- Independent Oil and Gas said it had struck an agreement with CalEnergy Resource to farm out 50% of the company's Southern North Sea assets for an initial payment of £40m in cash.

Under the terms of the deal, CalEnergy Resource (CER) would pay £40m on completion of the farm-out and up to £125m of the company's development costs, representing 80% of IOG's 50% share of core project costs, up to caps of £60m for Phase 1 and £65m for Phase 2 respectively.

The core project comprised 410 BCF of 2P+2C reserves and resources across six discovered Southern North Sea gas fields. IOG also agreed to pay CER a royalty of 20.2% of its net revenues from the Phase 1 fields only, up to a cap of £91m over field life.

IOG would also receive an effective royalty interest equating to £0.50 per MCF on CER's 50% share of production from certain sections of the Goddard Field after 70 BCF gross had been produced from the field up to a maximum royalty of £9.75m, the company added.

As well as the the Farm-out agreement, IOG and CER signed an agreement to allow for future co-operation in further Southern North Sea business development activities on a 50:50 basis.

At 8:03am: [LON:IOG] Independent Oil Gas PLC share price was +9p at 25p

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