Shares in Independent Oil and Gas (IOG) sank after the firm said a final investment decision (FID) on its southern North Sea gas development project had been pushed into the fourth quarter of 2018.
IOG said in July that it intended to sanction the programme at the end of September. Shares dipped 8.51% to 32.25p in early trading.
But the London-listed firm said it has made “significant further technical and financial progress” and is in the “final preparatory stages” for FID.
Front end engineering and design (Feed) studies and bidding processes are substantially complete and contract negotiations with preferred parties well advanced.
Following FID in Q4, construction of key project infrastructure is expected to follow during 2019 with installation scheduled for Q1-2 2020 and first gas in late Q2 2020.
IOG also said new tests had shown that its Thames pipeline could safely deliver gas to the Bacton terminal in Norfolk.
The firm completed its purchase of the pipeline in April.
It is expected to play a key role in Independent’s development of several fields in the gas basin.
It intends to export gas from the Blythe and Vulcan Satellite hubs to the Bacton Terminal via the Thames pipeline.
Blythe and Vulcan are expected to produce 180million cubic feet per day once they reach their peak.
IOG chief executive Andrew Hockey said: “I am delighted to announce that the internal inspection and high-pressure hydrotest have indisputably confirmed the viability of our pipeline as a very low-cost export route for all of our own substantial gas portfolio, plus a potential extra revenue stream through third party tariffing. Full ownership of this export pipeline with very substantial capacity of 550 MMcfd – acquired for a nominal sum – gives us real competitive advantage to capture consolidation opportunities in the Southern North Sea.
“The recommissioning of the Thames Pipeline will breathe new economic life into a part of the North Sea formerly considered to be in terminal decline and help to maximise economic recovery for the UK. The new gas developments enabled by the re-use of this pipeline will make a significant contribution to providing domestic energy resources to UK homes and industry over the next two decades and provide extended employment opportunities in the region.
“This is an especially exciting time for the company as we progress ever closer to a transformational FID and also prepare to drill a fully funded appraisal well at Harvey in the coming months which could dramatically increase our proven reserves and company valuation.”