NORTH Sea-focused Independent Oil and Gas (IOG) has entered into a memorandum of understanding (MOU) with AGR for a well construction and project management contract.
This relates to IOG's forthcoming drilling activity, and the news yesterday boosted its share price by 12.33 per cent, up 2.25p to 20.5p.
The company said oil and gas firm AGR, which has an office in Aberdeen, has started talks on its behalf with several rig owners, aiming to secure a rig for summer 2015.
IOG said several suitable structures are currently available, which may help it secure "the best deal possible in due course".
The well will be at the Cronx site, whose 100 per cent acquisition by IOG is yet to complete. Once it concludes the business will have five licences in the North Sea.
Chief executive Mark Routh said: "We are delighted to have signed this MOU and with AGR's assistance we look forward to operating next year's proposed drilling programme on Cronx, subject to completing the Cronx acquisition."
IOG said the plan is to drill a pilot well, to establish the crest of the reservoir and take core and gas samples.
It also explained that this will let it confirm the 3.4 million barrels of oil equivalent (mmboe) resource estimates and optimise the development. "The well will then be suspended for reuse as a producer, possibly with a horizontal section to be drilled later," IOG added. Its cost estimate for the well, based on current rig rates, is £6.25 million.
The company also plans to grow organically and by acquisition, and said on Saturday, as it announced the signing of an MOU with south-east Asia's Ping Petroleum regarding assets in the UK Continental Shelf, that it is looking at possible deals with that business.
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