If you would like to ask our webinar guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund a question please submit them here.

Less Ads, More Data, More Tools Register for FREE

Pin to quick picksIOG.L Regulatory News (IOG)

  • There is currently no data for IOG

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

Corporate Update

7 Jun 2023 07:00

RNS Number : 9302B
IOG PLC
07 June 2023
 

7 June 2023

 

IOG plc

 

Corporate Update

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L) provides an operational and financial update following well clean-up and testing operations at the Blythe H2 well over 4-7 June.

 

Blythe H2 clean-up and testing

· The H2 well was drilled to a total depth of 13,400 ft MD and initial data indicated better reservoir quality (permeability and porosity) in the H2 wellbore versus H1

· The well has flowed at a maximum dry gas rate of 22.8 mmscf/d and 280-336 bbl/d condensate at the export pipeline pressure of 1250psi, with no formation water observed

· This is an improvement on current H1 rate, but below the expected initial H2 gas rate of 30-40 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.

· No faults or fractures were encountered in the H2 reservoir section, unlike at H1 where a sub-seismic fracture appears to be causing formation water production

Blythe H2 next steps

· H2 will now be handed over for final hook-up and commissioning ("HUC") and remains expected to be brought onstream this month, despite the 34 days lost to the well control event

· Safely completing the H2 HUC is expected to require approximately one week of planned downtime

· The remedial downhole equipment will be mobilised in the coming weeks and run in the well with the rig alongside, with H2 well shut in during these operations

· Once H2 production is on, H1 is planned to be shut in; in a higher gas price environment it could be possible to reopen H1 at lower rates to minimise water production

Blythe H1 production operations

· The current gross unconstrained H1 production rate is approximately 15.5 mmscf/d

· Average 2023 gross production year to date to 31 May was 13.9 mmscf/d, factoring in shutdowns and liquid letdowns alongside other Bacton gas streams 

· Operating Efficiency over that period has been 93.9% and Production Efficiency 84.6%

 

Financial Update

· Final H2 well costs are expected to be approximately £15m net to IOG, consistent with guidance provided on 2 May

· The gas market environment has become increasingly challenging over recent months. In January 2023, the Company's average realised gas price was 214 p/therm. When the 2022 Annual Report and Accounts ("ARA") was released on 16 March 2023, the UK NBP Day-ahead gas price was 126 p/therm. This then fell to 64 p/therm by 6 June 2023. The average realised price for May 2023 was 72 p/therm and 2023 realised average to the end of May was 112 p/therm.

· The forward curve for 2H 2023 has also dropped considerably with near term prices at a 20-month low and less than half the level in February 2022 before the Ukraine war. Given the complex dynamics involved, there is also considerable uncertainty about the outlook for future gas prices.

· The going concern section of the ARA highlighted the evolution of gas prices as a key risk facing the business. The recent substantial further falls in gas prices means the Company is now likely to breach one or more of the covenants under the terms of its €100 million senior secured bond at the next covenant test date of 30 June 2023.

· The ARA also highlighted the importance to the Company of the Blythe H2 well. The Company is assessing the impacts of potentially lower than expected H2 production rates.

· The Board has been proactively taking mitigating actions to address balance sheet risks, including appointing an independent corporate finance firm, Smith Square Partners, which has considerable experience in advising companies in similar situations

· The Company has also engaged in preliminary discussions with an ad-hoc group of bondholders representing c. 40% of the bonds. The purpose of these discussions, which the Board views as constructive to date, is:

a) to secure pre-emptive waivers of potential covenant breaches

b) to agree measures to enable the Company to withstand short term consequences of recent gas price developments

c) to explore the most effective means of addressing the maturity of the bond in September 2024

· In this context, the Board remains highly focused on maximising near-term production and reducing operating costs, as well as minimising capital expenditure, as reflected in the Goddard farm-out process

· Cash at bank as at 31 May 2022 was £21.5 million, including restricted funds of £6.8 million

 

Rupert Newall, CEO, commented:

 

"The Blythe H2 well has tested at a maximum gas rate of 22.8 mmscf/d at the pipeline export pressure, appearing to be constrained by a suspected downhole mechanical blockage. H2 has been executed safely and efficiently considering that 34 days were lost to the well control event and remains on track to come onstream later this month following final hook-up and commissioning.

