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Independent Oil & Gas (LON:IOG) shares climbed 20% higher on Friday as the North Sea firm confirmed its interests are “very much aligned” with partner ATP, and both companies want to progress the appraisal of the Skipper discovery expeditiously.
It has been agreed that the proposed appraisal well could now spud this summer though this is subject to funding, rig availability and shareholder approval.
The partners also said they want to achieve first gas from the Blythe field as soon as practicable, with the aim to submit a field development plan in the third quarter of this year.
IOG says it continues to support ATP as the operator of the Skipper and Blythe projects. Previously the AIM quoted firm had considered taking operational control, to try and drill the Skipper well in the summer’s ‘good weather window’.
It now believes a change of operator won’t be necessary.
“I’m very happy to say that we are now working to a common schedule on the development and appraisal of these key assets,” IOG chief executive Mark Routh said in a Proactive Investors interview.
Routh also says he is confident that the partners will be able to secure a rig to drill the well in the summer.
A buyout of ATP shares is due to complete on Monday, and the Department of Energy and Climate Change (DECC) will extend the licences for the Skipper and Blythe projects for 18 months.
Completion of the deal would be an important milestone. The transaction sees Alpha Petroleum, a private equity backed firm, acquire all the shares in ATP from the current owner, which has been in bankruptcy protection. ATP’s existing management will remain.
It takes the shackles off IOG’s partner and allows the Skipper and Blythe projects to move forward.
In this morning’s statement Routh said: "Following discussions with the operator, we now feel confident that the continued appraisal and development of our key assets will be progressed with minimal delay.
“This is very good news for both IOG and its shareholders. We will now have a fully funded and aligned partner.”
“We also have confirmation from DECC of their intention to grant significant licence extensions to facilitate that. We will keep the market updated of our progress on these key assets.
“In light of these important steps, we feel it is in the best interests of all parties for ATP UK to continue as operator. IOG will continue to support this work as an active and technically strong 50% partner.
“IOG has made significant progress towards qualifying as an operator and this will stand us in good stead with regards to opportunities in the recently announced 28th licence round and other potential acquisitions.”
On AIM this morning IOG shares increased 4.25p, or 20%, to trade at 24.75p each.