Independent Oil and Gas (IOG), a development and production focused oil and gas company, has completed the acquisition of Versus Petroleum’s subsidiary, Oyster Petroleum.
Oyster holds the Southern North Sea licenses containing the Vulcan East, Vulcan Northwest, and Vulcan South fields, collectively known as the Vulcan Satellites in the UK part of the North Sea.
To remind, IOG has signed an agreement with Verus Petroleum to buy 100% of the shares of its subsidiary, Oyster Petroleum, on June 13, 2016.
The acquisition has an effective date of June 30, 2016, with an initial consideration of £1 million payable at completion.
According to the agreement, the company will make three further deferred consideration payments. The first sum of £0.75 million is payable nine months after completion. The second £1.75 million payment comes within 30 days of approval of a Field Development Plan on the Licenses by the UK Oil and Gas Authority. The final £1.5 million payment will be paid within 30 days of the production of first gas from the Licenses (defined as a minimum period of seven days of continuous production).
The aggregate consideration, allowing for any interim period adjustments, is £5 million ($7.1 million).
IOG said on Friday that this acquisition increases the company’s 2C recoverable resources by 320.7 BCF or 53.45 million barrels of oil equivalent.
The Vulcan Satellites require no further appraisal and IOG is moving on with discussions regarding an export route for its SNS gas hubs. IOG management will now build on the current preliminary Field Development Plan (FDP) preparation work, with a view of submitting the Vulcan Satellites FDP next year.
The company also said that Oyster has $25.6 million in UK pre-trading expenditure which can reduce the future amount of tax payable.
Mark Routh, CEO of IOG said: “We are very pleased to have completed the acquisition of these sizeable and attractive assets in the UK Southern North Sea, more than doubling our 2P+2C recoverable resources at a compelling price of $0.22/Boe.
“The acquisition is a very good fit for IOG alongside our Blythe hub and is a vital step forward in IOG’s plan to become a significant operator in the Southern North Sea.”