IOG.L Regulatory News (IOG)

15 March 2021

Independent Oil and Gas plc

Goddard and Abbeydale Area Technical Update

Independent Oil and Gas plc ("IOG" or "the Company"), (AIM: IOG.L), the UK gas company targeting high returns via an infrastructure-led hub strategy, is pleased to provide a technical update on its P2438 (Goddard) and P2442 (Abbeydale Area) licences in the UK Southern North Sea (SNS), both of which are jointly held by IOG (50%, operator) and CalEnergy Resources (UK) Limited (CER) (50%).

Highlights

· Interpretation and mapping of 1,200km² of 3D seismic data newly reprocessed to Pre-Stack Depth Migration (PSDM) level has significantly improved subsurface understanding of these licences, enabling management resource estimates to be updated

· This enhances the potential to create two new incremental high-return gas hubs, a northern hub in P2438 and a southern hub in P2442, in line with Company strategy

o Both hubs would be within scope of the Thames Pipeline export route

· P2438 licence potential enhanced by higher resources at Goddard discovery and identification of nearby Southsea prospect

o Goddard gross 2C contingent resources increased from 108 billion cubic feet (BCF) in the 2018 Competent Persons Report (CPR) to new management estimate of 132 BCF

o The two Goddard flanks gross mid-case prospective resources revised to 27 BCF and 16 BCF, with geological chance of success (GCOS) up to 71% from 48% (CPR)

o Southsea has gross mid-case prospective resources of 31 BCF and 48% GCOS

· P2442 licence also shows potential for a valuable multi-field gas hub, given identification of Thornbridge and Kelham prospects and higher Abbeydale resources

o Abbeydale discovery gross 2C contingent resource estimates increased from 6 BCF to 23 BCF, significantly increasing its commercial potential

o Thornbridge has gross mid-case prospective resources of 66 BCF with 32% GCOS

o Kelham has gross mid-case prospective resources of 31 BCF with 80% GCOS

o Several further leads identified; excellent reservoir quality across the licence

· Further detailed mapping, amplitude analysis and static and dynamic reservoir modelling is being progressed across these assets to advance them towards development decisions

· An accompanying technical presentation is available at www.iog.co.uk/investors/results-reports-and-presentations/

Andrew Hockey, CEO of IOG, commented: 

"It is very pleasing that our extensive seismic reprocessing work over the past year has identified additional resources and opportunities on both P2438 (Goddard and Southsea) and P2442 (Thornbridge, Kelham and Abbeydale). The new data shows enhanced potential for both licences to host production hubs with step-out exploration and appraisal upside. This fits squarely within our infrastructure-led strategy with our co-owned and operated Thames Pipeline providing direct access to market for all our gas hubs.

At IOG we always seek to plan our developments based on the best subsurface understanding of our assets. Applying this technical rigour to our portfolio helps us to allocate capital appropriately, select the right development concepts, optimise drilling designs, and ultimately to generate best shareholder value. I look forward to providing further technical updates on the rest of the portfolio while we continue on the path to Phase 1 first gas in Q3."

Introduction

The Company's programme of 3D seismic reprocessing to PSDM initiated in 2020 has covered an aggregate area of over 1,200km² across its SNS portfolio (equivalent to c.75% of the Greater London area). The new seismic dataset for each licence area has been reinterpreted to generate new subsurface maps, giving an enhanced technical view of each asset in our opportunity hopper and informing field development and well planning. The output of this work to date is discussed in more detail for the P2428 and P2442 licences below and in the accompanying presentation.

Licence P2438 (Goddard)

Reprocessing has substantially enhanced the Company's technical view of the Goddard discovery and surrounding area, with a clearer image indicating a larger structure than previously mapped. ERC Equipoise's 2018 CPR, which was based on publicly available seismic data used in the 30th Round application in 2017, estimated gross 1C/2C/3C contingent resources for the main discovered Goddard structure of 54/108/203 BCF. The updated management estimate based on the new PSDM reinterpretation is 57/132/258 BCF, representing a 22% increase in the 2C number versus the 2018 CPR.

