TIDMIOG
RNS Number : 5792L
Independent Oil & Gas PLC
01 May 2020
1 May 2020
Independent Oil and Gas plc
Project & Corporate Update: FDP Approval
Independent Oil and Gas plc ("IOG" or "the Company"), (AIM:
IOG.L), the development and production company focused on becoming
a substantial UK gas producer , is pleased to announce that the UK
Oil & Gas Authority ("OGA") has approved the Core Project Phase
1 Field Development Plan ("FDP"). The Company also provides a
comprehensive project and corporate update.
Highlights
-- The OGA has approved the Core Project Phase 1 FDP - a major
milestone for IOG and its partner CalEnergy Resources (UK) Ltd
-- Full contract awards are expected shortly for key Phase 1
workstreams underway since FID, including platform fabrication,
pipelay and subsea work, and well management
-- Project execution activities remain on track and at present
there is no impact to schedule from the ongoing industry and
macroeconomic turbulence
o Safety of staff and contractors remains the primary concern -
Covid-19-related risks being proactively identified and managed
o Working with suppliers to ensure social distancing is in
effect at all relevant sites, to maintain safe project delivery
o Further strengthened focus on cost savings across all
activities
-- Construction activities are ramping up to deliver the
Southwark and Blythe platforms on schedule in 1H 2021
-- Offshore pipelay campaign remains on schedule for 2H 2020
with necessary applications submitted to regulatory bodies and the
line pipe already transported to the UK
-- Competitive rig tender for the Phase 1 drilling programme is
progressing well, supported by the Company's selected well
management contractor
o Detailed well and completion design work is ongoing in
parallel
-- Acquisition and testing of two unused, refurbished subsea
trees and wellheads has been successfully completed
-- Detailed engineering and planning continues for refurbishment
of the Thames Reception Facilities (TRF) at Bacton, with initial
works expected to commence in Q2 2020 despite access restrictions
due to Covid-19
-- Further seismic reprocessing work is underway to improve
subsurface imaging of Vulcan Satellites, Goddard and Abbeydale
-- Technical work continues on the 40 Bcfe Harvey and 100 Bcfe
Redwell structures to support plans for high-return potential
incremental developments
-- 32(nd) Round licence application interviews completed with
OGA, with results now expected by early summer; several other
nearby growth opportunities remain under evaluation
-- The AGM management presentation is now available on the IOG website at www.iog.co.uk/investors/results-reports-and-presentations/
Andrew Hockey, CEO of IOG, commented:
"We are very pleased to have received this milestone approval
for our core UK gas project. Such government endorsement brings a
welcome boost to the UK offshore industry and supply chain given
the current environment. This innovative low-carbon project,
re-using previously decommissioned infrastructure to develop
otherwise stranded domestic gas resources, is a definitive example
of Maximising Economic Recovery (MER), in line with UK government
strategy.
In such a turbulent and unpredictable environment, we remain as
focused as ever on leveraging our core strengths: funded status,
proven resource base, infrastructure ownership, excellent partner,
low unit costs, low carbon footprint and experienced team with a
clear value creation strategy.
The safety of our staff, suppliers and their families remains
our top priority and we have continually reviewed and upgraded our
procedures to ensure they reflect government guidance and maintain
safe working environments. As Phase 1 execution ramps up, we have
avoided any schedule impact to date from Covid-19 and are also
targeting cost savings even more proactively to help deliver our
project on time and budget."
Corporate Update
The Company adapted to remote working quickly and seamlessly in
March, in response to government guidance. Systems implemented to
ensure efficient internal and external collaboration have proved
robust and reliable. The organisation is functioning well despite
current restrictions and any extended lockdown is expected to be
managed likewise. The planned post-FID organisation is in place,
with high quality hires having filled the remaining key technical
roles to ensure optimal project delivery.
Regulatory and Commercial
The Phase 1 EIA review process has been successfully completed
by the Offshore Petroleum Regulator for Environment and
Decommissioning (OPRED), which is part of the Department for
Business, Enterprise and Industrial Strategy (BEIS).
Further to this, the Phase 1 FDP was approved and all necessary
Phase 1 Fields Production Consents granted by the Oil and Gas
Authority (OGA) on behalf of the UK government, on the afternoon of
30 April.
The necessary Pipeline Works Authorisation applications (PWAs)
and other required consent applications have been submitted for the
pipelay activities planned for later this year and are in progress
with the relevant bodies.
The suite of commercial agreements relating to, among others,
pipeline proximity and crossing, procurement, onshore refurbishment
activities and terminal processing are either completed or being
progressed with the relevant third parties as planned.
Platforms
Fabrication activities for the two Phase 1 Normally Unmanned
Installation (NUI) platforms continue to ramp up, alongside
procurement of major equipment items and deliveries of bulk
materials. With FDP approval in place, a full engineering,
procurement and construction (EPC) contract is expected to be
signed with the platform contractor in the near future, superseding
the current limited commitment letter.
