North Sea exploration firm Independent Oil and Gas (IOG) has agreed to buy Oyster Petroleum off Verus Petroleum (previously Bridge Energy) for up to £3.25 million (US$4.6 million).
The move will see IOG take over 320.7 Bcf (53.45 MMboe) of gas contained in the Vulcan satellite fields in the southern North Sea, which Verus is due to transfer to Oyster before the acquisition.
The licenses Oyster will hold, and which IOG will take over, are: 100% of Block 49/21a (License P039), 100% of Block 49/21d (License P2122), 100% of Block 48/25b (License P130) and 100% of Block 49/21c (License P1915), in the UK sector of the Southern North Sea.
These contain Vulcan East (est. to contain 77.4 Bcf), Vulcan North West (131.3 Bcf) and Vulcan South (112 Bcf) (collectively, the Vulcan Satellites), which lie 30-45km east of the Blythe field, which is 100% owned by IOG, pending completion of another acquisition deal. Oyster also has approximately $25.6 million in UK pre-trading expenditure which can be used reduce the future amount of tax payable.
Vulcan East has a suspended well requiring decommissioning which has been independently estimated to cost £3 million.
IOG says it is in advanced discussions regarding an export route for its SNS gas hubs. Once these offtake arrangements are in place IOG will prepare field development plans.
Mark Routh CEO of IOG commented: "We are extremely pleased to have agreed this major transaction, to acquire a number of attractive assets, in what remains a challenging market. These assets will more than double our 2P and 2C recoverable resources at a very compelling price and come with substantial pre-trading expenditure.
"This acquisition expands our hub strategy; to gain control over a number of dormant discoveries that can be developed through common existing infrastructure, thereby generating significant economies and capturing many synergies.
Once all announced transactions have completed, we should have more than 100 MMboe of low risk resources in our portfolio. This will be approximately two thirds gas and one third oil which provides an excellent springboard for us to become a significant development and production company."