Independent Oil and Gas has signed a non-binding term sheet for a new non-convertible loan facility (Harvey Facility) of £15m with London Oil and Gas (LOG), to fund the upcoming Harvey appraisal well on the southern North Sea field.

The 100% owned and operated high-impact Harvey appraisal well is set to be spudded in December this year, with the objective of proving up the upside resource estimate of 286 BCF.

Proceeds of the Harvey Facility will also be used to fund other costs in the run-up to the company’s gas development project sanction, including full repayment of final remaining skipper liabilities.

At present, advanced preparation work is ongoing for the Harvey appraisal well, which aims to prove gas across the entire Harvey structure.

Independent Oil and Gas has already completed the Harvey area 3D-seismic reprocessing, fulfilling the 30th Licensing Round commitment.

Seismic reinterpretation and remapping is expected to conclude this month, while well management, rig and services discussions are well advanced.

“The 114 BCF mid-case result would still make it our largest gas asset, significantly enhancing the company’s value.”

Contracts are expected to be agreed in the coming weeks, following which further details will be announced.

The Harvey appraisal well lies close to the company’s 100% owned Thames pipeline.

Independent Oil and Gas CEO Andrew Hockey said: “A successful Harvey appraisal well could nearly double the proven reserves in our Southern North Sea gas portfolio in the high case of 286 BCF, which the Board of IOG considers to be a reasonably likely outcome.

“The 114 BCF mid-case result would still make it our largest gas asset, significantly enhancing the company’s value.

“The re-interpretation of the reprocessed 3D seismic to Pre-Stack Depth Migration (PSDM), to be completed very shortly, will further de-risk the appraisal well.”

The Harvey Facility would be secured against the company, its assets and its subsidiaries IOG North Sea, IOG UK and IOG infrastructure.

Agreed purposes for use of the facility include drilling of the Harvey appraisal well, payment of final remaining skipper liabilities, development project costs and G&A.