Incremental Oil and Gas (ASX:IOG) is an oil and gas company with...

Incremental Oil and Gas (ASX:IOG) is an oil and gas company with producing oilfields throughout the US. The team behind the company aims to identify and acquire underperforming oil fields and increase production and recoveries. IOG’s primary focus is production rather than high risk exploration, with a strong emphasis on positive cash flow.
IOG’s ability to focus on oil and gas prospects that have been left by previous producers means that the Company is always in a position to enter the production phase quickly and build revenue and company growth. IOG have acquired a lot of acreage in the California and have more recently expanded its prospects to Colorado where it bought the Florence Field in the middle of last year. Florence produces from a shallow unit called the Pierre but also has significant upside potential from the slightly deeper Niobrara Formation.

Managing Director Gerry McGann explained, “Our risk strategies are very much encompassed in the name of the company. We are not explorers as much as we are exploiters. We buy old oilfields where oil has been discovered many years before but, with new technology and mining techniques, we are able to harness the hydrocarbons that has been left behind.”

The approach IOG takes to developing mining prospects has proven to be a cost effective and time efficient way of operating and, over the past few years, has been successful due to very good selections by the management team. It is no coincidence that the Board has been able to produce such impressive results as they are the same board who ran the company “Incremental Petroleum.” That company bought the second largest oil field in Turkey in 2005 and doubled production rates in just a few years.

The Company has set its immediate sights on the Florence Oil field in Colorado. Mr. McGann commented, “Florence [Oil Field] is one of the oldest continual producing oil fields in the world. It is quite shallow, with an average well being only about 3200 ft deep. Although the most recent wells produced less-than-desired results, the Company doesn’t believe this is an indication of the entire prospect. Incremental will aim to commence drilling in areas of the field that have not been drained in the past. “What really resuscitated this field in the last four or five years is the development in technology. It is through these developments, such as 3D seismic that we can target new wells and we aim to produce more oil from a very promising resource.”

In California, the Company has maintained steady production of around 220 BOPD, in the Round Mountain and Sheep Springs projects, for very low operating costs. These fieldspay for all of the Company’s current expenses and continue to produce revenue. Last year, Incremental’s revenue more than doubled.

The Niobrara Formation which underlies the Florence Field , is an example of a project capable of expansion. The leases were acquired cheaply. Another company has recently drilled the first horizontal Niobrara well in the area only 300m away from Incremental’s leases and present indications are that the well is commercially successful.

Incremental Oil and Gas is a company in the hands of four highly competent Board members with a proven track record. The goals set for the Company in the next year may be adventurous, but are definitely achievable. “We are trying to build a company with production of over 3000 BOPD and we are heading that way. We continue to build our profitability; our revenue more than doubled last year. This shows we are a robust and profitable company and that we are not wasting our shareholders money. We are always looking for new projects that can offer substantial uplift in profitability and I think this is one of the main factors that is guiding the Company towards its goals,” Mr. McGann concluded.