Member Info for dinsalas32

Https://www.energyvoice.com/oilandgas/north-sea/exploration-production/500062/iog-conocophillips-field-next-phase-of-gas-development/

Autocorrect on the phone!

"These extensive senior management and board level changes are clearly not just as a result of yesterday’s operational update but as it was a culmination of a number of technical and mechanical problems at Phase 1 there are clearly some cumulative reasons for its severity.

The changes themselves, for whatever reasons make sense particularly at the COO level where Dougie Scott is amongst the most qualified and competent operators in the UKCS. This appointment is clearly designed to be a clear change and to make a massive difference on the ground. The other positional changes rather speak for themselves and seem to fit pretty well in the circumstances. "

"These extensive senior management and board level changes are clearly not just as a result of yesterday’s operational update but as it was a culmination of a number of technical and mechanical problems at Phase 1 there are clearly some cumulative reasons for its severity.

The changes themselves, for whatever reasons make sense particularly at the COO level where Dougie Scott is amongst the most qualified and competent operators in the UKCS. This appointment is clearly designed to be a clear change and to make a massive difference on the ground. The other positional changes rather speak for themselves and seem to fit pretty well in the circumstances. "

remember at these levels the IOG employees are hurting as we are, in that their salary sacrifices are worthless in the LTIP schemes quoting the RNS 17th March.

Thu, 17th Mar 2022 07:05

RNS Number : 0678F
IOG PLC
17 March 2022

I am also hoping this is oversold and emptying my pockets for loose change.

How much is the drop related to the attack on the nord gas pipline do we reckon? Its not like IOG are protecting the Stand alone structures with military?

PS cant believe we are back in the teens.

Hi,

See my previous posts and companys investor presentation on their website which specifically tackle the dividend speculation on here.

Hi Pipedragger,

see my posting re dividends having contacted IOG directly and shared in a post earlier this week.

Final part of the message-:

. . consideration in the mix.
In the meantime, as you will know from some of the many updates over the course of this year, we have £70-85m in capex expenditure over the course of 2022 plus operating and G&A costs to meet (albeit these are low compared to industry averages). The gas market is clearly favourable currently but it is also very volatile and it is still relatively early days in the life of the project. So the focus in the second half of this year is very much on ensuring stable cash flow generation at Blythe & Elgood and getting Southwark to first gas, while preparing for the two-well appraisal campaign and working up the next phases of the business – all of which would leave us well positioned for a bond refinance when the right time comes.

I hope this is helpful clarification.
Regards
XXXX

Id like to thank IOG for a well considered response-:
Hi XXXXX
Thanks for the email. That’s a fair question to ask and I’m happy to answer it.

Let me point you to p10 of our corporate presentation, the page on our investor return strategy. Essentially, as stated there, the objective is to achieve further growth in the business (through reinvestment of cashflows) whilst also, over time, being able to implement a sustainable distribution policy. In theory the latter would involve dividends but it could potentially also involve buybacks as you mention. Recycling cash flows into a healthy balance of new growth and distribution is a great place for any E&P company to get to and that is absolutely our intention, as we have stated consistently over the past few years. But of course it is a journey to get there with a number of stages involved. When we funded Phase 1 in 2019, the major elements were the farm-out transaction with CalEnergy and the €100m bond issue. As a small development company, raising a bond when still over 2 years away from production and cash flow means by necessity it is a tightly structured, project-style bond reflecting the risks to bond investors. One of the standard constraints in such a bond is a limitation on shareholder distributions, which from a bondholder perspective avoids the risk of a company paying out cash as equity returns before the bond is repaid.

However, that does not necessarily mean waiting until 2024. Now that we have progressed into production, the risk profile has changed materially and this opens up scope to refinance e.g. into a new bond or a reserve-based bank facility. Given the cashflow and different risk profile you would expect to see improved terms, including sufficient flexibility to make distributions and that would certainly be our intention. Depending on the type of facility, it can still remain subject to certain economic tests but these tend to be within the bound of prudent financial management in any case, rather than necessarily obstructive. In our case, the terms of our current bond legislate that we could look to refinance anytime within the final two years of its term (i.e. from Sept 22 onwards). For business reasons there will be an optimal time to do this – all else equal, refinancing with more fields in production and other assets/phases further progressed and defined means a lower risk proposition for debt providers (hence better terms). It also enables a better understanding for the company of what type and size of debt is best to protect and enhance shareholder value. A refinance would be designed to help fund that further growth mentioned above which in turn can drive further shareholder returns over time. For a company involved in a volatile market, ensuring any distribution policy is sustainable is important since to the extent cash is returned to shareholders it can’t go to fund new growth. The evolving fiscal terms in the UK are another also consideration ..