At the platform fabrication yard, a two-shift system is in place
to optimise Covid-19 restricted working conditions and ensure work
progresses as planned. Expected platform delivery dates have not
currently been affected by Covid-19 despite pressures on the supply
chain.
Subsea, Umbilicals, Risers and Flowlines (SURF)
Good progress continues with the major long lead subsea and
pipeline items. The 24-inch (Southwark) and 12-inch (Blythe) line
pipe have now been manufactured and delivered from Greece to the UK
for storage prior to loading onto the pipelay vessels in the
summer. With FDP approval in place, the full EPC contract award to
the main SURF contractor is also expected to supersede the current
limited commitment letter in the near future.
Planning and preparation continue for the offshore pipelay
programme in 2H 2020. The PWA applications for laying the 24-inch
and 12-inch extensions to the Thames Pipeline have been submitted
and formally accepted for review by the OGA. The approval process
for such applications entails standard internal and public
consultation periods, the first of which is underway. PWA approvals
are expected towards the end of 1H 2020, enabling the pipelay
programme to proceed as planned thereafter.
Drilling
IOG's competitive tendering process for the jack-up rig for the
five-well Phase 1 drilling programme is also progressing well, with
a view to securing attractive terms given current industry
conditions. Preparations are also underway for tendering offshore
drilling services and detailed well and completion design work is
likewise proceeding on schedule. The selected well management
contractor is now well established, supporting the IOG in-house
drilling and subsurface teams with detailed well planning and
design, contracting strategy and regulatory processes. Further
details will follow after contract signing.
The two unused and refurbished subsea wellheads and trees
purchased by the Company have been successfully tested. These are
typically long lead items. As previously mentioned, one set is to
be used on the Elgood subsea well and the other available for
Harvey or other incremental development opportunities. The Company
has also agreed a contract to procure the control system for the
Elgood subsea well.
Onshore
Front-End Engineering and Design (FEED) studies on the TRF
refurbishment at Bacton Gas Terminal (BGT) are ongoing, with good
co-operation between IOG, the BGT operator Perenco UK Limited (PUK)
and the engineering contractor Worley. Tendering and planning
activities are also being progressed for the environmental,
geo-technical and other surveys required at the TRF site. Initial
preparatory works at the TRF are expected to commence in May
2020.
The Covid-19 pandemic has necessitated operating protocols to be
temporarily revised at BGT, which as one of the UK's main gas
terminals is a site of national strategic importance. IOG is
working proactively with PUK to resolve any potential disruptions
which might arise to planned TRF activities.
Portfolio Development
Further seismic reprocessing and interpretation of the Vulcan
Satellite fields and Goddard and Abbeydale discoveries is underway.
This work will enhance the Company's subsurface imaging and help to
optimise field developments and well designs.
In addition, the further technical work to progress the Harvey
(P2085) and Redwell (P2441) licences is also proceeding. The
objective is to obtain more accurate recoverable gas volumes via
improved reservoir modelling following integration of the dataset
acquired in the Harvey well. As previously indicated, scoping
economics based on current mid-case recoverable gas estimates of 40
Bcfe at Harvey and 100 Bcfe at Redwell indicate high-return
incremental investments, benefiting from substantially lower capex
requirements to integrate with the Core Project assets. The results
of this work will help to inform IOG's development and commercial
strategy for these assets.
The Company has made detailed presentations to the OGA in
support of its 32(nd) Offshore Licensing Round applications and,
based on latest indications, results are expected by early summer.
Several other nearby growth opportunities remain under evaluation.
As ever, the Company's approach is to prioritise the highest
returns from any incremental investments.
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)
Rupert Newall (CFO)
James Chance (Head of Corporate Finance & IR) +44 (0) 20 7036 1400
finnCap Ltd
Christopher Raggett (Corporate Finance)
Simon Hicks (Corporate Finance)
Camille Gochez (Corporate Broking) +44 (0) 20 7220 0500
Peel Hunt LLP
Richard Crichton
David McKeown +44 (0) 20 7418 8900
Vigo Communications
Patrick d'Ancona
Chris McMahon
Simon Woods +44 (0) 20 7390 0230
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 Bcfe(1) + 2C gas
Contingent Resources of 108 Bcfe(2), 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 gross unrisked prospective gas resources of 73 Bcfe(2) at
Goddard. Alongside this IOG has management estimated mid-case
recoverable gas volumes of 40 Bcfe and 100 Bcfe at the Harvey and
Redwell licences and continues to pursue value accretive
acquisitions to generate significant shareholder returns.
(1) ERC Equipoise Competent Persons Report: October 2017,
adjusted by Management to account for updated project timing and
compression
(2) ERC Equipoise Competent Persons Report: October 2018
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.
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END
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