NORTH Sea- focused Independent Oil and Gas has won further backing from investors keeping alive its hopes of developing a find off Shetland.
The London-listed company said it has raised £150,000 from unnamed funders as directors grapple with the tough conditions facing small oil and gas firms following the plunge in the crude price.
“This is a small but important step for IOG,” said chief executive Mark Routh.
Aim-listed Independent Oil & Gas secured the fresh funding three weeks after directors noted the firm had limited cash to cover its costs.
In August the company had announced a firm it expected to provide investment that would help fund the development of the Skipper heavy oil find south east of Shetland had apparently lost interest.
The unnamed firm decided not to proceed with the planned investment following the renewed fall in the oil price in the summer.
The price fall has posed challenges for Independent, which follows a strategy of investing in assets that may not have sustained the interest of bigger fish.
Mr Routh, who formed the CH4 North Sea business with £1m funding and sold it for £154m in 2006, highlighted the potential of the Skipper find in the company’s interim results announcement last month.
He said then the appraisal well the company hopes to drill on Skipper is a transformational yet low risk exercise. Directors believe it could increase the firm’s reserves ten-fold, from three million barrels oil equivalent to more than 30mboe.
Yesterday Mr Routh said the £150,000 funding allows the company to concentrate fully on the completion of funding and all the technical and operational aspects of getting the well drilled.
The company said it has funding for its portfolio of assets through to February 2016, apart from the balance of funding for the planned Skipper well.
It may be able to capitalise on the sharp drop in the cost of drilling and other services in the North Sea, where firms are jockeying for position in a shrinking market.
Directors recently highlighted a “significant reduction” in cost structures across the industry.
Independent has been in talks with services firms about co-operating on the Skipper well, with some of the costs to be deferred.
In last month’s interim results announcement the company said: “The Group’s current cash balance only gives the Directors comfort that its liquid reserves are sufficient to satisfy its near term general and administrative costs until late October 2015 but not any operational work.”
The firm raised the £150,000 by issuing around 2.1m shares at 7p per share, an 8.62 per cent discount to Tuesday’s closing price.
It has a market capitalisation of around £5m.
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