 

Meanwhile, the Company has come under increased pressure from severe gas market volatility, with UK NBP Day-ahead gas prices falling by over 85% from August 2022 to June 2023. 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."

 

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

Rupert Newall (CEO)

Dougie Scott (COO)

James Chance (Head of Capital Markets & ESG)

 

+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 / Finlay Thomson

 

+44 (0) 20 7390 0230

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
UPDSSLSIWEDSEDM
Date   Source Headline
27th Jun 20177:00 amRNSOGA SNS Tight Gas Strategy and New Presentation
8th Jun 20177:00 amRNSNotice of AGM and Issue of New Shares
31st May 20177:00 amRNSIssue of New Shares
26th May 20177:00 amRNSFinal Results for the Year Ended 31 December 2016
11th Apr 20177:00 amRNSAcquisition of SNS Pipeline
31st Mar 20177:00 amRNSExtension of pipeline MOU
27th Mar 20177:00 amRNSHarvey and Elgood licence Updates
21st Mar 20179:00 amRNSConversion of Salaries & Fees into Share Options
21st Mar 20177:00 amRNSDirectorate Change
1st Mar 201710:55 amRNSAcquisition of SNS Pipeline Update
1st Mar 20178:59 amRNSDirectorate Change
23rd Jan 201712:31 pmRNSConversion of Salaries and Fees into Share Options
16th Jan 20177:00 amRNSAcquisition of SNS Pipeline and Skipper Update
20th Dec 20167:00 amRNSIssue of New Shares
16th Dec 20167:00 amRNSSouthern North Sea Resources Increase
8th Dec 20167:00 amRNSExtension of the Blythe Licence
3rd Nov 20167:00 amRNSIssue of New Shares
1st Nov 20167:00 amRNSInitial Results of Seismic and Update on Cronx
28th Oct 20167:00 amRNSCompletion of Vulcan Satellites Acquisition
3rd Oct 20162:05 pmRNSSecond Price Monitoring Extn
3rd Oct 20162:00 pmRNSPrice Monitoring Extension
30th Sep 20167:00 amRNSInterim Results 2016
30th Sep 20167:00 amRNSInitial Skipper Appraisal Well Results
31st Aug 20167:00 amRNSResignation of Director
19th Aug 20167:00 amRNSCompletion of the Skipper Appraisal Well
17th Aug 20167:00 amRNSSkipper Well Update
29th Jul 20167:00 amRNSDirectorate Change
20th Jul 20162:00 pmRNSSkipper Update
14th Jul 20167:00 amRNSSkipper Update and Issue of New Shares
30th Jun 20167:00 amRNSResult of AGM and Skipper Appraisal Well Update
21st Jun 20167:00 amRNSCompletion of Blythe Acquisition
14th Jun 201610:44 amRNSIssue of New Shares
13th Jun 20167:00 amRNSAcquisition of Vulcan Satellites fields
7th Jun 20167:00 amRNSSkipper Appraisal Well rescheduled for July 2016
27th May 20167:00 amRNSAudited Results for the Year Ended 31 December 15
22nd Apr 20167:00 amRNSHolding(s) in Company
19th Apr 20168:00 amRNSConversion of Salaries and Fees into Share Options
19th Apr 20167:00 amRNSAcquisition of Blythe Discovery
30th Mar 20161:15 pmRNSPotential Acquisition Update
30th Mar 20167:00 amRNSFunding and Strategic Update
7th Mar 20169:23 amRNSIssue of New Shares
22nd Feb 201610:44 amRNSResult of General Meeting
5th Feb 201611:16 amRNSLoan Facility, Corporate Update and Board Changes
28th Jan 20167:00 amRNSExtension of Skipper Licence
18th Jan 20164:35 pmRNSPrice Monitoring Extension
13th Jan 20164:40 pmRNSSecond Price Monitoring Extn
13th Jan 20164:35 pmRNSPrice Monitoring Extension
13th Jan 20167:00 amRNSRescheduling of Skipper Well & Additional Funding
31st Dec 20157:00 amRNSCronx Licence Extension
29th Dec 20156:00 pmRNSResult of GM and Skipper Licence Extension

Due to London Stock Exchange licensing terms, we stipulate that you must be a private investor. We apologise for the inconvenience.

To access our Live RNS you must confirm you are a private investor by using the button below.

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.