Operational Update

RNS Number : 5164V

IOG PLC

14 December 2021

 

14 December 2021

IOG plc

Operational Update

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

Andrew Hockey, CEO of IOG, commented:  

"I am pleased to confirm the Noble Hans Deul rig re-mobilised from Dundee back to Southwark in early December as forecast following an efficient repair by Noble Corporation. I look forward to safe and successful execution of the Southwark wells, the first of which is expected to spud in the next week.

Although significant further progress has been achieved at Bacton, final pre-First Gas commissioning activities are now expected to carry over into the early weeks of 2022. My team and I continue to focus all our efforts on ensuring safe and reliable start-up as early as possible at Blythe and Elgood."

Southwark

After successful investigation and repair of the Noble Hans Deul rig leg, the rig was re-mobilised from Dundee port on 3 December and arrived at the Southwark platform 500 metre zone on 9 December. The first Southwark development well is expected to be spudded by the end of this week.

Given the two-month drilling hiatus, First Gas is expected at Southwark by mid-2022 after the planned installation in Q1 of the 6km Saturn Banks pipeline extension to the Southwark platform. The rig is then scheduled to move on to drill the Goddard and Kelham North/Central appraisal wells while analysis of reservoir and production data from Southwark wells 1 and 2 will inform an optimal Southwark 3 well plan.

Saturn Banks Reception Facilities (SBRF) and Phase 1 First Gas

At Bacton, IOG is working proactively with terminal operator Perenco (UK) Limited and on-site contractors to complete the outstanding SBRF recommissioning work to bring Phase 1 gas safely and reliably onstream. Progress has continued despite some difficult recent weather conditions. The new 45 metre emergency vent stack is now installed, electrical and instrumentation activities are ramping up, and powering up and testing of onshore systems is starting imminently. The SBRF are now expected to be ready to receive production in the early weeks of 2022. The final steps to First Gas involve commissioning of end-to-end control and communications systems and backgassing of the pipeline system before opening up the Blythe and Elgood wells in quick succession.

Saturn Banks Project Phase 2

The schedule for concept selection and sanction for the Nailsworth development is planned to be submitted to the Oil and Gas Authority this month. Nailsworth lies 19km north-west of the Southwark field in water depths of 25-40 metres and is expected to be the first Phase 2 field to be developed. Following the interpretation of reprocessed 3D seismic the Company is building new static and dynamic subsurface models to refine its management estimated gross recoverable gas of 64/105/156 billion cubic feet (Bcfe).

Nailsworth gas is expected to be evacuated via the Southwark platform and Saturn Banks Pipeline System in line with IOG's strategy of maximising returns through use of owned infrastructure. IOG and its partner CalEnergy Resources (UK) Limited are assessing the most economically and environmentally attractive concept, bearing in mind nearby potential incremental developments.

Portfolio Management

The Company continues to assess its hopper of incremental opportunities to maximise shareholder returns. These primarily include the potential Northern and Southern Hubs, P2438 and P2442 respectively, for which Goddard, Kelham North and Kelham Central are planned to be appraised in the second half of 2022. In the P2589 licence, 3D seismic reprocessing to Pre-Stack Depth Migration is being initiated to re-map the Panther and Grafton discoveries and evaluate the area's full commercial potential.

In the P2085 ("Harvey") licence, the structure around the 48/23b-2 well has a Most Likely recoverable gas resource of 21 Bcfe. Alongside Phase 2 development activities, IOG sees more material, higher-return opportunities than Harvey to allocate its capital and resources. The Company has therefore decided not to pursue an extension to P2085 beyond its expiry date of 19 December 2021.

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.

Enquiries:

IOG plc Andrew Hockey (CEO) Rupert Newall (CFO) James Chance (Head of Capital Markets & ESG)	[phone]
finnCap Ltd Christopher Raggett / Simon Hicks	[phone]
Peel Hunt LLP Richard Crichton / David McKeown	[phone]
Vigo Consulting Patrick d'Ancona / Chris McMahon / Oliver Clark	[phone]

About IOG:

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.

In December 2020 IOG was also awarded 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.

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

 

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