IOG PLC – IOG – Interim Results

IOG PLC – IOG – Interim Results

IOG plc ("IOG" or the "Company" or "Group") (AIM: IOG.L), the Net Zero UK gas and infrastructure operator focused on high return projects, is pleased to present its unaudited interim results for the six months ended 30 June 2021.


Corporate and Operational Highlights

·      Core Project and associated Thames infrastructure renamed as the Saturn Banks Project and Saturn Banks Pipeline System ("SBPS"), a reference to local seabed features in the Southern North Sea ("SNS")

·      Fabrication, transportation and installation of both the Saturn Banks Phase 1 Normally Unmanned Installations ("NUIs") at Blythe and Southwark successfully completed

·      Key subsea installation activities include laying of 12" Blythe line and 6" Elgood line, which are to be connected to the Blythe platform and Elgood wellhead ahead of First Gas  

·      Phase 1 development drilling campaign kicked off with spud of Elgood well 48/22c-7 in April 2021 by the Noble Hans Deul jack-up rig, with Petrofac as Well Operator and Schlumberger as key drilling services contractor

·      ODE Asset Management awarded the Phase 1 Duty Holder contract for Installation and Pipeline Operator, as well as facilities operations and maintenance ("O&M")

·      Refurbishment and recommissioning process for the co-owned Saturn Banks Reception Facilities continued to progress at the Bacton Gas Terminal ("BGT") to prepare for First Gas

·      3D seismic reprocessing to Pre-Stack Depth Migration ("PSDM") significantly improved the potential for two new incremental high-return gas hubs, a northern hub in P2438 and a southern hub in P2442

o  In licence P2438, gross management estimated 2C contingent resources at Goddard increased from 108 billion cubic feet equivalent¹ ("Bcfe") to 132 Bcfe, with Southsea prospect also identified  

o  In licence P2442, gross management estimated 2C contingent resources at Abbeydale increased from 6 Bcfe to 23 Bcfe

o  Kelham North and Kelham Central structures in licence P2442 with gross management estimated prospective resources of 36 Bcfe and 42 Bcfe, with 80% and 70% Geological Chance of Success ("GCoS"), respectively

o  Thornbridge prospect also identified in licence P2442 with gross management estimated prospective resources of 58 Bcfe and 32% GCoS

o  Both the P2438 and P2442 licences are held 50:50 between IOG and its Joint Venture ("JV") partner CalEnergy Resources Limited ("CER"), and operated by IOG      

·      Further organisational strengthening in key positions, notably Chief Operating Officer David Gibson


Financial Highlights

·      Cash balance at period end of £59.0 million (31 December 2020: £80.4 million), including restricted cash of £3.4 million (31 December 2020: £67.0 million)

·      Post-tax profit for the period of £0.2 million (30 June 2020: £3.6 million loss)

·      Group net debt2 at period end of £32.2 million (31 December 2020: £14.1 million)

·      Phase 1 development carry from JV partner CER fully utilised in Q2 2021

·      Further €65.8 million (£59.2 million equivalent) drawdowns made from the senior secured bond ("Bond") escrow account for development expenditure, against operational milestones as planned, completing the full drawdown of the escrow account

·      These interim results are presented on a Going Concern basis further to management's reasonable expectation that the Company continues to have sufficient funding to deliver First Gas

Post-Period End Highlights

·    Elgood subsea well flowed successfully on clean-up at a maximum rate of 57.8 mmscf/d gas and 959 bbl/d condensate through an 80/64th inch choke

·    Blythe well spudded on 2 August 2021 and is expected to be completed within three months

·    Gas sales agreement ("GSA") signed with Gazprom Marketing & Trading ("GM&T") for the first two years of Elgood and Southwark production, plus Nailsworth and Elland, after a competitive offtake process 

·    Commitment to Scope 1 & 2 Net Zero from 2021 with Emissions Assessment demonstrating the very low emissions profile of the Saturn Banks Project Phase 1

·    Elgood umbilical laid as part of ongoing summer 2021 subsea installation campaign 

·    Safety Cases for the Blythe and Southwark platforms accepted by the UK Health and Safety Executive ("UK HSE")


Expected Future Activity

·      Phase 1 First Gas expected in Q4 2021 on completion of the Blythe well and onshore recommissioning activities

·      Pipelay campaign to install 6km extension of the 24" Saturn Banks pipeline to the Southwark field expected in Q1 2022, ahead of Southwark first gas expected in Q2 2022


Billion cubic feet equivalent ("Bcfe") incorporates gas plus condensate based on a ratio of 5.8 thousand cubic feet (mcf) per barrel of condensate    

Net debt is defined as restricted cash (£3.4 million) plus cash and cash equivalents (£55.6 million) plus financial assets (£1.4 million), less outstanding loans (£92.6 million)


Andrew Hockey, CEO of IOG, said:

"Over 2021 to date we have delivered a series of key Phase 1 progress milestones on the path to First Gas in Q4. To reach this target two years after FID amid a prolonged global pandemic will be a fantastic achievement by the IOG team. I would like to thank them for their continued hard work and dedication in delivering on our ambition to be a safe, efficient, low-carbon developer and producer of high-value gas, whilst also recognising the support and collaboration of our Joint Venture partner CER, contractors and regulators.


Having installed the Blythe and Southwark platforms and successfully tested the Elgood well at 57.8 mmscf/d gas and 959 bbl/d condensate, the Blythe development well is now progressing to plan, with Southwark to follow. Beyond Phase 1, we are working up the excellent potential to expand our Saturn Banks Pipeline System with further high-return gas hubs. Alongside this, we were very pleased to confirm our very low emissions operating model and commitment to Scope 1 and 2 Net Zero from 2021."

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