IOG spuds Harvey appraisal well

Independent Oil and Gas (IOG) has confirmed that the Maersk Resilient rig has started drilling the Harvey appraisal well located in the UK North Sea.

The Maersk Drilling-owned jack-up rig Maersk Resilient has recently completed its prior operations and re-located to Harvey well location.

The well was spud at 2230hrs BST on Tuesday, August 6, 2019, IOG said on Wednesday.

The designated well operator is Fraser Well Management. In addition, Halliburton Manufacturing and Services has been contracted to provide offshore drilling services for the well.

Completion of the well is expected to take approximately two months in the success case, IOG said.

Harvey is centrally located within IOG’s asset portfolio in UK Southern North Sea Blocks 48/23c, 48/24a, and 48/24b, close to the Thames Pipeline export route.

The primary objective of the well is to confirm gas volumes which management estimate at 85/129/199 BCF Prospective Resources in the Low/Best/High case, with a 63% Geological Chance of Success, and secondly to demonstrate reservoir deliverability.

If successfully appraised, the additional scale and synergies of a Harvey development could substantially enhance the portfolio’s overall value and returns, the company explained.

On completion of the farm-out transaction announced in late July the company’s designated partner, CalEnergy Resources Limited (CER), will have the option to acquire 50 per cent of the Harvey licenses within three months of completion of the appraisal well.

If this option is exercised, CER will pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER’s life-of-field net gas production from Harvey (equivalent to £61.3 million if Harvey produces IOG’s 129 BCF Best Estimate Prospective Resources). This would maintain full alignment between IOG and CER across IOG’s entire SNS Assets.

Andrew Hockey, CEO of IOG, commented: “Spudding the Harvey appraisal well is an exciting development for IOG and potentially a major catalyst for the business. Our objective is to prove up a substantial, high-quality reservoir in the heart of our core asset base which would create significant shareholder value over and above our recently announced farm-out.

“Success at Harvey could trigger a further significant near-term cash payment plus valuable life-of-field royalties should our designated partner exercise its right to farm in. We are pleased with our choice of rig and contractors and look forward to drilling the well safely and successfully.”

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