Independent Oil & Gas PLC Operational Update (6855U)

TIDMIOG

RNS Number : 6855U

Independent Oil & Gas PLC

31 July 2020

31 July 2020

Independent Oil and Gas plc

Operational Update

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 provide an operational update for July 2020.

Platforms

-- Fabrication of the Phase 1 Southwark and Blythe platforms continues to progress well, with a two-shift system remaining in place to manage Covid-19 restrictions

-- Southwark cellar and sub-cellar decks have been fabricated and painted, with deck stacking expected early next week

-- Southwark mezzanine and weather decks are on target for timely delivery by the sub-contractor, and jacket fabrication will also commence shortly

   --      Hydrate inhibitor tanks have been delivered and installation has commenced 

-- Crane pedestals have been built and delivered, and fabrication of helidecks and suction piles is also progressing well

   --      Formal platform contract award is expected imminently 

SURF

-- Detailed preparations for installation of Phase 1 pipelines and Elgood umbilical continue with Subsea 7 and supporting contractors

-- Welding of 12-inch Blythe and 6-inch Elgood reel lay pipelines is underway at Subsea 7 spool base in Leith ahead of planned installation later this quarter

   --      Seabed survey for pipeline crossings completed in preparation for pipelay campaign 

-- 6km 24-inch pipeline extension from the Thames Pipeline to Southwark is expected to be installed in first half of 2021

-- All associated regulatory consent processes ongoing, with permits for the 12-inch line being updated to align with latest crossing design and installation techniques

Drilling

-- Competitive selection process for the jack-up rig for the five-well Phase 1 drilling programme has advanced to final post-tender technical and commercial clarifications, assisted by Petrofac

   --      Pre-Drill Data Packages for all wells are complete and detailed well design is progressing 

-- Several awards made and orders placed for critical drilling services and tangibles, and tender processes also underway for numerous others, including cementing, drilling & measurements, conductor/riser analysis, surface wellheads & trees and subsea wellhead tooling

-- Pre-drill rig site survey for Elgood subsea well is underway and expected to complete this week

Onshore

-- Engineering work and procurement is accelerating for the refurbishment of the Thames Reception Facilities ("TRF") at Bacton Gas Terminal ("BGT")

-- Clean-out of the existing TRF slugcatchers is complete, with less than expected residues encountered, paving the way for full internal inspection in August

-- Preparations are ongoing for tie-in activities during a scheduled BGT shutdown later this year

-- Full suite of necessary commercial agreements with BGT operator Perenco UK Limited continues to be progressed

-- IOG onshore team continues to optimise and adapt planned activities where necessary to work efficiently around the current Covid-19 restrictions at Bacton

Subsurface & Licences

-- Seismic reprocessing to further improve subsurface imaging of the Vulcan Satellites area (Southwark, Nailsworth and Elland fields) is on track for completion by Q4 2020, in order to optimise field developments and well designs

-- Harvey and Redwell seismic reprocessing is expected to provide updated volumetric estimates by Q4 2020, to support plans for high-return potential incremental developments

   --      Equivalent work on Goddard and Abbeydale assets also projected to complete in 1H 2021 
   --      Final determination of Southwark, Blythe and Elgood fields confirmed by OGA 

-- Results of targeted applications for nearby blocks submitted in the 32(nd) UK Offshore Licence Round awaited from the Oil & Gas Authority (OGA) in due course

Andrew Hockey, CEO of IOG, commented:

"I am pleased to provide this operational update to keep our investors informed on Phase 1 progress and wider business development. Amid the challenges of Covid-19 and the wider macroeconomic environment, the IOG team and our contractors and suppliers continue to work hard across the board to safely and efficiently execute the four key project elements - Platforms, SURF, Drilling and Onshore - and bring Phase 1 into production in Q3 2021. This in turn will catalyse our further value creation strategy, adding on higher-return incremental investments to our established infrastructure and using cost efficiencies to strengthen cash flows.

To that end, we are also making good progress with the seismic reprocessing work to advance our subsurface interpretations of all pre-development assets in the IOG portfolio, including Harvey, Redwell, Nailsworth, Elland, Goddard and Abbeydale. If successful, the additional nearby discovered resources that we have specifically targeted in our 32(nd) Round applications could also create further portfolio upside."

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)   [phone] 
finnCap Ltd 
 Christopher Raggett 
 Simon Hicks                                     [phone] 
Peel Hunt LLP 
 Richard Crichton 
 David McKeown                                   [phone] 
Vigo Communications 
 Patrick d'Ancona 
 Chris McMahon 
 Simon Woods                                     [phone] 
 

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

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July 31, 2020 02:00 ET (06:00 GMT)