(Alliance News) - IOG PLC on Wednesday reported a constrained maximum gas rate at the Blythe H2 well in the North Sea.
IOG shares fell 40% to 4.00 pence per share on Wednesday morning in London.
The UK-focused offshore gas developer said the well has flowed at a maximum dry gas rate of 22.8 million standard cubic feet per day and 280 to 336 barrels of oil per day condensate. While it noted an improvement from the current H1 well rate of about 15.5 mmscf/d, it was still lower than the expected initial H2 gas rate range of 30 to 40 mmscf/d.
"There is evidence that a potential mechanical blockage downhole is constraining flow. Equipment is being mobilised in the coming weeks to assess and rectify this potential blockage," the company said.
It anticipates the well to be brought onstream this month.
On top of the low gas rate, Chief Executive Officer Rupert Newall noted that "the company has come under increased pressure from severe gas market volatility".
In January, the average realised gas price per therm was 214 pence. That slumped to 64p on Tuesday.
"In that context, we have initiated constructive discussions with an ad-hoc group of our largest bondholders around potential short and longer-term solutions. We will keep all stakeholders updated as appropriate on the progress of these discussions," CEO Newall said.
IOG will attempt "to secure pre-emptive waivers of potential covenant breaches" and agree measures to allow it to weather the period of weaker gas prices. It will also look to "explore the most effective means of addressing the maturity of the bond in September 2024".
By Tom Budszus, Alliance News reporter
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