UK Find Boosts IOG Plan
UK Independent Oil & Gas (IOG) has upped the economics of its 'core project' following the discovery of contingent reserves at the recently-awarded Goddard licence, it said January 8. It hopes to take the final investment decision (FID) this quarter, having postponed it from late last year on grounds of market volatility, with first gas 20 months later.
The plan comprises a two-phase development of its 302bn ft³ of proven + probable gas reserves at the Blythe Hub and the Vulcan Satellites Hub and another 108bn ft³ 2C contingent resources at Goddard. This delivers a 40% internal rate of return and a net present value to £358mn ($456mn) with no additional funding required to develop Goddard, it said.
CEO Andrew Hockey said that Goddard "makes what was already a very strong investment case even more compelling." The award of Goddard "was a big win for us -- we consider it one of the most valuable remaining undeveloped UK southern North Sea fields and an ideal fit for our portfolio, lifting our core project's projected peak production rate as high as 146mn ft³/d." It had been 114mn ft³/day before Goddard.
Phase 1 is technically ready to enter the execution phase with all engineering work required for FID complete. Commercial terms are substantially agreed with all major contractors, it said.
The Goddard licence was awarded in the recent 30th round and the gas is technically ready for development, once the upstream regulator Oil & Gas Authority has approved it. Submission of the plan is expected in the first half of this year, at which point the resources can be reclassified as proven + probable reserves. Goddard also contains a further 73bn ft³ best estimate prospective resources to be appraised at the optimal time.
IOG is in the final stages of signing documentation for purchase of the onshore Thames Reception Facility, where its fully-proven, 550mn ft³/d pipeline lands at Bacton. It will deliver gas to the UK market with future commercialisation opportunities for new asset additions to IOG's portfolio and for third party gas.
Preparations continue for drilling the Harvey appraisal well, which management estimates has prospective resources in the Low/Best/High case of 85/129/199bn ft³ and 63% geological chance of success. In the event of Harvey success, IOG's portfolio would deliver 77% internal rate of return and £688mn post-tax net present value, it said and peak production would go to 230mn ft³/d.