REG - IOG PLC - Production Update

IogAnnouncement

30/09/2022 07:00

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RNS Number : 2612B  IOG PLC  30 September 2022

30 September 2022

 

IOG plc

 

Production Update

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), the Net Zero UK gas and
infrastructure operator focused on high return projects, provides an update on
Saturn Banks production.

 

Andrew Hockey, CEO of IOG, commented:

 

"Over 2H 2022 to date, average gross gas rates have been 28.6 mmscf/d, with
average realised gas prices of 274 p/therm, resulting in higher revenues in
both July and August than previous months. In September, saline liquids
production has constrained average gas production to 21.8 mmscf/d, with latest
rates of 32 mmscf/d as we work to restore higher flows.

 

Working closely with Perenco and ODE, we have secured short-term aqueous
liquids handling capacity and are pursuing more attractive medium-term
solutions. As the water is most likely being produced via a natural Blythe
reservoir fracture, we are also working to optimise reservoir management."

 

Blythe and Elgood production

 

In September, Saturn Banks combined gross flow rates have averaged 21.8
mmscf/d at uptime of 87%, building up to a latest gross production rate of 32
mmscf/d. The volume weighted average realised gas price (VWAP) in September,
factoring in the 30,000 therms/day fixed at 444 p/therm for this month, was
290 p/therm. IOG has fixed the same volume at 263 p/therm for October.

 

Build-up of stable gas rates has been constrained by intermittent flows of
aqueous liquids into the Saturn Banks Reception Facilities. Condensate and
aqueous liquids have each averaged approximately 300 bbl/d in September. The
aqueous liquids consist of saline water and monoethylene glycol (MEG), which
is injected in the wells to inhibit hydrate formation.

 

When liquids arrivals reduce available storage capacity, the Perenco Bacton
terminal control room reduces gas flow to avoid overfilling the Saturn Banks
slugcatcher and shutting in production. As liquids are let down from the
slugcatcher and removed, gas flow rates can be gradually increased.

 

Currently, letdown capacity is restricted by storage availability (shared with
other non-Saturn Banks liquids), tanker removals and the cycling of letdowns
between Saturn Banks and other Bacton gas streams. IOG is working with Perenco
on modifications to enable continuous letdowns.

 

Due to salinity levels, the aqueous liquids cannot currently be regenerated at
Bacton as originally planned, but are stored onsite or offsite to be either
regenerated for reinjection or disposed. Up to four tankers per day are
transporting liquids to offsite storage facilities and several MEG
regeneration routes have also been identified.

 

Analysis indicates that a sub-seismic resolution natural reservoir fracture
encountered during Blythe development drilling is the most likely source of
the saline water. IOG is therefore evaluating ways to optimise Blythe
reservoir management.

 

The intention over the coming weeks is to continue restoring higher stabilised
flow rates, subject to liquids handling constraints. As gas rates are
increased, the extent to which aqueous liquids production increase will be
assessed.

 

Separately, in November the Perenco Bacton terminal is scheduled to undergo
annual maintenance, during which Saturn Banks production is expected to be
suspended for up to two weeks. Meanwhile, as work continues to establish
remote platform restart capability offshore, IOG retains permanent standby
logistical capacity to ensure that, in the event of platform trips, restart
interventions can be expedited typically in well under 24 hours.

 

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

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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