Drilling of the Skipper appraisal well, of which IOG is 100% owner and operator, is scheduled for July 2016 and will be drilled by Transocean’s Sedco 704 semi-submersible.
The vertical well will be drilled to 5600 ft with the primary objective of retrieving good quality reservoir condition oil samples in order to optimise the Skipper field development plan and to drill two mapped reservoir structures beneath the Skipper oil field in the Lower Dornoch and Maureen formations.
Directors believe an approved field development plan on Skipper would convert the Board’s estimated 34.1 million bbls of contingent resources into 2P reserves.
Funding has been agreed and the relevant service contracts including deferrals previously agreed by IOG remain in place or are being renewed with a repayment date of 20th December 2017.
The previous contract with Transocean to drill the well has been renewed, with advance payment of US$1.73 million to be part-settled by the issue of ordinary shares to Transocean and the balance paid from IOG’s existing loan facilities or settled via share issuance.
The well is expected to take 22 days to drill.
Commencement of drilling is contingent upon relevant technical and environmental approvals, including well permits, which are progressing with the OGA and DECC.
Mark Routh CEO of IOG commented:
“This well should be transformational for IOG and we are delighted to drill it next month with a significantly reduced estimated duration and cost.
The willingness of our financial backers and contractors to co-operate in a progressive way to make this well happen amid these tough industry conditions is testament to a new collaborative spirit in the North Sea. The support and engagement of the OGA for this approach has been vitally important and is very encouraging for the future. We look forward to continuing to work with our regulators, investors and commercial partners to create value for all.
Our determination to move Skipper forward further underlines our commitment to the future of the North Sea and indeed this may well prove a good time to invest counter-cyclically. Well-managed projects on the UK Continental Shelf can create excellent value for investors and that remains our clear focus.
IOG is very pleased to be working with Transocean, who have first class operational expertise and are showing their continued support for investment in the North Sea by partnering in this innovative commercial structure.”