Independent Oil and Gas (IOG), UK-based gas development and production company, has announced the spudding of the Harvey appraisal well by Maersk Resilient rig, a modern, high-specification rig.

The Harvey well is located within its UK asset portfolio of Southern North Sea Blocks 48/23c, 48/24a, and 48/24b, and close to the Thames Pipeline export route.

The well has been spudded with a primary aim to confirm gas volumes estimated at 85/129/199BCF prospective resources in the low/best/high case, with a 63% geological chance of success, and to demonstrate reservoir deliverability.

CEO IOG Andrew Hockey said: “Spudding the Harvey appraisal well is an exciting development for IOG and potentially a major catalyst for the business. Our objective is to prove up a substantial, high-quality reservoir in the heart of our core asset base which would create significant shareholder value over and above our recently announced farm-out.

“Success at Harvey could trigger a further significant near-term cash payment plus valuable life-of-field royalties should our designated partner exercise its right to farm in. We are pleased with our choice of rig and contractors and look forward to drilling the well safely and successfully.”

IOG would take approximately two months for completion of the Harvey well

The completion of the Harvey well is expected to take nearly two months in the success case.

The additional scale and synergies of Harvey development are expected to enhance the portfolio’s overall value and returns if it is successfully appraised.

Following the completion of the farm-out transaction, IOC’s partner CalEnergy Resources (CER) has gained an option to acquire 50% of the Harvey licences within three months of completion of the appraisal well.

If this option is exercised, CER would pay an additional £20m to IOG and a £0.95/MCF royalty on all of CER’s life-of-field net gas production from Harvey, which is equivalent to £61.3m if Harvey produces 129BCF best estimate prospective resources for IOG.

Fraser Well Management, which holds extensive experience in drilling wells in the UK SNS, is the well operator, and Halliburton Manufacturing and Services has been contracted to carry out offshore drilling services for the well.