TIDMIOG
RNS Number : 4593F
Independent Oil & Gas PLC
21 February 2018
21 February 2018
Independent Oil and Gas plc
Corporate and Funding Update
Loan facility of GBP10million, IOG fully funded to FID
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to provide the following financial, operational and Board
update.
Highlights
-- GBP10 million convertible loan facility (the "New Facility")
successfully signed with existing lender London Oil and Gas Limited
("LOG").
o Subject to shareholder approval, convertible into ordinary
shares of 1p in the Company ("Ordinary Shares") at a conversion
price of 19p (the "Conversion Price"), a 15% premium to the closing
price of the Ordinary Shares on 20 February 2018.
o Loans drawn down under the New Facility will carry a coupon of LIBOR+9%.
o The New Facility is secured against all of the current and
future assets of the Company and of the Company's subsidiaries IOG
North Sea Limited ("IOG NS") and IOG UK Limited ("IOG UK"), and is
repayable 36 months after the drawdown of each tranche.
-- IOG is now fully funded to Final Investment Decision ("FID")
on its 100% owned UK Southern North Sea ("SNS") dual gas hub
development project (Blythe and Vulcan Satellites), expected in
August 2018.
o Blythe and Vulcan Satellite gas hubs consist of five fields
with independently verified 2P reserves of 303 BCF (54 MMBOE).
o IOG remains on track for first gas in Q4 2019.
-- Proceeds of the New Facility are to be used to fund: -
o Ongoing site survey programme for the Thames Pipeline and
other project pipeline routes, as well as all future platform
locations.
o Intelligent pigging operation to confirm the integrity of the
decommissioned Thames pipeline, scheduled for late March.
o Platform and pipeline Front-End Engineering & Design ("FEED").
o Thames gas reception facility refurbishment and FEED work at the Bacton terminal.
-- Alongside this, initial planning work is underway for the
drilling of the Harvey appraisal well.
-- Andrew Hockey to succeed Mark Routh as CEO. Mark Routh to be
appointed Non-Executive Chairman.
-- The issue of Ordinary Shares pursuant to the New Facility is
subject to shareholder approval. A General Meeting is to be
convened for 13 March 2018.
Mark Routh, Chairman of IOG commented: -
"IOG is pleased to deepen its strategic relationship with LOG to
advance its highly attractive SNS development project to FID and
beyond.
"This is an exciting year for IOG, with funding in place and a
busy work schedule ahead. We are on track by the end of this month
to complete the acquisition of the Thames Pipeline, the cornerstone
of IOG's SNS gas hub strategy. We have submitted the Blythe Hub
Environmental Impact Assessment ("EIA") and will shortly submit the
Vulcan Satellites Hub EIA as we target August 2018 for the FID for
our entire SNS portfolio.
"The new financing enables us to complete the remaining
engineering studies, technical and planning work ahead of FID on
what will be a highly cash generative gas portfolio. Development
funding plans are progressing well with a view to finalising the
optimal mix of conventional debt, offtake-linked finance and
contractor finance to take the project to first gas.
"I wholeheartedly congratulate Andrew on his new role as CEO.
Andrew has been with IOG since March 2017 as Deputy CEO, working
closely with me and has a deep technical and commercial
understanding of the business and an excellent SNS development
track record. As Chairman I look forward to providing dedicated
support and guidance to the Board and management as the Company
proceeds to its next stage of growth."
Andrew Hockey, CEO of IOG commented: -
"I am thrilled that the Board has appointed me to succeed Mark
as CEO. IOG has a fantastic set of assets, an excellent team, new
funding in place and a clear growth strategy focused on UK offshore
gas. I look forward to continuing to work with Mark and the wider
team to deliver significant shareholder value by bringing our
proven assets into production while further expanding our
portfolio."
Michael Starkie, Finance Director of LOG said: -
"We are delighted to have supported IOG with this financing
which will ensure these highly attractive UK gas assets reach FID
in the coming months. We have every confidence that the Company
will deliver full project funding to achieve FID in August 2018 and
first gas by late 2019. We are also excited by the portfolio growth
and production opportunities being actively pursued on the solid
foundations of the SNS gas hub strategy."
GBP10 million New Facility
LOG has agreed to make a secured convertible loan facility of up
to GBP10 million available to the Company. The New Facility will
carry a coupon of LIBOR + 9%, with accrued interest capitalised
every six months and added to the outstanding principal. Principal
and accrued interest is repayable 36 months after the drawdown of
the relevant tranche. LOG may, at its sole discretion, elect to
extend the maturity date of a tranche by up to 12 months (provided
that no maturity date shall extend beyond 25 February 2022).
