UK IOG Refills its Coffers with Share Issue

UK explorer Independent Oil & Gas has secured funding through a £16.6mn ($21.7mn) share issue, subject to shareholder approval, it said April 1, the day before predator RockRose is to announce its decision whether or not to continue its pursuit.

IOG also expects to raise a further £2.275mn from executives and shareholders through a £0.10/share subscription. At time of press (10.30 BST) the shares were trading at $0.125/each after the dilution, down about a third from late last week; but still above the subscription price; and at least one analyst has raised his outlook for the company.

IOG also has restructured its arrangements with creditor London Oil & Gas which allows, among other things, the extension of £7.1mn of 2019 maturities for 12 months and a new shareholder relationship agreement between the two that regulates their commercial relations on an arms-length basis.

The primary use of the proceeds will be an appraisal well at its southern North Sea Harvey field, expected to spud in mid-2019, at a total remaining cost of some £9.6mn. A further £2.5mn will be used to fund continued work on a field development plan for the Goddard gas field. The rest will meet working capital requirements to the end of 2019 and ongoing project management costs. This will allow it to continue to progress its ongoing farm-out discussions, enabling it to decide in 1H 2019 between industrial or capital markets funding to final investment decision which will ensure the development of its southern North Sea portfolio.

IOG CEO Andrew Hickey said the fund raising was "a vital step in progressing our plans to become a substantial UK gas producer, delivering excellent returns by unlocking the exceptional value in our portfolio."

The Harvey field's technical readiness has given IOG the opportunity to engage with well-funded potential partners on attractive terms and he said he looked forward "to selecting our preferred party in 1H 2019 in a transaction which we expect substantially to cover our project funding needs, as well as providing important further industrial validation. We have the right team with the right experience to deliver both the development funding and the project itself, which will generate very substantial cashflow.

"Upon shareholder approval we will be fully funded to deliver this major catalyst as soon as possible, as well as the submission of the field development plan for Goddard, which is another key step in strengthening core value."