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Independent Oil & Gas gets US$50mln funding boost

Last updated: 01:06 07 Mar 2014 EST, First published: 02:06 07 Mar 2014 EST

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Independent Oil & Gas (LON:IOG) has agreed a US$50mln debt facility that will help fund its development plans.

The lender isn’t named, although IOG said it has provided funds to “several oil and gas businesses, including to companies operating in the North Sea”.

Meanwhile, the terms of the debt are described as attractive, while the facility will run for five years.

The company said US$25mln will be available to invest in the Blythe field, in the North Sea, once the group satisfies certain conditions such as approval of the field development plan.

Chief executive Mark Routh said: "We are absolutely delighted to have received credit committee approval for this debt facility on attractive terms.

“IOG chooses its partners very carefully and we believe that this will be a long term relationship of mutual benefit.

“This is another important milestone in the Blythe field development but also this facility gives us great flexibility with regards to potential acquisitions and other developments such as the nearby Cronx gas discovery.

“We are working towards submitting the Blythe Field Development Plan by the third quarter of this year, targeting first gas by the end of next year.”

It has been a busy week for Independent, which on Wednesday said it acquiring block 48/22a in the North Sea, which will be renamed Cronx.

The acquisition follows the group’s strategy of building production hubs, where smaller fields are developed and connected to nearby infrastructure, and will see the company become an operator.

The plan is to route production via the Blythe hub, which IOG jointly owns with Alpha Petroleum Resources.

Blythe is expected to achieve first gas by the end of 2015, and it is thought that Cronx could potentially be developed around six to nine months after that, meaning it could begin producing in 2016.

On Tuesday stockbroker Charles Stanley said the group had significant upside as it said the stock was worth a punchy 100.4p.

At that level the broker reckons the AIM quoted share is worth around three times the current price.

Analyst Brendan Long said the target actually reflects the fair value of the company as it stands today, rather than its blue-sky potential.

A work programme was recently agreed with Alpha, a sales agreement was reached with BP (LON:BP.) and the licences have just been extended by the Department of Energy and Climate Change (DECC) until next September.

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