REG - IOG PLC - Signing of Gas Sales Agreement

IogAnnouncement

29/07/2021 07:05

RNS Number : 8268G
  
IOG PLC
  
29 July 2021
  
 

29 July 2021 
 
IOG plc
 
Signing of Gas Sales Agreement 
 
IOG plc (IOG, or the Company), (AIM: IOG.L), the UK gas company targeting growth and high returns via an infrastructure-led hub strategy, is pleased to announce the execution of a gas sales agreement ("GSA") with Gazprom Marketing & Trading Limited ("GM&T"). This follows a competitive offtake process involving more than 10 bidders over recent months. 
 
The GSA relates to IOG's equity production for the first two years from the Elgood and Southwark fields, part of the Company's Phase 1 development, and the Nailsworth and Elland fields that form part of our Phase 2 development, with a mutual extension option. Gas will be sold on a day-ahead daily nomination basis at a price linked to the National Balancing Point (NBP, the UK traded gas benchmark). A separate gas sales agreement with BP Gas Marketing Limited was signed on 24 February 2014 for Blythe, the other Phase 1 field. 
 
Following a two-month period to establish consistent production, the GSA incorporates the potential for physical gas hedging, which the Company intends to undertake as part of its overall risk management programme. 
 
GM&T is the London-based energy marketing and trading subsidiary of Gazprom, the world's largest gas producer. It has been active in the UK gas market for over two decades and has around 900 employees based in London and eight other international offices. 
 
Andrew Hockey, CEO of IOG, commented: 
 
"We were pleased at the strong interest in offtake rights for our gas, which helped to secure attractive terms for IOG. As we will be delivering all of our gas into the Bacton terminal complex, an important UK gas hub relatively close to major demand centres, we expect to benefit from favourable pricing. We look forward to developing a good working relationship with GM&T over the coming years. 
 
In that context we also note the significant strengthening of the UK gas market over 2021 to date as we progress towards gas production, expected in Q4 this year. Forward pricing for the six-month Winter 2021 gas period closed yesterday at over 101 pence per therm - 96% ahead of our central planning case for that period. Forward pricing for Summer 2022 closed yesterday at over 59 pence per therm, 49% ahead of our central planning case for that period." 
 
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 
Andrew Hockey (CEO)
Rupert Newall (CFO)
James Chance (Head of Corporate Finance & IR)
 


+44 (0) 20 7036 1400




finnCap Ltd
Christopher Raggett / Simon Hicks 
 


+44 (0) 20 7220 0500




Peel Hunt LLP
Richard Crichton / David McKeown  


+44 (0) 20 7418 8900














Vigo Consulting 
Patrick d'Ancona / Chris McMahon / Oliver Clark
 


+44 (0) 20 7390 0230



About IOG: 
 
IOG owns and operates a 50% stake in substantial low risk, high value gas reserves in the UK Southern North Sea. The Company's Core Project targets a gross 2P peak production rate of 140 MMcfe/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 unrisked mid-case prospective resources of 66 Bcfe at Thornbridge, 31 Bcfe at Southsea, 31 Bcfe at Kelham, 27 Bcfe and 16 Bcfe in the two Goddard flank structures, and 21 Bcfe at Harvey. In December 2020 IOG also accepted 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 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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