REG - IOG PLC - Corporate and Operational Update

IogAnnouncement

22/11/2021 07:05

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RNS Number : 0464T  IOG PLC  22 November 2021

22 November 2021

 

IOG plc

 

Corporate and Operational Update

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), the Net Zero UK gas and
infrastructure operator focused on high return projects, is pleased to provide
a corporate and operational update, with a short accompanying presentation
available here: https://bit.ly/3Hwbbuk (https://bit.ly/3Hwbbuk)

 

Andrew Hockey, CEO of IOG, commented:

 

"The offshore subsea and hook-up scopes for the Blythe and Elgood fields are
now complete. We continue to work closely with Bacton terminal operator
Perenco and an enlarged workforce to complete the reception facilities
recommissioning and deliver First Gas in Q4, albeit this may be challenging.

 

Meanwhile, we expect the Noble Hans Deul rig to re-mobilise to Southwark in
early December once it has been re-certified for safe operation, with
Southwark First Gas still on track for Q2 2022.

 

Phase 1 looks set to capitalise on very strong gas prices whilst also
providing timely new low carbon intensity UK domestic gas production. I would
like to thank the whole IOG team and all our contractors for their continued
dedication and hard work towards delivering a safe and reliable start-up which
will be a major milestone for the company."

 

Schedule

 

The Saturn Banks Project Phase 1 passed one million cumulative manhours worked
in September 2021. Despite recent Covid-19 related challenges both offshore
and onshore, the Company continues to target safe and reliable delivery of
First Gas by the end of Q4 2021, subject to completion of the remaining
onshore scope detailed below.

 

The Noble Hans Deul rig owner has progressed investigation and repair works of
the rig leg at Dundee port to allow safe resumption of Phase 1 drilling.
Repair operations have required equipment and personnel to be mobilised from
the Middle East and Asia. The rig is expected to re-mobilise to Southwark by
the first week of December, subject to weather, and Southwark First Gas
remains on track for Q2 2022. All permits are in place to start Southwark
drilling and the IOG drilling and subsurface teams have used the downtime to
accelerate planning of the 2022 appraisal well campaign.

 

Phase 1 Offshore

 

The key subsea, umbilicals, risers and flowlines (SURF) and hook up and
commissioning (HUC) scopes have now been completed in preparation for Blythe
and Elgood first gas. These include connection of the Blythe 12" pipeline
(PL4956) and Elgood 6" pipeline (PL4955) to the Blythe platform risers and
leak testing and dewatering of both pipelines; fabrication and installation of
the 24" valve skid at the Saturn Banks tie-in point; tie-in of the shoreward
section (PL5079) of the 24" Saturn Banks pipeline section at Bacton; hook-up
of the Blythe and Elgood wells and system commissioning. Use of a walk to work
vessel has enabled longer shift durations and minimised the need for
helicopter flights.

 

Successful leak testing and dewatering of the 24" pipeline and valve skid has
now confirmed the integrity of the production system from the onshore Saturn
Banks Reception Facilities (SBRF) at Bacton to the Blythe platform and the
Elgood subsea well. Once the onshore scope is finished, along with final
systems testing between on and offshore, nitrogen venting and backgassing of
the pipelines will enable start-up of the Blythe and Elgood wells in quick
succession. Analysis of the early months of production will then help to
facilitate production guidance for 2022.

 

Phase 1 Onshore

 

At the SBRF, an expanded team has been progressing refurbishment activities.
Key items recently completed include installation of the new 24" emergency
shutdown valve, pipeline spools and motorised valves, replacement of the gas
metering streams and associated isolation valves, installation of new pressure
control valves and pulling/terminating of all multi-core cables. IOG is
co-operating closely with Perenco UK Limited and the onshore contractors to
expedite completion of intra-terminal pipework, testing of telecoms &
control systems, installation of the emergency vent stack, in order to enable
a safe and reliable start-up at the earliest feasible time.

 

Appraisal Planning

 

Planning and contracting is underway for the two 2022 appraisal wells at
Kelham North / Kelham Central (P2442: Block 53/1b) and Goddard (P2342: Block
48/11c and 12b) respectively. The Company has exercised its contract option to
drill these wells in succession with the Noble Hans Deul rig after the second
Southwark well, on the same competitive dayrate as the Phase 1 wells. Petrofac
has been appointed Well Operator for the two appraisal wells and pre-drill
site surveys are being planned for Q1 2022. In parallel, analysis of reservoir
and production data from the Southwark 1 and 2 wells will inform an optimal
Southwark 3 well plan.

 

Further Phase Activities

 

Concept select work on Nailsworth is progressing with a view to accelerating
front-end engineering and design (FEED) and taking a Final Investment Decision
(FID) in Q1 2022. P2589 (Panther / Grafton area) seismic reprocessing is also
starting shortly and expected to be completed by mid-2022, providing an
enhanced subsurface view of the area directly east of Southwark and Elland.

 

Gas Market and Risk Management

 

The UK NBP benchmark, like other global gas markets, has been exceptionally
strong in 2021. Forward pricing remains substantially above the Company's
planning case, although volatility also remains high. Preparatory discussions
are underway with relevant parties to start implementing a prudent, systematic
gas hedging strategy by the end of Q1 2022.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.

 

Enquiries:

 

 IOG plc                                            +44 (0) 20 7036 1400

 Andrew Hockey (CEO)

 Rupert Newall (CFO)

 James Chance (Head of Capital Markets & ESG)

 finnCap Ltd                                        +44 (0) 20 7220 0500

 Christopher Raggett / Simon Hicks

 Peel Hunt LLP                                      +44 (0) 20 7418 8900

 Richard Crichton / David McKeown

 Vigo Consulting                                    +44 (0) 20 7390 0230

 Patrick d'Ancona / Chris McMahon / Oliver Clark

About IOG:

 

IOG's Saturn Banks Project targets a gross peak production rate of 140 mmscf/d
(c. 24,000 Boe/d) from gross 2P gas reserves of 302 Bcfe¹ and management
estimated 2C gas Contingent Resources of 132 Bcfe, via an efficient hub
strategy based on co-owned infrastructure. In addition to its 2P reserves at
Blythe, Elgood, Southwark, Nailsworth and Elland and 2C contingent resources
at Goddard, it has management estimated gross 2C contingent resources of 23
Bcfe at Abbeydale and gross unrisked mid-case prospective resources of 36 Bcfe
at Kelham North, 42 Bcfe at Kelham Central, 58 Bcfe at Thornbridge, 31 Bcfe at
Southsea, 28 Bcfe and 19 Bcfe in the two Goddard flank structures, and 21 Bcfe
at Harvey. The Orrell discovery, with management estimated gross 2C contingent
resources of 42 Bcfe, also lies approximately 50% on the P2442 licence held
50% by IOG.

In December 2020 IOG was also awarded a 50% operated stake in Licence P2589,
containing the Panther and Grafton gas discoveries with management estimated
gross mid-case contingent resources of 46 Bcfe and 35 Bcfe respectively. In
addition, IOG continues to pursue value accretive acquisitions to help
generate further significant shareholder returns.

¹ERC Equipoise Competent Persons Report: October 2017, adjusted by Management
to account for updated project timing and compression

 

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