REG - IOG PLC - Operational Update

IogAnnouncement

23/05/2022 07:00

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RNS Number : 3521M  IOG PLC  23 May 2022

23 May 2022

 

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 update.

 

Over the past month, Blythe and Elgood hydrocarbon liquids (condensate)
flowing into the Saturn Banks Reception Facilities (SBRF) slugcatcher have
fluctuated considerably, reaching peak levels of up to 1,850bbl/d. The SBRF,
which lies adjacent to the main Perenco Bacton terminal, is co-owned by IOG
and CalEnergy Resources Limited and operated by Perenco (UK) Limited (PUK).
All liquids streams coming into Perenco Bacton, including Saturn Banks
liquids, are processed through the terminal's Condensate Stabilisation Unit
(CSU).

 

In the past week, a PUK operational risk assessment has identified a drainage
system deficiency in the CSU's two recycle compressors, which has been
highlighted by the increased Saturn Banks liquid rates. PUK has concluded that
this must be addressed before any further Saturn Banks liquids can be
processed and has limited the SBRF slugcatcher to a 15% maximum liquid level.
Consequently, after progressive reduction in flow rates to manage these
constraints, PUK has now enforced a full shut-in of Blythe and Elgood
production to prevent further liquids entering the slugcatcher.

 

PUK has been developing a modification to their CSU compressor drainage system
to resolve the issue. Subject to a safety review scheduled for Monday 23(rd)
May, one compressor is expected to be modified within approximately one week,
enabling limited initial resumption of Saturn Banks production (currently
projected to be c.30 mmscf/d of gas). Following modification of the second
compressor, which is expected to take approximately one further week, Saturn
Banks production is expected to be gradually restored to normal levels over
the following weeks. The outcome of PUK's safety review may yet affect this
provisional timeline.

 

As previously indicated, Blythe and Elgood condensate yields per unit of gas
produced are expected to decline relatively rapidly during the first year of
production. This should reduce any longer-term potential for such onshore
liquids handling challenges. Southwark is expected to have far lower
condensate yield.

 

Average aggregate Saturn Banks gas production over the 30 days prior to 20(th)
May was 41 mmscf/d, achieving uptime of 74% at Blythe and 78% at Elgood.
During that period, the volume weighted average realised gas price was
100p/therm. Over recent weeks, UK NBP day-ahead prices have continued to
diverge both from European benchmark day-ahead prices and NBP forward curve
prices, following record high LNG inflows into the UK, lack of domestic
storage and interconnector capacity driving significant short-term price
volatility.

 

Andrew Hockey, CEO of IOG, commented:

 

"Whilst relatively high liquids flows are welcome and generate revenue,
liquids handling issues within the Perenco Bacton terminal have unfortunately
required a short-term shut-in of Saturn Banks production. This is a very
frustrating interruption to our efforts to maintain stable, consistent early
gas flows, however, maintaining the highest safety standards must always be
the first priority.

 

We are in close dialogue with Perenco at both management and technical levels
to ensure the modification to their plant is rapidly expedited. Subject to
their risk review, we currently expect a limited re-start after approximately
one week with a gradual return to full production levels over the following
weeks."

 

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 / Finlay Thomson / Oliver Clark

About IOG:

 

IOG is a Net Zero UK gas and infrastructure operator focused on high-return
projects. The Company's operations are currently concentrated around its
offshore and onshore Saturn Banks infrastructure in the UK Southern North Sea.
Phase 1 of its Saturn Banks Project, which started production in March 2022,
entails the commercialisation of the Blythe, Elgood and Southwark gas fields
through this infrastructure. Phase 2 of the Saturn Banks Project entails the
Nailsworth, Goddard and Elland gas discoveries, which are subject to future
investment decisions and expected to be commercialised through the same export
infrastructure. The Company also holds further licences with additional
resources including the Abbeydale, Panther and Grafton gas discoveries, the
Kelham North, Kelham Central, Thornbridge and Thornbridge Deep prospects, and
part of the Orrell gas discovery. Currently, all IOG's licences are held 50:50
with its joint venture partner CalEnergy Resources (UK) Limited and operated
by IOG. In addition, the Company continually evaluates further opportunities
for accretive portfolio additions to help generate additional shareholder
returns. Further details are available at www.iog.co.uk (http://www.iog.co.uk)
.

 

 

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