North Sea focused Independent Oil and Gas’ (LON:IOG) key licences are Skipper and Blythe. An agreement on drilling plans with partner ATP, the operator of licences, should see Skipper now move forward rapidly. Mark Routh, IOG’s chief executive, explains the development plans.
Charlotte Kan: Today’s news looks very encouraging and removes a lot of uncertainty. Can you tell us a bit more?
Mark Routh: Firstly, IOG sees great opportunities in the North Sea at the moment, and finally, we now have a fully funded partner which is completely aligned with our plans.
What has happened over the past year is that ATP Corporation ran into trouble in 2012, and filed for Chapter 11 Bankruptcy Protection.
Its wholly owned subsidiary, ATP UK, our partner in the field, was then put up for sale. Finally, the sale of that company has been completed.
In the past month, we’ve been discussing with ATP, and also with the Department of Energy, our plans for the appraisal of our Skipper discovery and the developments of the Blythe gas field.
I’m very happy to say that now we’re working to a common schedule on the developments and appraisal of these key assets.
CK: Can you provide us with an update on a timetable for Skipper and Blythe?
MR: IOG has done significant work on the planning for the Skipper appraisal well and also on the development of Blythe.
We shared that with the operator and with the Department of Energy and we’re now working towards drilling the Skipper appraisal well in the summer of 2014.
That’s subject to rig availability, but we are confident that we can secure a suitable rig to drill the well in the summer of 2014.
On Blythe, the plan is to work as far as possible to submit a field development plan to the Department of Energy by third quarter of 2014.
CK: How are your discussions going with the Department of Energy at the moment?
MR: They have been extremely supportive throughout the whole process.
What’s great about the acquisition by of ATP by Alpha Petroleum is that they are keeping the ATP management team in its entirety, with all its systems and all its people.
We know them very well. We’ve worked with them for a long time and are very happy to be completely aligned with them now on the schedule on our assets.
CK: What are the plans for your other assets in the North Sea?
MR: We are very pleased to have been awarded two licences in the 27th Licensing Round, which are adjacent to our existing fields, Blythe and Skipper.
We’re working up our plans on these assets, which have exploration upside of close to 40mln barrels of oil equivalent.
IOG, at the moment, has reserves and resources of 16.2mln barrels of oil equivalent. Of that, 3.3mln is proven.
Our existing assets’ unrisked net present value is £165mln. Compare that with our market cap or around 15 at the moment, we see this potential huge upside for IOG and its shareholders.
As for the plans for the future, and in 2014 and beyond, we are working on the 28th Licence Round Applications, where we see some good potential, and we’re working on some other acquisitions.