REG - IOG PLC - Phase1 operational update & corporate presentation

IogAnnouncement

11/11/2022 07:16

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RNS Number : 0629G  IOG PLC  11 November 2022

11 November 2022

 

IOG plc

 

Phase 1 operational update & new corporate presentation

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), the Net Zero UK gas and
infrastructure operator focused on high return projects, provides a Phase 1
operational update alongside the release of a new corporate presentation which
can be accessed here: https://bit.ly/3WsVWcV (https://bit.ly/3WsVWcV) .

 

Southwark Drilling

 

       Southwark A2 well

-     Well stimulation vessel SLB BIGORANGE XVIII is scheduled to start
mobilising to Southwark today

-     A2 hydraulic stimulation operations are expected to start by early
next week

-     A2 first gas is expected around year end, subject to stimulation
progress and operational risks to final hook-up and commissioning

 

       Southwark A1 well

-     A1 resumption plan has been agreed, risk-assessed and associated
procurement actioned for direct continuation after A2

-     A1 first gas is expected by early Q2 2023

 

Saturn Banks Operations

-     Saturn Banks Pipeline System ("SBPS") has been depressurised as
planned to enable safe installation of final subsea spool connecting to
Southwark over the coming days

-     October gross average production was 15.8 mmscf/d at a volume
weighted average price of 164 p/therm, with 59% uptime driven partly by the
depressurisation

-     Production is expected to restart in late November, subject to
operational risks and Perenco Bacton terminal maintenance, which commenced
overnight 4-5 November

-     Dewatering and backgassing of the SBPS outer section to Southwark
are planned to be completed during the shutdown

 

Finance & Contractual

-     October 2022 gas price fix of 30,000 therms/day at 263 p/therm was
closed out early given the shut-in, resulting in £0.47 million income to IOG
over late October shut-in period

-     2022 net IOG capex (including IFRS16 leases) is expected to outturn
at the low end of £70-85 million guidance range

-     Aqueous liquids handling onshore is putting upward pressure on
operating costs - management is evaluating a range of potential solutions

-     Following sale to Shelf Drilling Holdings Ltd ("Shelf"), the Noble
Hans Deul jack-up drilling rig is being renamed the Shelf Perseverance - no
operational impact

-     IOG's rig contract, which includes one further unexercised extension
option at an attractive dayrate, has been novated to Shelf

 

Rupert Newall, CEO of IOG, commented:

 

"The IOG team is addressing recent operational challenges in order to restore
forward momentum across the business. Our new COO Dougie Scott and I have set
clear short, medium and longer-term objectives that can unlock shareholder
value from our diverse portfolio of gas and infrastructure assets. I am much
encouraged by the renewed focus and commitment of everyone at IOG to mitigate
risks and deliver these objectives.

 

For the remainder of 2022, our top priorities are safe and timely resumption
of Saturn Banks production after the Bacton shutdown and successful
stimulation to deliver first gas at the Southwark A2 well. The pipeline
depressurisation and stimulation vessel mobilisation announced today are two
steps towards these goals. Additionally, having assessed several A1 drilling
options in light of well conditions to date, we have decided on an optimal
plan to complete and bring it onstream after A2.

 

The increase in cash generation from both Southwark wells can underpin the
multiple further value adding activities we are planning over coming months,
including Blythe production optimisation, progressing Nailsworth as part of a
wider Central Hub development with Elland and Panther, the appraisal campaign
at Goddard and Kelham, evaluating the commercial potential of the Grafton area
(P2589) via seismic reinterpretation, and submitting bids for a range of
complementary assets when the 33(rd) Round closes in January. I look forward
to keeping investors regularly updated as we progress through this important
phase for the business."

 

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

 Rupert Newall (CEO)

 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

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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