies headed by CalEnergy currently participates in upstream oil and gas projects in Australia, Poland and the UK.
CalEnergy currently has three offices located in London, Perth, Western Australia and Warsaw.