TIDMIOG
RNS Number : 1589L
Independent Oil & Gas PLC
11 January 2021
11 January 2021
Independent Oil and Gas plc
Corporate and Operational Update
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 provide an early
2021 update.
Highlights
- Specialist in-house discipline heads all now in place; new COO selection process progressing
- Phase 1 remains on schedule for First Gas in Q3 2021
- Blythe and Elgood offshore pipelay campaign executed in Q4 2020
- Detailed well design to complete in Q1 and first development
well expected to spud by early Q2
- Platform fabrication also expected to complete in Q1, before installation in Q2
- Onshore tie-ins to LAPS facilities successfully completed
during Q4 2020 Bacton terminal regular maintenance shutdown
- Gas sales tender process being prepared, with ECC appointed as advisor
- Portfolio technical re-evaluation continues - further update expected later in Q1
- New Climate Change and Sustainability Policy and Social Policy adopted in 2020
Andrew Hockey, CEO of IOG, commented:
"This is set to be another breakthrough year for IOG, when we
deliver our first production and revenue, paving the way for
sustained value generation for shareholders. Having made real
progress in 2020 in difficult conditions, we expect to complete
fabrication of our Phase 1 platforms this quarter and start
development drilling by early Q2. We recently completed important
steps towards achieving First Gas in Q3 including the LAPS tie-ins
at Bacton and the offshore Blythe-Elgood pipelay campaign.
We now have our full development team in place, led by in-house
specialist senior managers across all disciplines. This is
important both for Phase 1 execution and to maximise wider
portfolio value. We also expect to confirm the selection of a
highly experienced new COO in the coming weeks.
IOG's ambition is to be a safe, efficient, low-carbon intensity
gas producer helping to provide reliable domestic energy supply as
the UK transitions to Net Zero by 2050. In that context, we were
pleased to adopt a new Climate Change and Sustainability Policy
late last year and are initiating a comprehensive independent
emissions certification process which we hope will confirm IOG's
low environmental impact business model.
We are also very encouraged by the significant gas market
recovery, with UK NBP day-ahead prices reaching over 55p/therm and
Winter-21 prices over 50p/therm last week - higher than at any
point in 2020."
Corporate Update
IOG continues to respond and adapt as necessary to the evolving
Covid-19 restrictions. In the current lockdown, we remain driven by
our three fundamental priorities: protecting our people, delivering
the project and ensuring business continuity.
In late 2020, IOG completed the process of bringing in house all
discipline lead positions and other specialist staff, from
technical and operational (HSE, subsurface, offshore project
management, engineering and platforms, subsea and pipelines,
drilling, pre-development assets and onshore) to finance, legal,
commercial, and contracts and procurement. The Company also expects
to select a new Chief Operating Officer (COO) in the coming weeks.
In the meantime, the project is being closely managed by Rupert
Newall as Interim Project Director.
This further team strengthening is a key part of the Company's
plan to establish itself as a safe, efficient and low-carbon
intensity gas producer, with the experience and expertise in house
to generate, engineer and execute successive phases of growth for
shareholders.
Further to this objective, in late 2020 the Board approved two
new corporate policies, the Climate Change and Sustainability
Policy and the Social Policy, and an updated Health, Safety and
Environment (HSE) Policy. These policies can all be viewed in full
via the following link: www.iog.co.uk/esg
At the end of 2020, 5,400,000 warrants over 1p Ordinary Shares
in the Company expired unexercised. The number of Ordinary Shares
in issue remains 488,211,155.
Phase 1 Update
Intensive work has continued across all key Phase 1 development
disciplines, as well as increasing project integration activities
focused on efficient completion, installation and commissioning of
infrastructure in conjunction with the drilling programme over the
coming months.
Fabrication of the Phase 1 Southwark and Blythe platforms at
HSM's yard in Schiedam remains on track for mechanical completion
later in Q1 2021. Construction of both jackets is proceeding
alongside installation and testing of topside equipment including
risers, helidecks, controls, communications and integrity
management systems. Transport and installation (T&I) of the
platforms at the field locations is planned for Q2 2021, in
coordination with drilling operations.
Over Q4 2020, IOG's subsea and pipelines contractor Subsea 7
undertook the offshore campaign to install the Blythe 12-inch and
Elgood 6-inch lines. This was a key part of the Phase 1 subsea and
pipelines scope.
Detailed well design for the drilling campaign is on track to
complete in Q1, with the first development well now expected to
spud by early Q2. Contracting of Tier 1, 2 and 3 drilling services,
logistics and tangibles is also now well advanced, while permit
applications and risk assessments continue in parallel.
IOG safely and successfully completed all planned tie-ins to the
Perenco LAPS facilities during the regular maintenance shutdown of
the Bacton gas terminal in November 2020. The wider Thames
Reception Facilities (TRF) process continues onshore at Bacton, for
which ODE, a specialist engineering house with extensive knowledge
of the terminal, has been selected as engineering, procurement and
construction (EPC) contractor.
An updated assessment of expected Phase 1 outturn cost versus
budget is expected later in Q1, once detailed well design is
complete and key operational windows have been further defined.
IOG is also stepping up preparations for a competitive gas sales
tender process for the initial years of production, on behalf of
the IOG-CalEnergy Resources (UK) Limited JV. The Energy Contract
Company (ECC), a specialist gas sales advisor, has been engaged to
assist the process.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
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 21 Bcfe at Harvey. In December 2020 IOG
also accepted a 50% operated stake in Licence P2589, containing the
Panther and Grafton gas discoveries with management estimated 46
Bcfe and 35 Bcfe respectively. In addition IOG continues to pursue
value accretive acquisitions to help 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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