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Independent Oil and Gas hoping for September FID on Southwark field

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Oilfield Technology,


Independent Oil and Gas plc, the development and production company focused on becoming a substantial UK gas producer, has provided a project and funding update, further to recent announcements relating to the proposed farm-out and bond issue.

Final pre-FID project optimisation

In line with its target schedule for Core Project Phase 1 Final Investment Decision (FID), the company is in the advanced stages of retendering certain key project contracts and preparing to recommend final awards. Formal awards are expected to be made shortly after FID, which will follow directly from completion of the Farm-out and Bond. Assuming an early September FID date, under the development schedule to be submitted in the finalised Phase 1 Field Development Plan (FDP), First Gas is expected to be reached in July 2021 from the Southwark field in the North Sea.

In that context, the company has chosen to optimise further the Phase 1 drilling schedule in the final FDP submission. In particular, the drilling and completion of the Elgood subsea well will be accelerated to bring Blythe and Elgood production online simultaneously three months after Southwark. This will entail higher capex spend prior to Phase 1 First Gas, but will increase production over winter 2021 given relatively high forecast initial rates from Blythe and Elgood, thereby improving cash flows. In the UK gas market, winter months typically exhibit substantially higher gas pricing than summer months.

Funding sources and uses

In that context, and further to final tender clarifications and contract negotiations, the proposed amount of the contemplated Bond issue will be £88 million equivalent.

Launch of bond process

The company expects to launch the marketing process for the proposed Bond this week. The objective is to complete both the Farm-out and the Bond simultaneously and proceed immediately to FID with its designated Farm-out partner in early September.

The company has issued an updated Corporate Presentation on its website to reflect these updates.

Andrew Hockey, CEO of IOG, commented:

"We are very pleased to have finalised our project and financial planning and to now be ready to launch the bond process. In conjunction with the announced farm-out, this bond issue would see IOG fully funded for Phase 1 of our Core Project without any additional equity requirement. Phase 2 will in turn be funded by Phase 1 cash flows and the Phase 2 development carry. The bond marketing materials have now been finalised and a detailed long-form term sheet agreed. We are targeting completion of both the farm-out and bond in early September, which will lead straight to Phase 1 FID. This promises to be a very significant milestone for IOG, with the potential for a positive Harvey appraisal well result to follow. We look forward to a strong and successful alliance with our farm-out partner CalEnergy Resources which we believe will deliver excellent value to our shareholders."

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/15082019/independent-oil-and-gas-hoping-for-september-fid-on-southwark-field/

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