Independent Oil and Gas (IOG) has decided not to complete the acquisition of the Cronx license located in the Southern North Sea claiming that would not be “an optimal use” of the company’s funds.
IOG said on Tuesday it has received initial results from new interpretations of 3D seismic data covering the Blythe Hub licences in the company’s Southern North Sea (SNS) portfolio and a further update on the Cronx license.
The data was reprocessed by Schlumberger WesternGeCo to create a more consistent set of maps over the area. It comprises of 250 square kilometers of 3D seismic data from the 1990s.
According to the company’s statement on Tuesday, the initial interpretation of the reprocessed data across these licenses suggest that the estimates of Gas-Initially-In-Place (GIIP) and therefore recoverable gas reserves are greater than previously estimated.
However, the interpretation of reprocessed data on Cronx suggests that the GIIP there is slightly lower than the estimates in the ERC Equipoise Competent Persons Report from July 2012.
Subject to acquisition completion, IOG would have a 100 percent working interest in the Cronx gas discovery, located 14 kilometers northwest of the Blythe field. Cronx was discovered in 2007 via well 48/22b-6 drilled by Perenco UK Ltd.
Following the recent acquisition of the Vulcan Satellites and resource estimate increase in the Blythe hub licenses, the company said that committing to a firm well along with near-term completion payments, seismic uplift payments, and future milestone payments on Cronx would not be “an optimal use” of the company’s funds.
Therefore, IOG has chosen not to complete the acquisition of the Cronx license. The company previously anticipated to drill a well on the Cronx discovery in 2016 to confirm the recoverable resources.
IOG also reported that the second phase of reinterpretation work is now being completed over the Harvey and Hambleton discoveries and the Truman prospect and an update will be made once the work has been completed in full.
Mark Routh, CEO of IOG, said: “The seismic reprocessing studies completed so far have involved a great deal of hard work by the IOG team. Before this work, the Cronx resources comprised less than 5 percent of our estimated recoverable 2P and 2C gas resources and it has now become less material.
“If, following completion of the seismic reprocessing work, we can conclude that there is greater materiality across fewer assets in the Blythe Hub, development costs should also be streamlined. I look forward to making further updates on the progress of our developments in due course.”