The two Goddard flank structures adjacent to the main discovery were estimated in the 2018 CPR as having Low/Mid/High gross unrisked prospective resources of 28/49/82 BCF and 14/24/40 BCF respectively, with GCOS for 48% in each case. The Company's new mapping of these two structures initially indicates gross unrisked prospective resource range of Low/Mid/High 7/16/35 BCF and 13/27/54 BCF, with 71% GCOS in each case.

The seismic reinterpretation has also identified an additional prospect close to the south-east of Goddard, which the Company has named Southsea. Mapping of this structure indicates gross prospective resources of Low/Mid/High 13/31/76 BCF, with a 48% GCOS. Further technical work will be required to confirm these initial estimates and an exploration well would be required to prove gas in the structure.

The next technical priorities for the P2438 licence are to update the static and dynamic reservoir models with the interpretations of the reprocessed seismic which may further revise the resource range, ensuring that a Field Development Plan is based on the most accurate technical understanding. Given the ongoing technical work, the Company is also discussing the optimal timing and objective of the commitment well on the licence with the Oil and Gas Authority (OGA), and will update accordingly.

Licence P2442 (Abbeydale Area)

The Company acquired the P2442 licence, which lies south of the Thames Pipeline adjacent to the prolific Leman and Hewett fields, in the 30th Licensing Round in 2018, with CER entering as 50% partner via the farm-out transaction in 2019. While the initial focus on P2442 was the Abbeydale discovery, for which IOG held gross 1C/2C/3C contingent resources of 3/6/15 BCF based on data from the original 51/3a-13 discovery well, the hypothesis was that seismic reprocessing may reveal other opportunities on the licence.

Interpretation and mapping of the newly reprocessed 3D seismic data appears to validate this hypothesis and substantially enhances the Company's view of the commercial potential across the licence. The updated deterministic management estimate of 1C/2C/3C contingent resources at Abbeydale has increased to 19/23/25 BCF, nearly quadrupling the 2C estimate. The tight resource range reflects a well-defined structure with good well control from well 51/13a-13. Reservoir quality in the area is excellent and recovery factors are therefore estimated at 80%/85%/90%.

In addition to Abbeydale, several further prospects and leads have been identified across the P2442 licence. To the immediate north of Abbeydale lies the Camelot Complex, comprising several fields developed and produced by Mobil (and later Perenco). One of these is the Cador field, the western extension of which IOG proposes to rename Kelham. The new seismic work combined with available production data indicates recoverable gas volumes in Kelham of Low/Mid/High 22/31/36 BCF, with an 80% GCOS. As more detailed mapping and reservoir modelling is required to further clarify the potential, the Company has classified Kelham as a prospect.

IOG has also identified another prospect west of Abbeydale which it has named Thornbridge, with gross prospective resources of Low/Mid/High 54/66/73 BCF, and 32% GCOS. Again, further detailed mapping is required, with the key geological risk considered to be the quality of the Zechstein seal.

The technical work to date on P2442 has therefore demonstrated initial scope for a hub development that could be tied in to the Thames Pipeline. A successful discovery at Thornbridge would substantially unlock the area's commercial potential, likely being large enough to host an unmanned platform to which Abbeydale, Kelham and potentially other assets could be tied back as subsea developments. Thornbridge lies approximately 29km from the Blythe-Thames tie-in point (from which Blythe lies 24km, for comparison). Kelham and Abbeydale lie approximately 3km and 7km respectively from Thornbridge. Several further smaller leads have been identified across the licence which could potentially add further prospective resources subject to further analysis.

Under the licence terms, the IOG-CER joint venture operated by IOG is required to elect by 30 September 2021 to drill a well within the following two years, or surrender the licence. The technical work to inform that decision includes further detailed mapping, amplitude analysis, reservoir modelling and development engineering studies.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Enquiries:

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

Competent Person's Statement

In accordance with the AIM Note for Mining and Oil and Gas Companies, IOG discloses that Andrew Hockey, IOG's CEO, is the qualified person that has reviewed the technical information contained in this document. Andrew Hockey has an MSc in Petroleum Geology and has been a member of the Petroleum Exploration Society of Great Britain since 1983. He has almost 40 years' operating experience in the upstream oil and gas industry. Andrew Hockey consents to the inclusion of the information in the form and context in which it appears.