Description of business:
IOG is a UK based energy company that has been established to identify, acquire and commercialise proven oil and gas fields in the United Kingdom Continental Shelf and Irish Sea, complemented with select, targeted exploration. IOG is focused on building a significant oil and gas company which will maximise shareholder returns through the enhanced development of hydrocarbon reserves and the acquisition, trading and monetisation of licence interests.
Having been established in November 2010, in February 2011 IOG set about combining the UK assets of MOST Oil & Gas Ltd and Ebor Energy Ltd. By October 2011, the acquisition of the 50 per cent interests in the Blythe gas field in the Southern North Sea and a heavy oil discovery in the Skipper licence, south east of the Shetland Isles was completed in an all share transaction. In May 2013, IOG was awarded 100 per cent of the Skipper West licence, thus creating the first potential hub within the Company's portfolio. These three licences include proven gas reserves, contingent oil resources and nearby exploration upside respectively.
IOG's strategy is to target "stranded" assets and dormant discoveries, especially those near to existing and, ideally, owned infrastructure (the "Hub Strategy"). These are assets that are marginal for the major oil companies but are profitable developments which can be beneficially developed by a smaller independent company, focused on the North Sea.
The aim is to build on the existing development assets in order to achieve a diversified, balanced, portfolio of near and long term developments with exploration upside that complement the existing operations. This will include the acquisition of producing fields or near-term production if the risk is positively assessed and the acquisition price results in value accretion.
The operator and holder of the remaining 50% of each of the Blythe and Skipper licences is ATP UK. ATP UK is currently for sale due to its parent company, ATP Oil & Gas Corporation filing for Chapter 11 bankruptcy protection in the U.S. during 2012, largely as a result of the widespread impact of the Gulf of Mexico "Macondo" disaster in 2010 on the oil and gas industry in the U.S. This has resulted in minimal recent spend and a slower pace of development on the Blythe & Skipper licences. The directors understand that the purchase of ATP UK is currently being progressed.
The term of both the Blythe Licence and Skipper Licence have been extended from 30 September 2013 to 31 December 2013, in order to allow time for the sale process of ATP UK to complete.
The Department of Energy & Climate Change ("DECC") has advised that further licence extensions will be subject to confirmation that there are financial resources available to ATP UK to fulfil the agreed work programme under the Blythe Licence and Skipper Licence. In this context, DECC will require a detailed business plan from the intended buyer of ATP UK, which would be expected to remain as operator of the licences. IOG as co-licensee would similarly be required to confirm its plans.
IOG is confident that the Blythe Licence and Skipper Licence will be extended beyond 31 December 2013. Since DECC has a mandate to promote activity and field developments to boost hydrocarbon production for the UK, it will look favourably upon a licensee which has the desire to submit the relevant plans, has an ability to raise the funds required and which has the technical competence to operate. For these reasons, the IOG directors expect that both ATP UK (under new ownership) and IOG (following Admission) will be regarded as competent to complete the committed work programmes on both the Blythe Licence and the Skipper Licence.
Independent Oil & Gas Plc