Farm-in Option for IOG's North Sea Gas Finds Expires
US-based CalEnergy Resources (CER)'s option for a 50% stake in the Harvey and Redwell gas licences in the southern North Sea has expired, their UK-listed operator Independent Oil & Gas (IOG) said on February 28.
CER, a subsidiary of Warren Buffett's Berkshire Hathaway Energy, reached a deal with IOG in July last year to acquire 50% interests in all the operator's southern North Sea assets save Harvey and Redwell. But it secured an option to take 50% stakes in these projects as well within three months of an appraisal well being completed at Harvey.
That well was finished in September but found only a 49-ft gas column, falling far short of IOG's target of a 211-ft column. The find was deemed sub-commercial, but a larger structure has been detected at Harvey northeast of the well, which could hold 40bn ft3 of gas. The company has said more technical work is needed to shore up this figure.
The Redwell prospect meanwhile is now believed to extend further northwest than previously understood, holding an estimated 100bn ft3 of gas.
In its statement today, IOG said discussions on a farm-in by CER continued, despite the option's expiry.
"We are advancing our Harvey and Redwell mapping and modelling work in order to generate optimal development plans for these assets," CEO Andrew Hockey said. They "present attractive incremental investment opportunities" in relation to IOG's other operations, he said.
IOG completed the farm-out deal with CER covering its other southern North Sea assets in October, and also took a final investment decision on the first phase of their development. The project comprises 410bn ft3 of 2P+2C gas across six fields. First gas is expected in the summer of 2021.