Independent Oil and Gas plc (IOG), the North Sea focused oil and gas company, has informed that the Skipper and Blythe licences, both located in the UK North Sea, have been extended by the Oil and Gas Authority (OGA).
In addition, Alpha Petroleum has agreed to extend the deadline for completion of the sale of its 50% interest in licence P1609, that contains the Skipper discovery, to IOG.
According to its press release, IOG has presented the rig proposal and the progress with certain contractor discussions to the OGA and OGA in turn has agreed to extend the Skipper licence by three months to December 31, 2015.
IOG aims to drill the Skipper well as 100% owner, which requires completion of the Sale and Purchase agreement to acquire 50% of the licence from Alpha.
Alpha has agreed to extend the deadline for completion of the acquisition by one month to October 7, 2015. IOG previously extended the deadline till September 7, 2015.
Skipper well funding
IOG says it is pursuing a contractor led funding approach to drill the Skipper commitment well. The aim of the well is to retrieve core and oil samples in order to design the optimum field development plan. Skipper has independently verified gross 2C resources of 26.2 MMBbls. The appraisal well will also target two exploration prospects directly beneath the Skipper oil discovery which the Competent Person estimates may contain additional oil in place of 46 MMBbls.
IOG has said it has received a rig proposal that includes a partial deferment of the costs and could allow the well to be drilled later this year, subject to full funding of the rig contract and the well permitting process.
IOG notes that it continues to explore alternative funding arrangements and is in discussions with several contractors regarding the provision of well services and equipment on a full cost deferral basis and also with several parties regarding potential loan finance to bridge any funding gap relating to the Skipper commitment well.
Alpha and IOG also recently presented an update on the Blythe development plans to the OGA and a 15 month licence extension to December 31, 2016 has now been agreed. Blythe is located in licence P1736 in the North Sea and IOG is the operator with 50% interest.
In addition to licence extension, Alpha and IOG have agreed with the OGA that a draft Field Development Plan will be submitted by December 31, 2015.
Mark Routh, CEO of IOG commented: “This remains a challenging time to fund and drill wells in the North Sea, but we are very pleased with the support we have had from the OGA in extending both licences and from the contractor community to help us get the exciting Skipper well drilled.”
In addition, Darwin Strategic (Darwin) has agreed to defer the repayment of its loan to IOG by one month to October 4, 2015 when £358,000 will be payable. IOG says that no additional fees or interest have been charged. If the loan is not repaid by this date Darwin will have the right to convert any outstanding balance into equity at 85% of the three lowest average daily prices in the preceding 10 days. IOG is now funded until early October 2015.
Routh added: “We are also appreciative of Darwin’s flexibility in extending the loan without any levy of fees or interest. I look forward to providing further updates on our progress in due course.”