Independent Oil and Gas plc (IOG), the North Sea focused oil and gas company, has today entered into a conditional agreement with London Oil and Gas Limited (LOG) for the provision of a secured convertible loan facility for up to £10 million ($14.6M).
In addition, the company agreed with its offshore rig and oilfield services providers, Transocean and Baker Hughes, to delay the provision of their services for the UK North Sea well, Skipper.
IOG and LOG agreed terms in principle for the new facility in January when IOG informed that its Skipper appraisal well, in the UK North Sea, had been delayed following recent oil price movements and bad weather in the North Sea
A £10 million secured fully convertible loan facility to be made available by LOG will provide IOG with additional working capital and funding for future acquisitions.
The further loan funding is in addition to the existing £2.75 million and £0.8 million loans from LOG announced in December 2015, and will rank behind those facilities in terms of security.
According to IOG, £7 million of the new facility will be dedicated to fund acquisitions that would add value to the company’s portfolio, while the remaining £3 million will be used to fund corporate G&A and licence fees up to July 2018.
Of the new facility, £3 million may be drawn down in instalments of up to £100,000 each month to be used specifically to cover G&A and licence fees for the next 30 months, ensuring the company will be fully funded for general purposes until mid-2018.
A further £7 million of the new facility may be drawn down subject to certain conditions precedent and at LOG’s sole election to be used specifically to finance IOG’s business strategy.
Mark Routh, CEO of IOG, commented: “We are delighted to announce the entry into this facility with LOG. On satisfying the conditions to draw down, the company will be fully funded for its corporate G&A and licences fees until mid-2018 and can now focus upon building an exciting phase of growth.
“Following the recent extension to the Skipper licence until the end of 2016, we remain ready to remobilise on the appraisal well at the earliest feasible opportunity.”
Rig contract deferred
Further, IOG said that the drilling contractor Transocean, from which IOG hired a semi-submersible drilling rig John Shaw for the Skipper well, has agreed to defer the existing rig contract start and will be working together with IOG on the future drilling of the Skipper appraisal well. To remind, IOG postponed the Skipper well drilling plans in January 2016.
IOG added that an oilfield services provider Baker Hughes has also agreed to delay the provision of their services for the Skipper appraisal well and will also work with IOG on the Skipper development wells.
IOG added on Friday that under the loan agreement, LOG has the right to nominate two directors to the Board. Martin Ruscoe is LOG’s initial nomination to the Board and a further appointment may be announced in due course. In addition, LOG has the right to nominate a non-director observer to the Board.
Therefore, IOG on Friday announced the appointment of Martin Ruscoe as a Non-Executive Director. Ruscoe is currently a director at London Group Limited and has over 40 years’ experience in the financial services industry.
Furthermore, as part of the restructuring of the company’s Board, Marie-Louise Clayton has chosen to step down as a non-executive director in order to concentrate on other activities.
Eric Bosshard is joining IOG in a part time role as Technical Advisor to the Board. He is currently President and Technical Director at LOG and has over 40 years of international experience across the oil and gas sector.
In addition, Clint Redman is joining IOG in a part time role as Head of Corporate Finance. He is currently Head of Corporate Finance with LOG.
Routh commented: “We are pleased that Martin has agreed to join the Board and also that Clint and Eric are joining the team and look forward to working with them. Their wide ranging finance and technical expertise will help us to deliver our refined business strategy and generate shareholder value.
“We thank Marie-Louise for her important contribution dating back to before IOG was created in its current form, and wish her very well for the future.”
Offshore Energy Today Staff