IOG still in talks with CalEnergy over two North Sea licenses entry

An option held by CalEnergy Resources (CER) to acquire interest in two Southern North Sea licenses owned by Independent Oil and Gas (IOG) has now expired, but the two companies are still in talks over CER’s potential entry. 

Map of IOG’s assets. Source: IOG

IOG confirmed on Friday that the option held by its Core Project partner, CalEnergy Resources, to acquire 50% of the Harvey and Redwell licenses had expired.

The Harvey (P2085) and Redwell (P2441) licenses are located in the UK Southern North Sea.

However, IOG added, discussions remain ongoing as to potential CER participation in these licenses.

To remind, IOG in July 2019 entered into binding agreements to farm out 50% of its Southern North Sea assets, excluding Harvey, to CER. As part of the farm-out, CER was also granted an option to acquire 50% of the Harvey licenses within three months of completion of the Harvey appraisal well.

It was agreed that, should this option be exercised, CER would pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER’s life-of-field net gas production from Harvey (equivalent to £61.3 million if Harvey produces IOG’s 129 BCF Best Estimate Prospective Resources). This would maintain full alignment between IOG and CER across IOG’s entire SNS Assets.

The Harvey appraisal well 48/24b-6 was spud in early August 2019, using the Maersk Resilient jack-up rig. IOG reached a total depth at the appraisal well, confirming a gas discovery, in September 2019. The company then started the analysis required to reach a definitive view on resource range, reservoir quality, and deliverability.

In December 2019, IOG said that the gas discovery made at the Harvey location had appeared to be sub-commercial. However, a further mapping indicated the presence of a larger – potentially commercial – structure at Harvey up-dip to the northeast of the previous 48/23-2 well.

 

Harvey & Redwell Resources

 

Further to the 48/24b-6 Harvey appraisal well, as previously stated, the company estimates mid-case recoverable gas volumes of 40 Bcfe in Harvey and 100 Bcfe in Redwell.

In an update on Friday, IOG said it continues to progress sub-surface re-mapping and modelling of the Harvey-Redwell area to further define its commercial potential.

Andrew Hockey, CEO of IOG, commented: “We are advancing our Harvey and Redwell mapping and modelling work in order to generate optimal development plans for these assets. In the context of our Core Project, we believe they will present attractive incremental investment opportunities for the company.”

Offshore Energy Today Staff


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