North Sea-focused energy company Independent Oil and Gas (IOG) has struck a major deal with a business owned by US tycoon Warren Buffett’s Berkshire Hathaway investment firm which could be worth up to £165 million.
Under the deal, IOG has signed an agreement with Australian firm CalEnergy Resources to farm out 50% of most its Southern North Sea assets.
The deal will see CalEnergy pay £40 million upfront and up to £125 million in development costs to help take forward IOG’s major gas project.
IOG has also announced plans to raise approximately £70 million through the issue of a bond to institutional investors.
Shares in IOG rocketed by more than 40% in early trading this morning.
Andrew Hockey, CEO of IOG, said: "The successful farm-out to a partner of the stature of CalEnergy Resources, part of Berkshire Hathaway Energy Company, is a landmark transaction for IOG which should deliver very significant value for our shareholders both now and in the future.
“This transaction is a strong validation of our exciting portfolio of upstream and infrastructure assets, as well as our focused Southern North Sea gas strategy which can generate exceptional shareholder returns.
“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. We now look forward with real optimism to realising the significant value in our portfolio and embracing opportunities to generate further upside through our partnership with CalEnergy”.
