30th Sep 2014 12:42
LONDON (Alliance News) - Independent Oil & Gas PLC Tuesday reported a widened loss following developments of existing and new opportunities, as it waits to finalise the acquisition of the Cronx asset from Swift Exploration Ltd, and subsequently, a bridging loan deal with BP Gas Marketing Ltd.
The company reported a pretax loss of GBP1.5 million in the six months ended June 30, widened from a GBP234,455 loss in the first half of 2013.
The company does not generate any revenue, with the widened loss being attributed to an increase in administrative expenses to GBP505,625 from GBP67,652 and in exploration costs to GBP204,174 from GBP2,375. Independent Oil also made share-based payments of GBP658,789 in the recent half-year. No share-based payments were paid in the first half of 2013.
The increase in administration charges reflects the additional work undertaken on existing operations, the pursuit of new opportunities, and financing following the completion of listing and associated fundraising, the company said.
Independent Oil has five projects: two based in the North Sea - Skipper and Skipper west area - and three offshore projects to the east of England - Blythe, Blythe east area and the pending Cronx acquisition.
"We have made considerable progress in the first half of 2014 increasing our asset base, with the pending acquisition of Cronx and the award of the Blythe east area licence," said Chief Executive Mark Routh.
Independent Oil is reviewing offtake options for the east license area which is due to be finished by the fourth-quarter, followed by a "drill or drop" decision by February 2015, it said.
The Cronx acquisition from Swift Exploration, which is still pending completion, is now actively being prepared for drilling of the commitment well by Independent Oil, to prepare for its development. The base case for Cronx is to tie it back to a hub at Blythe, located nearby, following first production from Blythe, but the company has now commenced discussions with nearby infrastructure owners regarding an alternate plan which could accelerate first gas by more than a year to late 2016, said the company.
"Significantly this asset should be Independent Oil and Gas' first operated asset as we have prepared all that is necessary to apply for and become approved as an 'exploration operator' on this licence," added Routh.
The Cronx project, when finalised, will allow the company to finalise a GBP3 million secured bridging loan with BP Gas Marketing Ltd, part of the BP PLC group. The loan is pending, as is the acquisition, with loan conditions including securing the Cronx acquisition as an operator and securing the balance of funding to drill before summer 2015.
"The Directors [take] comfort that its liquid reserves are sufficient to satisfy its near-term general and administrative costs, but not for the operational work, including the completion of the acquisition of Cronx, the drilling of the Skipper appraisal well, and the development funding for Blythe. Accordingly, the group continues to seek additional funding which may include a partial farm down of assets, an additional debt facility, or an equity fundraising," Independent Oil said in its statement.
The company reported a cash balance of GBP323,259 at June 30.
The company has committed to drilling its Skipper project by the end of September 2015, and it has asked the operator to run a farm-out process to potentially reduce funding requirements. Farm-out proposals may be considered alongside its Skipper west area, for which it will make a drill-or-drop decision on by May 2015. Any farm-out proposals are due to be considered and will only be approved if it is seen as the best funding option, Independent Oil said.
The company has "some very material short-term drivers of value to look forward to in the months ahead which will both expand our asset portfolio and reserve base and move some of our projects closer to development," said Routh.
Independents shares were up 0.7% to 20.65 pence per share Tuesday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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