Independent Oil and Gas plc (“IOG” or the “Company”), the development and production company focused on becoming a substantial UK gas producer, is pleased to confirm that the Maersk Resilient rig spudded the Harvey appraisal well at 2230hrs BST on Tuesday 6 August 2019. As previously indicated, completion of the well is expected to take approximately two months in the success case.
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 Success¹, 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.
On completion of the farm-out transaction announced on 26 July 2019 the Company’s designated partner, CalEnergy Resources Limited (“CER”), will have the option to acquire 50 per cent of the Harvey licences 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.
The Maersk Resilient is a modern, high-spec rig with a strong operating history and an excellent safety record. The designated well operator is Fraser Well Management, who have extensive experience in drilling successful wells in the UK Southern North Sea (“SNS”). In addition, Halliburton Manufacturing and Services Ltd have been contracted to provide offshore drilling services for the well.
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.”