IOG to choose SNS core project partner in first half of 2019

Independent Oil and Gas (IOG) is looking to select a preferred farm-out partner for its Southern North Sea (SNS) Core Project in the first half of 2019.

IOG’s SNS Core Project consists of six discovered gas fields off the UK coast. The fields will be developed in two phases with Phase 1 consisting of the Southwark, Blythe, and Elgood fields (158 bcf 2P reserves).

Phase 2 consists of the Goddard, Nailsworth, and Elland fields (144 bcf 2P Reserves and 108 bcf 2C resources). In total, the Core Project comprises 410 bcf of 2P+2C reserves and resources.

IOG said on Monday that it had received extensive industry interest in its Core Project since the company confirmed the integrity of the Thames Pipeline.

In late 2018, management initiated a farm-out process with shortlist of potential farm-in partners. According to the company, it expects to select a preferred partner in the first half of 2019.

IOG added that first gas from the first phase of the SNS Core Project was planned to be delivered within 20 months of FID.

If the farm-in process is successful, it could provide valuable funding options via a development carry which would reduce new capital required for IOG’s Core Project.

Harvey spud in mid-2019

As for IOG’s plans for the Harvey appraisal well, the primary objective is to confirm gas resource volumes which management estimate at 85/129/199 bcf prospective resources in the low/best/high case, with a 63% geological chance of success.

“In the context of the wider funding process and availability of the selected rig, the well is now expected to spud in mid-2019,” IOG said.

If successfully appraised, Harvey would be integrated into a further optimized Core Project with significantly higher value and returns.

IOG added that it continued to utilize the £15 million ($19,6M) non-convertible loan for the Harvey well provided by London Oil and Gas (LOG).

Namely, the company drew £3.93 million in 2019 and currently has £2.9 million in cash and a further £3.93 million undrawn.

Andrew Hockey, CEO of IOG, said: “We are encouraged by the strong interest and engagement from a number of recognized parties to date as we focus on securing an attractive transaction which would fundamentally reduce our further funding needs for FID.”