IOG.L Regulatory News (IOG)

25 February 2019

Independent Oil & Gas plc

Project & Funding Update

Independent Oil and Gas plc ("IOG" or the "Company"), the development and production company focused on becoming a substantial UK gas producer, is pleased to provide an update on the funding and progress of its two-phase Southern North Sea (SNS) Core Project (the "Core Project").

SNS Farm-Out Process Underway

The Company's focus remains reaching Final Investment Decision (FID) at the earliest feasible time on its Core Project, which comprises 410 BCF¹,² of 2P+2C reserves and resources across six discovered SNS gas fields.

Since confirming Thames Pipeline integrity and technical FID-readiness in Q4 2018, the Company has received extensive industry interest in its Core Project. Therefore, with the flexibility afforded by 100% Core Project ownership, in late 2018 management initiated a focused farm-out process with a carefully selected shortlist of motivated and well-funded potential farm-in partners. This process is running in parallel with IOG's stated capital markets funding plans and the Company is encouraged by the level of serious interest shown to date.

On success, this process could provide valuable funding optionality via a development carry which would significantly reduce the new capital required for its Core Project.

Management expects to select a preferred partner in 1H 2019, thereby enabling an optimal choice between an industrial or capital markets FID solution. First Gas is planned to be delivered within 20 months of FID.

Harvey

The Company is progressing its plans to drill the Harvey appraisal well. The primary objective is to confirm gas resource volumes which management estimate at 85/129/199 BCF Prospective Resources in the Low/Best/High case, with a 63% Geological Chance of Success³. In the context of the wider funding process and availability of the selected rig, the well is now expected to spud in mid-2019. If successfully appraised, Harvey would be integrated into a further optimised Core Project with significantly higher value and returns.

London Oil & Gas ("LOG") facilities

The Company continues to utilise the September 2018 £15 million LOG facility. Having drawn £3.93 million in 2019, the Company currently has £2.9 million in cash and a further £3.93 million undrawn.

The Company notes the recent appointment of Smith & Williamson as administrators of London Capital & Finance (LCF) and their appointment of a representative to the board of LOG, given LOG is a borrower from LCF. This representative has also replaced the previous LOG observer on IOG's board, which is a role mandated under the terms of LOG's loans.

The loans provided to IOG are understood to be key assets for LOG given the Company's high value portfolio, which is anticipated to be endorsed by a third-party due diligence report for LCF.. The Company continues to have positive discussions with LOG and fully expects them to continue to support the Company, including in respect of managing 2019 maturities, as it progresses towards FID.

Andrew Hockey, CEO of IOG commented:

"Having demonstrated our Core Project's technical readiness and proven the integrity of our high-capacity Thames Pipeline, we have created an excellent opportunity to bring in an established and well-funded industrial partner on competitive terms. We are encouraged by the strong interest and engagement from a number of recognised parties to date as we focus on securing an attractive transaction which would fundamentally reduce our further funding needs for FID.

The IOG team continues to be highly focused and motivated to reach FID as soon as possible. While acutely conscious of timing, our core goal is to ensure we deliver best value for shareholders from our exciting Southern North Sea gas portfolio. Our updated funding strategy provides different potential pathways to achieve this - industrial or capital markets - and we are encouraged by improving debt and equity market conditions. In the meantime, we continue to engage constructively with LOG and are confident that they and their stakeholders will continue to support the realisation of full value from IOG's portfolio."

Enquiries:

About Independent Oil and Gas:

IOG owns substantial low risk, high value gas reserves in the UK Southern North Sea. The Company is targeting a 2P peak production rate of 146 MMCF/d (c. 25,000 Boe/d) from its substantial Core Project (2P gas Reserves of 302 BCF¹ + 2C gas Contingent Resources of 108 BCF²) via an efficient hub strategy. In addition to the independently verified 2P reserves at Blythe, Elgood, Southwark, Nailsworth and Elland and 2C Contingent Resources at Goddard, IOG also has independently verified best estimate unrisked prospective gas resources of 202 BCF²,³ in Harvey and Goddard. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns. All IOG's licences and the Thames Pipeline are owned 100% and operated by IOG.

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 over 35 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.

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

²ERC Equipoise Competent Persons Report: October 2018

³Updated management estimates based on interpretation and mapping of 3D seismic data reprocessed to Pre-Stack Depth Migration (PSDM) in 2018, subsequent to ERC Equipoise's 2017 Competent Persons Report

Certain information communicated in this announcement was, prior to its publication, inside information for the purposes of Article 7 of Regulation 596/2014.