However, interest will not accrue during the period of this
extension. The New Facility is secured against all the current and
future assets of the Company and of IOG NS and IOG UK and, subject
to shareholders approving the resolutions at the General Meeting,
amounts drawn down under the New Facility and accrued interest will
be fully convertible at any time following the drawdown of each
tranche at LOG's election into Ordinary Shares at the Conversion
Price. Prior to the shareholders' approval, the Company can draw
down a maximum of GBP1 million under the New Facility. If the
shareholders' resolutions are not passed at the General Meeting,
any sums drawn down (together with all accrued interest) would
become repayable on the date falling three months after the date of
the New Facility.
The Company may elect to draw down the New Facility no more than
once each month and in a sum of not less than GBP500,000 and up to
GBP1 million, unless otherwise agreed with LOG. Any election by the
Company to draw down the New Facility may be accepted or declined
by LOG, in its sole discretion. If LOG accepts the Company's
election to draw down the New Facility, LOG is irrevocably
committed to advance the full amount of the loan specified in the
Company's notice to draw down the New Facility.
The New Facility is in addition to the existing loans from LOG
("Existing Loans") as announced on 7 December 2015, 11 December
2015 and 5 February 2016. The New Facility will share senior
security with the Existing Loans. LOG retains the right under the
Existing Loans to nominate two directors to the board, currently
Martin Ruscoe and The Right Honourable Charles Hendry. As
previously announced, the Company is seeking to appoint a further
independent Non-Executive Director in the near future.
Proceeds from the New Facility will primarily be used to fund
the 2018 work programme to FID as detailed below.
2018 Work Programme
The Company has two 100% owned gas hubs, the Blythe and Vulcan
Satellites Hub Developments which consist of five fields with
independently verified 2P reserves of 303 BCF (54 MMBOE). The EIA
has been submitted for the Blythe Hub, which includes the Blythe
and Elgood fields and the EIA for the Vulcan Satellites Hub will be
submitted shortly. The Company continues to target August 2018 for
FID at both hubs with first gas scheduled for Q4 2019 subject to
project financing.
The Company's pre-FID work on the SNS gas hubs project includes:
-
-- Ongoing site survey programme for the Thames Pipeline and
other project pipeline routes, as well as all future platform
locations.
-- Intelligent pigging operation to confirm the integrity of the
decommissioned Thames Pipeline, scheduled for late March.
-- Platform and pipeline FEED.
-- Thames gas reception facility refurbishment FEED work at Bacton terminal.
In addition, the Company is focused on progressing other
value-adding activities during 2018. Initial planning work to drill
the Harvey appraisal well is underway. This includes commissioning
of Pre-Stack Depth Migration of the 3D seismic on the Harvey
licence. Under the current licence IOG has until December 2019 to
drill the well. A final decision as to the timing of this drilling
will be taken later this year.
Alongside this the Company has applied for three new areas in
the UK 30th Offshore Licensing Round and looks forward to a
successful outcome later this year. The Company continues to target
production acquisition opportunities to supplement its SNS gas
development strategy.
Board Changes
Mark Routh is to be appointed Non-Executive Chairman and Andrew
Hockey will now step up from Deputy CEO to lead IOG's executive
function as CEO. As part of the transition, Mark Routh will
continue to be available to provide certain executive functions as
requested by the Company for a minimum period of three months which
may be extended by the parties each quarter as required.
Notice of General Meeting
The Company has today published and posted to its shareholders a
circular containing a Notice of General Meeting at which
resolutions will be proposed in order to grant authority to the
directors to issue and allot Ordinary Shares to satisfy conversion
of sums drawn down under the New Facility without being required to
offer these Ordinary Shares to shareholders on a pre-emptive
basis.
The General Meeting is to be held at the offices of Shakespeare
Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR on
13 March 2018 at 11:00 am.
A copy of the Circular is available at the Company's website at
www.independentoilandgas.com
-S-
Certain information communicated in this announcement was, prior
to its publication, inside information for the purposes of Article
7 of Regulation 596/2014.
Enquiries:
Independent Oil and Gas plc
Andrew Hockey (CEO) +44 (0) 20 3879
James Chance (CFO) 0510
finnCap Ltd
Christopher Raggett / Anthony
Adams +44 (0) 20 7220
(Corporate Finance) 0500
Camarco +44 (0) 20 3757
Georgia Edmonds / Tom Huddart 4980
Notes
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 in excess of 200 MMcfd (c. 35,000 Boe/d) from its substantial
current portfolio via an efficient hub strategy. Alongside this it
continues to pursue value accretive acquisitions, to generate
significant shareholder returns. All of IOG's licences 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 Mark Routh, IOG's Chairman is the
qualified person that has reviewed the technical information
contained in this document. Mark Routh has an MSc in Petroleum
Engineering and has been a member of the Society of Petroleum
Engineers since 1985. He has over 35 years' operating experience in
the upstream oil and gas industry. Mark Routh consents to the
inclusion of the information in the form and context in which it
appears.
Further information can be found on
www.independentoilandgas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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