IOG expands in North Sea with Oyster buy

Independent Oil and Gas (IOG), a development and production focused oil and gas company, has signed an agreement with Verus Petroleum to buy 100% of the shares of its subsidiary, Oyster Petroleum. 

The acquisition is conditional upon Verus completing the transfer of certain licences into Oyster which have 2C recoverable resources of 320.7 billion cubic feet of gas (BCF).

Oyster will hold 100% of Block 49/21a (Licence P039), 100% of Block 49/21d (Licence P2122), 100% of Block 48/25b (Licence P130), and 100% of Block 49/21c (Licence P1915), in the UK sector of the Southern North Sea. These Licences contain the Vulcan East, Vulcan North West and Vulcan South fields.

IOG stated that this transaction enhances its 2C recoverable resources by 320.7 BCF or 53.45 MMBoe at a cost of $0.22/Boe. This consists of independently verified resources of 77.4 BCF at Vulcan East, 131.3 BCF at Vulcan North West and 112.0 BCF at Vulcan South. Subject to completion of the Blythe and Cronx acquisitions, the company’s combined 2P reserves and 2C resources increases to 102.3 MMBoe.

The Vulcan Satellites, which need no further appraisal, lie 30-45km east of the Blythe field, which is 100% owned by IOG pending completion of the acquisition of the other 50% of the Blythe licence from Alpha Petroleum Resources announced in April 2016.

IOG said it is in advanced discussions regarding an export route for these fields and once that is in place the company will prepare a Field Development Plan. The company further added that it will take on liability for decommissioning a suspended well on Vulcan East, which in April 2015 was independently estimated to cost £3 million as part of a development campaign, based on prevailing rig rates at that time.

As of December 31, 2015, Oyster held approximately $25.6 million in UK pre-trading expenditure, which IOG can use to reduce the future amount of tax payable.

The acquisition has an effective date of June 30, 2016 and is conditional upon the approval of the UK Oil and Gas Authority (OGA), upon receipt of which the acquisition will complete.

The acquisition is for an initial consideration of £1 million payable at completion, subject to interim period adjustments for the period between the effective date and completion. The initial consideration will be funded by the draw-down of the company’s available facilities under the loans provided by London Oil and Gas which has approved the acquisition and this payment.

In addition, the company will make three further deferred consideration payments:  £0.75 million payable nine months after completion; £1.75 million payable within 30 days of approval of a Field Development Plan on the Licences by the OGA; and £1.5 million payable within 30 days of the production of first gas from the Licences (defined as a minimum period of seven days of continuous production).

The aggregate consideration, allowing for any interim period adjustments, is therefore £5 million ($7.1M).

Mark Routh, CEO of IOG, commented: “These assets will more than double our 2P and 2C recoverable resources at a very compelling price and come with substantial pre-trading expenditure.

“This acquisition expands our hub strategy; to gain control over a number of dormant discoveries that can be developed through common existing infrastructure, thereby generating significant economies and capturing many synergies.

“Once all announced transactions have completed, we should have more than 100 MMBoe of low risk resources in our portfolio. This will be approximately two thirds gas and one third oil which provides an excellent springboard for us to become a significant development and production company.”

Share this article

Follow Offshore Energy Today

Events>

<< Dec 2019 >>
MTWTFSS
25 26 27 28 29 30 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31 1 2 3 4 5

Africa Oil Week 2020

For over 25 years Africa Oil Week has been the meeting place for Africa’s most senior E&P stakeholders.

read more >

CERAWeek 2020

 Each year, CERA clients gathered for a few days in Houston…

read more >

Offshore Technology Conference (OTC) 2020

The Offshore Technology Conference (OTC) showcases leading-edge technology for offshore drilling, exploration…

read more >

2020 EXPLORATION AND PRODUCTION STANDARDS CONFERENCE ON OILFIELD EQUIPMENT AND MATERIALS

The development of consensus standards is one of API’s oldest and most successful programs.

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply