IOG.L Regulatory News (IOG)

21 February 2022

IOG plc

Phase 1 Progress

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), the Net Zero UK gas and infrastructure operator focused on high return projects, provides the following operational update.

Andrew Hockey, CEO of IOG, commented: 

"The IOG leadership team attended Bacton terminal late last week to go through a Pre-Start Up Safety Review ahead of final Saturn Banks commissioning. Terminal operator Perenco, executing works on IOG's behalf, advised us that the current stormy weather has hampered the final construction and leak testing programme with a knock-on impact on commissioning of the safety instrumentation systems. As a result the plant will likely not be ready to start backgassing until the week beginning 28th February, with First Gas from both Blythe and Elgood around a week later. Albeit frustrating, this delay facilitates a safe and reliable start-up."

Saturn Banks Reception Facilities (SBRF), Backgassing and First Gas

SBRF preparation for First Gas is now 99% complete. IOG senior management attended a final Pre-Start Up Safety Review and inspected the facilities on Thursday 17 February as part of pre-completion assurance. Final pre-commissioning checks and cause-and-effect function testing and final construction activities continue to be undertaken, albeit severe weather from the named storms passing over the UK has been hindering progress with further stormy weather likely to impact crane lifting operations. Once the terminal operator Perenco UK Limited (PUK), the Company and its pipeline duty holder ODE Asset Management (ODEAM) have fully signed off the onshore facilities to safely introduce hydrocarbons, then backgassing operations can commence. This is now targeted for the week beginning 28th February, with First Gas expected to occur approximately a week later. The unsettled weather may also potentially impede the operations required at the Blythe platform as part of the backgassing and start-up procedures, although the bulk of this work is now complete. As a result of a planned inspection the UK Health and Safety Executive have raised a number of clarifications required to be resolved ahead of start-up and this is being addressed.

Southwark

In parallel, the Company has continued to progress suitable options for a timely and safe return to Southwark drilling, after unstable conditions due to seabed scouring forced operations to be suspended in January. During February to date the forward plan has been defined with the assistance of subject matter experts and agreed with the rig owner. This essentially entails creating pads on the seabed with suitable sized rocks to enable stable positioning of the rig spud cans. This solution is now being expedited with drilling expected to be resumed at Southwark in March subject to completion of the necessary regulatory approvals and commercial processes.

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.

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IOG's Saturn Banks Project targets a gross peak production rate of 140 mmscf/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 gross unrisked mid-case prospective resources of 36 Bcfe at Kelham North, 42 Bcfe at Kelham Central, 58 Bcfe at Thornbridge, 31 Bcfe at Southsea, 28 Bcfe and 19 Bcfe in the two Goddard flank structures. The Orrell discovery, with management estimated gross 2C contingent resources of 42 Bcfe, also lies approximately 50% on the P2442 licence held 50% by IOG. IOG also holds 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 further significant shareholder returns.

¹ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression