REG - IOG PLC - Successful Blythe H2 Intervention

IogAnnouncement

26/06/2023 07:00

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RNS Number : 8137D  IOG PLC  26 June 2023

26 June 2023

 

IOG plc

 

Successful Blythe H2 Intervention and Drilling Programme Update

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L) provides an update on the
Blythe H2 well wireline intervention and the drilling contract with the Shelf
Drilling Perseverance ("SDP") jack-up rig.

 

Rupert Newall, CEO, commented:

 

"We have successfully completed the wireline intervention at Blythe H2 well,
which has now flowed at a maximum stabilised rate around 42 mmscf/d, slightly
above our original 30-40 mmscf/d guidance. Production will now be managed up
from 20 mmscf/d towards the maximum rate to further dewater the pipeline. The
team has worked very well to identify the issue and remediate it safely and
efficiently. The significant improvement in our operating team performance is
also demonstrated by Blythe operating efficiency increasing from 59% in 2022
to 93% over 1H23 to date.

 

In parallel with the remediation work on H2, we have been assessing next steps
for the business very carefully. Mindful of current gas market and balance
sheet risks, we have decided to pause drilling activity for now in order to
maximise near-term cash flow."

 

H2 intervention

·    During well testing prior to H2 First Gas on 12(th) June, gas flow
appeared to be choked back below expected levels by a restriction above the
reservoir. Equipment was mobilised to the rig to test whether this was caused
by a partially activated downhole valve

·    Over the weekend, the downhole blockage was duly verified at the
expected depth. The valve was then fully opened with suitable equipment and
the anticipated change in downhole pressure was observed

·   The well was handed back to the Operations team in the early hours of
Sunday 25(th) June and subsequently flowed at a maximum stabilised rate of
41.9 mmscf/d

·    Production is now initially set at 20 mmscf/d and will be steadily
built up to full rate over the coming week as the Saturn Banks Pipeline System
is further dewatered

·   The absence of formation water production from H2 is expected to
significantly reduce aqueous liquid arrivals at Bacton, which should in turn
reduce unit operating expenditure

·   The plan remains to produce from H2 only over the next few months; once
water levels have re-equilibrated at the H1 location, periodic production is
planned from H1 at lower rates to minimise water production

 

SDP Drilling contract

·    The SDP has been contracted to the IOG-CalEnergy Resources JV ("the
JV") since the Elgood well was spudded in April 2021

·     One of two priced contract extension options was previously
exercised with a view to drilling one of the two planned appraisal wells at
Kelham North/Central and Goddard

·     At the current time, having overcome both the Blythe H2 well
control event and downhole blockage, and in the context of continued gas
market volatility, maximising production and rebuilding cash balances are key
priorities

·    The decision has been taken to defer the drilling of the Kelham and
Goddard appraisal wells at this time and the SDP will therefore be released
after completion of Blythe H2 operations

·     The JV will continue to assess the best options to drill the two
appraisal wells by 31 March 2024 as per the respective licence terms

·    The JV is offering potential farm-in partners up to 50% of the
Goddard licence (P2438) via the previously announced farm-out process

 

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)

 Dougie Scott (COO)

 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 UK developer and producer of indigenous offshore gas. The Company
began producing gas in March 2022 via its offshore and onshore Saturn Banks
production infrastructure. In addition to its production assets, IOG operates
several UK Southern North Sea licences containing gas discoveries and
prospects which, subject to future investment decisions, may be commercialised
through the Saturn Banks infrastructure. All its assets are co-owned 50:50
with its joint venture partner CalEnergy Resources (UK) Limited. Further
details of its portfolio can be found at www.iog.co.uk (http://www.iog.co.uk)
.

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