Independent Oil and Gas plc (“IOG”), the UK North Sea focused oil and gas company, will have to look elsewhere for new funding, after one of its potential investors pulled out.
IOG signed a Letter of Intent on May 27 with an internationally listed group with a multi-billion dollar market capitalisation for a $10m equity investment at 23.79p and what IOG says is an attractively priced debt of $80m 1st tranche and contingent £400m 2nd tranche.
Accordingly, IOG says it advised the market that it was working on a transaction to fund the whole development portfolio to first production. As negotiations progressed IOG says it issued a circular to shareholders and called an EGM to approve the potential issue of new shares to allow the transaction to conclude without further delay and this was approved by shareholders on July 31, 2015.
“Unexpectedly, the investor has advised us today that due to the renewed fall in commodity prices they have decided not to proceed with the investment at this stage,” IOG said in a statement issued Friday, August 7.
It went on to say: “Whilst the IOG team had confidence in this transaction closing it also felt it prudent to keep a number of alternative options open which it is now pursuing. The short term priority is to secure the funding for the Skipper commitment well which is necessary to secure a licence extension for Skipper and also to close the acquisition of 50% of Skipper from our partner in the licence, Alpha Petroleum.”
IOG is funded up to 4th September 2015 when the Darwin loan of £358,000 is repayable.
Mark Routh, CEO of IOG said: “The decision from our potential investor is unexpected based on the progress made to date and clearly very disappointing. It is a decision based on external factors and not a reflection on our team and assets. Whilst we anticipated that the transaction was likely to conclude, we have continued to keep other opportunities open. We are now pursuing these opportunities with the aim of maximising value to shareholders.”