Independent Oil and Gas buys UK licence

5th Mar 2014 16:09

Shares in Independent Oil and Gas (IOG) surged after the firm agreed to buy the entire holding of the UK licence block 48/22a from Swift Exploration for an initial consideration of 468,000 pounds.The block contains a gas discovery which the company intends to rename Cronx. An independent competent person's report (CPR) by ERC Equipoise on Cronx, in July 2012, revealed a base case expected gas recovery of 17.6bn cubic feet (bcf) or 3.4m barrels of oil equivalent 2C resource. IOG believes the well has the potential to be larger.The group expects to begin drilling a pilot well in November 2014, subject to rig availability, the necessary permits and funding, which is estimated at £6.25m. The well would then be reused and extended into a producing well as part of the field development.Cronx is located 14km north-west of the Blythe field in which IOG holds 50%.The acquisition is subject to regulatory approval.IOG Chief Executive Mark Routh said: "We are delighted to have secured this asset at a low upfront cost and modest future consideration which will be paid from production revenue. "IOG's strategy is to develop hubs in the North Sea and this acquisition is further delivery of that strategy. This would be our first well as a fully qualified operator and we have the team and experience to deliver an optimal result."Shares jumped 15.15% to 28.50p at 16:29 on Thursday.RD