TIDMIOG
RNS Number : 1640E
Independent Oil & Gas PLC
04 November 2020
4 November 2020
Independent Oil and Gas plc
Corporate and Operational Progress One Year on from FID
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 update on the
substantial progress in the year since Final Investment Decision
(FID) on Phase 1 of its Core Project in the UK Southern North Sea
(SNS).
Highlights
- Team significantly strengthened in 2020 to deliver successive phases of growth
- Phase 1 development on schedule for First Gas in Q3 2021
- Blythe and Elgood pipelay campaign ongoing, expected to complete later this month
- Rig signed on attractive terms with extension options, with first well to spud in Q1 2021
- Platform fabrication and Thames Reception refurbishment works continue to progress
- Programme of 1200km(2) SNS 3D seismic reprocessing nearing completion
- JV partnership continuing to function effectively
- Adapting to increased Covid-19 restrictions while seeking to minimise disruption
- IOG has released a new Investor Presentation, available at: www.iog.co.uk/investors/results-reports-and-presentations
Corporate
Over the year since FID, IOG has significantly strengthened its
team to support its planned growth into an established UK North Sea
operator and material gas producer, delivering strong returns for
shareholders. The team has evolved from a small core of employees
pre-FID into a fit-for-purpose organisation of over 30 employees,
supported by over 20 specialist consultants and technical
experts.
The operational team focused on construction, installation and
commissioning of the key Phase 1 infrastructure, both onshore and
offshore, has been suitably reinforced, with an ongoing focus on
project optimisation. In parallel, a high-calibre drilling
department has been established, ensuring the Company possesses the
right in-house expertise to lead the design and execution of the
Phase 1 and subsequent drilling campaigns. The drilling team is
working with top tier contractors, including Petrofac, Noble
Corporation and others yet to be announced.
IOG has also built an experienced in-house subsurface team
comprising all relevant disciplines to optimise its asset base and
evaluate further opportunities. Other key areas including Health,
Safety and Environment, Contracts and Procurement, and Finance have
likewise been strengthened via new hires with deep and relevant
experience. This organisational build-out is central to the
Company's plans to deliver multiple phases of growth as a
best-in-class, low-carbon North Sea operator.
IOG's relationship with its joint venture partner CalEnergy
Resources (UK) Limited (CER), the subsidiary of Berkshire Hathaway
Energy Company, has proven to be effective and constructive over
its initial year, pointing to the potential for a long and fruitful
collaboration.
Covid-19
As the Covid-19 pandemic necessitates a further lockdown, IOG is
adapting dynamically to the practical challenges during this key
phase, with platform construction ongoing in the Netherlands,
subsea installation offshore in the SNS, onshore refurbishment at
Bacton and planning for forthcoming drilling operations. In that
context, our three fundamental priorities remain as throughout:
protecting our people, delivering the project and ensuring business
continuity.
The Company is continually assessing the right balance between
these key objectives as government guidelines and business needs
evolve. Appropriate measures are being determined primarily by the
nature and usual location of work undertaken, with management
activities differentiated from physical construction and
installation operations. While every effort is being made to
maintain business as usual, a prolonged disruption to working
practices over coming months could put additional burden on the
supply chain and impact the Company's ability to operate most
effectively.
Core Project Phase 1
Platforms
-- Fabrication of the Phase 1 Southwark and Blythe platforms at
HSM's yard in Schiedam continues on track for mechanical completion
in Q1 2021 and installation in Q2 2021
-- Southwark and Blythe deck stacking and internal fit-out is
progressing and both jackets are also well underway
-- Covid-19 restrictions have been strengthened at the yard
given the increased risks over recent weeks, but work to date has
not been interrupted
SURF
-- Pipelay campaign for the 6-inch Elgood and Blythe 12-inch
lines connecting to the Blythe platform and 24-inch Thames Pipeline
respectively is expected to complete later in November
-- This follows extensive preparatory work at IOG's pipeline
routes and at crossing points for other lines, as per regulatory
requirements, and line pipe welding and spooling onshore at Subsea
7's Leith base
-- Weather conditions during the campaign to date have been
relatively unsettled, resulting in some challenging conditions
offshore
-- Other required subsea tie-in equipment and the Elgood
umbilical are being fabricated or available for installation
Drilling
-- Contract signed with Noble Corporation for the Noble Hans
Deul jack-up rig to drill the five Phase 1 wells, with options for
up to two further wells on favourable terms
-- Detailed well design and permitting on track to complete
ahead of spudding of first well in Q1 2021
-- Other key drilling services, logistics and tangibles also being contracted in parallel
-- Petrofac approved as Phase 1 Well Operator by the Oil and Gas Authority (OGA)
Onshore
-- Refurbishment works progressing on the Thames Reception
Facilities (TRF) at Bacton Gas Terminal (BGT)
-- Working closely with terminal operator Perenco to maximise
efficiency of TRF recommissioning and minimise requirement for new
equipment
-- Clean-out and inspection of TRF slug catchers completed to pave the way for re-use
-- Key tie-in activities to be undertaken during the scheduled BGT shutdown this quarter
-- Competitive gas sales tender process to be concluded during first half of 2021
Portfolio and Business Development
The programme of 3D seismic reprocessing to Pre-Stack Depth
Migration (PSDM) on the Company's portfolio is getting closer to
completion, with an aggregate area of over 1200km(2) covered.
Interpretation of this new data will materially enhance subsurface
understanding of the Company's assets, helping to optimise field
developments and inform well designs. An initial update on this
work is anticipated before year end.
In the recent 32(nd) Licensing Round the Company enjoyed another
100% success rate, being offered every block for which it applied.
Most notably this includes two new operated gas discoveries,
Panther and Grafton, which lie adjacent to the existing portfolio,
as 50% operator in partnership with CER (50% non-operator). These
discoveries have management estimated 46 Bcfe and 35 Bcfe mid-case
recoverable gas resources respectively. Upon acceptance, formal
licence awards will follow in due course.
Andrew Hockey, CEO of IOG, commented:
"I am proud of our extensive progress on many fronts since we
completed the farm-out to our partner CalEnergy Resources and took
FID this time last year. Whilst recognising the challenges of
Covid-19, I am equally excited about the year ahead with the
transition to production and cash flow from Q3 2021. With a greatly
strengthened team working hard to deliver Phase 1 while progressing
plans for our pre-development asset portfolio, we are laying the
foundations to deliver sustained value to shareholders.
The ongoing technical re-evaluation of the full IOG portfolio by
our in-house subsurface team - who have extensive SNS experience -
will underpin our wider growth ambitions, enabling further value
creation via incremental investments, additional licensing and
other potential nearby redevelopments and acquisitions."
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
Simon Hicks +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. In
September 2020 IOG was also offered four further Southern North Sea
blocks adjacent to its existing portfolio which it had applied for
in the 32(nd) Offshore Licensing Round.
(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
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