REG - IOG PLC - Operational Update

IogAnnouncement

14/12/2021 07:00

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RNS Number : 5164V  IOG PLC  14 December 2021

14 December 2021

 

IOG plc

 

Operational Update

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), the Net Zero UK gas and
infrastructure operator focused on high return projects, provides a further
operational and portfolio update.

 

Andrew Hockey, CEO of IOG, commented:

 

"I am pleased to confirm the Noble Hans Deul rig re-mobilised from Dundee back
to Southwark in early December as forecast following an efficient repair by
Noble Corporation. I look forward to safe and successful execution of the
Southwark wells, the first of which is expected to spud in the next week.

 

Although significant further progress has been achieved at Bacton, final
pre-First Gas commissioning activities are now expected to carry over into the
early weeks of 2022. My team and I continue to focus all our efforts on
ensuring safe and reliable start-up as early as possible at Blythe and
Elgood."

 

Southwark

 

After successful investigation and repair of the Noble Hans Deul rig leg, the
rig was re-mobilised from Dundee port on 3 December and arrived at the
Southwark platform 500 metre zone on 9 December. The first Southwark
development well is expected to be spudded by the end of this week.

 

Given the two-month drilling hiatus, First Gas is expected at Southwark by
mid-2022 after the planned installation in Q1 of the 6km Saturn Banks pipeline
extension to the Southwark platform. The rig is then scheduled to move on to
drill the Goddard and Kelham North/Central appraisal wells while analysis of
reservoir and production data from Southwark wells 1 and 2 will inform an
optimal Southwark 3 well plan.

 

Saturn Banks Reception Facilities (SBRF) and Phase 1 First Gas

 

At Bacton, IOG is working proactively with terminal operator Perenco (UK)
Limited and on-site contractors to complete the outstanding SBRF
recommissioning work to bring Phase 1 gas safely and reliably onstream.
Progress has continued despite some difficult recent weather conditions. The
new 45 metre emergency vent stack is now installed, electrical and
instrumentation activities are ramping up, and powering up and testing of
onshore systems is starting imminently. The SBRF are now expected to be ready
to receive production in the early weeks of 2022. The final steps to First Gas
involve commissioning of end-to-end control and communications systems and
backgassing of the pipeline system before opening up the Blythe and Elgood
wells in quick succession.

 

Saturn Banks Project Phase 2

 

The schedule for concept selection and sanction for the Nailsworth development
is planned to be submitted to the Oil and Gas Authority this month. Nailsworth
lies 19km north-west of the Southwark field in water depths of 25-40 metres
and is expected to be the first Phase 2 field to be developed. Following the
interpretation of reprocessed 3D seismic the Company is building new static
and dynamic subsurface models to refine its management estimated gross
recoverable gas of 64/105/156 billion cubic feet (Bcfe).

 

Nailsworth gas is expected to be evacuated via the Southwark platform and
Saturn Banks Pipeline System in line with IOG's strategy of maximising returns
through use of owned infrastructure. IOG and its partner CalEnergy Resources
(UK) Limited are assessing the most economically and environmentally
attractive concept, bearing in mind nearby potential incremental developments.

 

Portfolio Management

 

The Company continues to assess its hopper of incremental opportunities to
maximise shareholder returns. These primarily include the potential Northern
and Southern Hubs, P2438 and P2442 respectively, for which Goddard, Kelham
North and Kelham Central are planned to be appraised in the second half of
2022. In the P2589 licence, 3D seismic reprocessing to Pre-Stack Depth
Migration is being initiated to re-map the Panther and Grafton discoveries and
evaluate the area's full commercial potential.

 

In the P2085 ("Harvey") licence, the structure around the 48/23b-2 well has a
Most Likely recoverable gas resource of 21 Bcfe. Alongside Phase 2 development
activities, IOG sees more material, higher-return opportunities than Harvey to
allocate its capital and resources. The Company has therefore decided not to
pursue an extension to P2085 beyond its expiry date of 19 December 2021.

 

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. 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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