SHARES in Independent Oil & Gas plunged by 40 per cent yesterday as the company’s losses widened and initial analysis from oil extracted from its Skipper well was not compatible with expectations.
The analysis found that oil from the well is heavier than expected, and the company said determining the commercial viability of the site may take several months.
Mark Routh, chief executive, said: "The initial oil analysis results are incompatible with our observations, therefore we are now reviewing our strategy to establish the commerciality of Skipper.
“In addition, we have an increased oil in place, higher observed reservoir permeabilities and an increased reservoir height from the crest to the oil water contact.”
The findings from Skipper were announced as the company’s pre-tax losses widened to £1.1 million for the six months ending June 30, up from £200,000 in the same period in 2015.
Total administrative expenses and other expenses for the period almost trebled to £938,000 from £366,000.
The company made no revenue over the period and as at June 30 the group had cash resources of £107,000 plus undrawn loan facilities totalling £13.2 million.
Mr Routh said the company was now funded until 2018 and was preparing to work on three different development projects, one in the northern North Sea and two in the southern North Sea.
He added that IOG had made “great strides” over the period.
“Despite a tough industry environment, there is significant value to be unlocked from each of these projects…by managing low cost developments.
“The group is now significantly better funded than this time last year and this in turn will enable us to focus our efforts on planning the developments, building the right industry partnerships and securing the necessary development finance.”
Meanwhile, Cluff Natural Resources has received regulatory approval to combine equity positions in two North Sea licenses with Simwell Resources and Burgate E&P to lower the cost burden of developing the assets.
Cluff now holds 50 per cent of the equity position across both licences, Simwell 45 per cent and Burgate the remaining five per cent.
Tidal power firm Atlantis Resources has also widened its pre-tax losses, to £4.4m, from £3.6m as it continues to make progress on its Meygen site.
The group's consolidated total assets increased to £103.1m at June 30 from £91.7m at December 31, with the acquisition of the development rights for two tidal projects from ScottishPower.
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