Independent Oil and Gas has announced that it has received initial results from new interpretations of 3D seismic data covering the Blythe Hub licences in the Company's Southern North Sea ('SNS') portfolio and has also provided a further update on the Cronx acquisition. The data, which is being reinterpreted and comprises 250km˛ of 3D seismic from the 1990s, has been reprocessed by Schlumberger WesternGeCo to create a more consistent set of maps over the area.
The Company's initial interpretation of the reprocessed data across these licences suggest that the estimates of Gas-Initially-In-Place ('GIIP') and therefore recoverable gas reserves are greater in aggregate than previously estimated. However, the Company's interpretation of the reprocessed data on Cronx suggests that the GIIP on Cronx is likely to be slightly lower than the estimates in the ERC Equipoise Competent Persons Report dated July 2012.
Following the Vulcan Satellites acquisition and the expectation of an increase in our estimate of the resources in the Blythe hub licences, the materiality of Cronx is expected to have diminished in our portfolio. Accordingly, the Board believes that committing to a firm well along with near term completion payments, seismic uplift payments and future milestone payments would not be the optimal use of the Company's funds. The Board is focused on achieving superior returns for investors and as such has chosen not to complete the acquisition of the Cronx licence.
A second phase of reinterpretation work is now being completed over the Harvey and Hambleton discoveries and the Truman prospect and the company anticipates making a market update in relation to the seismic reprocessing exercise in relation to these areas once the work has been completed in full.
Mark Routh CEO of IOG commented: 'The seismic reprocessing studies completed so far has involved a great deal of hard work by the IOG team. Prior to this work the Cronx resources comprised less than 5% of our estimated recoverable 2P and 2C gas resources and it has now become less material.
The reprocessing work completed to date has proved very helpful in enabling us to focus on the most value-adding assets and not completing on the acquisition of Cronx will be more than compensated for elsewhere in the portfolio. We have discussed our latest thinking with the OGA who remain very supportive of our SNS strategy which is fully in line with the UK agenda of Maximising Economic Recovery, particularly from previously overlooked assets.'
'If, following completion of the seismic reprocessing work, we are able to conclude that there is greater materiality across fewer assets in the Blythe Hub, development costs should also be streamlined. Even before the completion of these resource updates, we believe we have the right strategy to achieve excellent returns from our core Southern North Sea gas hubs and all the more so if the recent UK gas price recovery is sustained in future. I look forward to making further updates on the progress of our developments in due course.'