INDEPENDENT Oil and Gas has plunged into a loss for 2016 after writing down the value of its Skipper oil field, and said it will prioritise development of its gas hubs in the Southern North Sea, writes Kevin Scott.
Impairment charges of £22 million against Skipper led the London-based development and production company to post a £21.4m pre-tax loss for 2016, reversing a £5.3m profit in 2015.
A drilling programme at Skipper last year was described as below expectations, Independent said at current oil prices Skipper is less attractive than its gas portfolio, which has extraction costs of about $20 per barrel equivalent.
The group has said it would now focus on its gas assets in the Southern North Sea. In the last year, Independent acquired the 50 per cent of the Blythe field it didn’t own, and 100 per cent of the Vulcan satellite fields.
This helped expand its recovered gas reserves to more than 400 BCF, with further appraisal likely to increase this.
Chief executive Mark Routh called the deals “landmarks in the evolution of the group”.
Independent acquired the strategic Thames Pipeline in April, with Mr Routh describing it as “the key that unlocks our low-risk development and production strategy”.
He added that the deal for Thames, which it allows it to control the flow of gas to the mainland, had saved the group £100m in capital costs and given it a viable exit route.
Mr Routh said it had been a year of “substantial progress”.
Independent said its objective this year was “to secure an appropriate capital structure for the company and obtain full financing for the Southern North Sea and future UKCS opportunities.”
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