Independent Oil & Gas (LON:IOG) says becoming an operator will be instrumental in the company’s growth.
The UK Department of Energy and Climate Change (DECC) is currently working through an application for IOG to be the operator of the Cronx field – for which a £468,000 acquisition was announced in March.
Such a designation would also boost the company’s ongoing efforts to acquire additional, portfolio expanding acquisitions.
The expansion strategy borrows from the play book of Dana Petroleum and Venture Production – both of which built and sold substantial North Sea businesses. IOG will look to acquire known, dormant discoveries, along with exploration, which can be enhanced and commercialised through their combination.
Its own Blythe and Skipper projects are based upon this 'hub' blueprint. A field development plan for Blythe is scheduled to go to DECC in the fourth quarter, meaning first gas could follow in 2016, meanwhile an appraisal well is planned for Skipper in 2015.
Aside from acquisitions, the company has also applied for new projects in the UK 28th Seaward licensing round.
As it pursues its expansion plans, IOG believes becoming a recognised operator will be a real positive.
“Operator status gives a licensee more control over the field development plan and its execution,” the company said in today’s full year results for 2013.
“This also makes it easier to deliver on the Hub Strategy because as the operator of owned infrastructure, third party consents to tie in additional discoveries are easier to facilitate. Also, as the
“Majors continue to divest late life producing assets they often prefer to assign operatorship and redeploy their own resources and so additional opportunities arise. In the UK licensing rounds, certain licences will only be made available to pre-qualified operators.”
IOG, which has yet to establish production revenues, reported a loss of £1.03mln for the twelve months to December 31. It used £820,000 of its cash on its operations. The company ended the period with £1.12mln of cash and equivalents.
Importantly, IOG has now had credit approval for a US$50mln financing facility, half of which is earmarked for the development of Hythe. The rest will be treated as a “war chest” for use in its acquisition campaign.
IOG also recently arranged a equity swap deal with Darwin Strategic which will see the company raise an estimated £1.8mln.