A North Sea oil and gas minnow which has faced big funding challenges has won backing from famed US billionaire Warren Buffett for a pioneering plan to develop a cluster of fields.

Independent Oil & Gas faced an uncertain future earlier this year when its main funder got caught in the fallout from the collapse of the London Capital & Finance investment business.

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However, a firm owned by Mr Buffett’s Berkshire Hathaway Energy group has agreed to invest up to £165 million to support Independent’s plan for a major new production hub.

Shares in Aim-listed Independent rose 22 per cent yesterday after the company announced the deal, which provides a remarkable vote of confidence in the firm.

Independent had a market capitalisation of just £54m before the deal was announced.

News of the transaction will also be welcomed by the wider North Sea oil and gas industry. The investment suggests Mr Buffett sees big potential in the North Sea.

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Independent’s chief executive Andrew Hockey said the farm out deal agreed with Berkshire Hathaway’s CalEnergy Resources was a landmark for the firm.

“It is a testament to my team’s expertise, resourcefulness and tenacity to have reached this milestone after navigating some considerable challenges over recent years,” he said.

Run by veterans of the oil and gas business, Independent has spent years working on plans to develop gas finds in the North Sea that had been left idle by firms that did not think they were worth bringing into production.

The company completed work to firm up estimates of the size of the finds and bought the moribund Thames pipeline, which it plans to use to transport output from the fields for processing onshore.

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It set out to find a partner to help shoulder the cost of completing a six-field development against a very challenging backdrop.

Oil and gas firms slashed investment in the North Sea in response to the plunge in the crude price from 2014.

Independent hit funding obstacles before the collapse of London Capital & Finance (LCF) in January raised big questions for the firm.

LCF went into administration after raising £236m from investors following the sale of mini-bonds. The Serious Fraud Office recently launched an investigation into LCF and four individuals associated with it.

LCF had funded the London Oil & Gas business, which provided debt Independent relied on while working up its plans.

Following LCF’s collapse RockRose Energy made a £27m takeover approach for Independent that the company’s directors said undervalued it.

The farm-out to CalEnergy looks set to solve the funding puzzle for Independent, subject to regulatory approval.

CalEnergy has agreed to pay Independent £40m cash up front and to contribute up to £125m towards the costs of the proposed development, in exchange for a 50% stake in the acreage concerned.

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Independent plans to raise £70m bond funding to cover its share of the first phase development costs. The six fields involved are estimated to contain 410 billion cubic feet of gas.

Independent and CalEnergy will consider co-operating on other development projects on a 50:50 basis, with a focus on fields that could be linked to the Thames Pipeline.

Independent said it had already identified several opportunities.

CalEnergy has oil and gas exploration and production interests in the UK, Australia and Poland.

It did not comment on the farm-out.

Jonathan Wright at Independent’s joint house broker FinnCap said: “This has been a long and arduous journey, but all credit to this management team that has done an extraordinary job in piecing together this complex jigsaw of a project.”

Independent Oil & Gas shares closed up 3.5p at 19.5p.