Below is copy of my original question-:
(I've obviously removed email addresses etc for privacy).

My initial email-:

Congratulations on getting across the line to first gas.

I appreciate you can't give away anything market specific, however I wondered if the possibility of a share buyback has been considered by the board and yourself to benefit both the company value and shareholders in light of the unhedged gas prices the company is currently benefiting from?

I appreciate the company has the 2024 bond to repay and operating costs as part of further exploration, however it would be good to see the company using the unexpected additional revenue to increase the value of the company whilst the share price is so low before the further fields come online?

HI Mole,

I did acknowledge the same in my original post yesterday re quoting below in that bond, debt and opex will come first.

"Whilst the firms priority will be to maintain cash for opex and correct me If I'm wrong, we have a £100m bond to replay 20/09/2024?"

However this doesnt stop the board planning a buy back or factoring it into this years spend since the gas price is a multiple of the originally planned rates anticpated for income, we should have money to burn and I see this as a great opportunity to reurn value to the shareholders.

Cheers Aligator thought I'd see feedback here from fellow investors before suggesting the idea to the board (specifically James as finance director), however I'd assume this option is already on their radar.

Philsy027. A share buyback reduces the number of shares in the market and is something the IOG can control.
This is subtly different to obtaining the LOG shares (which requires agreement from both parties).

Reducing the shares in the open market squeezes the LOG holding back to the 30% forcing the administrators hand to reduce their holding also in the public domain therefore reducing IOG exposure to LOG and also reducing the number of shares in the event of a future dividend.

Personally I dont see LOG offloading shares back to IOG.

Whilst the firms priority will be to maintain cash for opex and correct me If I'm wrong, we have a £100m bond to replay 20/09/2024?

Once both of those are covered and instead of a dividend (suggested earlier this week), the board could instruct share buybacks to force the LOG hand into reduce holdings to prevent trriggering the 30% holding rule, also making any future dividend sustainable and also rewards shareholders?

Maybe following CalE approach who left IOG to carry all the exploration risk with an option if it came good.

ie potential suitors are waiting for Q4 fields to come online knowing the disconnect of the revenue vs the mkt value and by then clearer on LOG strategy.

I noticed another share jumped intraday yesterday between 40 & 95% on the back of a vox markets update (not because I hold it unfortunately) roughly after it announced repaying a bond. 'If 'that behaviour were to repeat here, the maturity date of the bonds are another timeline to track.

Hi,

Posting for some balance.

Whilst the LOG overhang is frustrating and they aren't the only large investor thats been selling down.

Feel its worth posting a reminder as I'm sure the longer term investors do, IOG wouldnt be here without the LOG funding at the time. It wasn't a long queue lining up to fund us back then . . pretty sure it was the only option.

Rather have smaller than anticipated profits or lost investment depending on how long you've been invested (had LOG not provided the funding.)

Glad a few got to go. I assume it wasn't recordedast night? Checked the website incase anything had been uploaded and will check again later

Hi all,

I'd normally quote an RNS to back up my query below but cannot find the relevant one. Unfortunately I cannot make the investor evening and wanted to submit a question in advance.

Does anyone remember a potential tax write off for circa £25 million. If my memory serves me right it was to do with the pipeline acquisition as a future incentive?
**Before anyone panics this is a benefit and Im raising now as I'd be keen to see if it still exists and will be used to offset the revenue now coming in this year.

https://*********************/companies/uk/oil-gas-e-ps/iog-plc/research/finncap/morning-note-13-april-2022/8_d4945da9-9e21-4bbb-b4d7-2068ae7d9cf6/05b110fd-1e1c-453f-9cc5-9da4a9e491f0

66p target price
Revenue 221m for 2022

Also a link on the companies website link below. Hopefully an online option

https://www.iog.co.uk/investors/private-investor-evening/