Independent Oil &Gas - Project & Corporate Update
Project & Corporate Update
· Key Core Project Phase 1 infrastructure development workstreams are proceeding to plan
o Platform designs at advanced stage and construction activities now underway
o Pipelay campaign for lines connecting to Thames Pipeline scheduled for 2H 2020
o Onshore Thames Reception Facilities refurbishment activities ramping up; FEED studies being executed by Worley
· Competitive tendering ongoing for rig and offshore services for five-well Phase 1 drilling programme, with increasingly favourable contracting conditions
o Final selections expected in Q2 2020 and drilling to start in Q1 2021
· Environmental Impact Assessment (EIA) and Field Development Plan (FDP) approvals expected in
· Average carbon intensity of
· Ongoing work on 40 Bcfe Harvey and 100 Bcfe Redwell structures indicate strongly value-accretive incremental investment opportunities
o Additional seismic reprocessing underway to support Harvey development plans
o Further reprocessing also being done on Vulcan Satellites, Goddard and Abbeydale
· Strengthened team pursuing portfolio development activities against stringent value criteria
o 32nd Round OGA interviews scheduled in March; results expected in mid-Q2 2020
o Several other nearby growth opportunities under evaluation
· Audited full-year financials planned to be released on
· An updated Corporate Presentation is available on the IOG website www.iog.co.uk
Core Project Phase 1
Detailed design for the two Phase 1 Normally Unmanned Installation (NUI) platforms is well advanced and fabrication activities are now underway. This work is proceeding as planned under a Letter of Limited Commitment (LoLC), which will be converted into a full contract upon FDP approval.
Most bulk materials for pipelines connecting Phase 1 fields to the main Thames 24" export line have been ordered and plans are in place for a pipelay programme in the second half of 2020. Pipeline and subsea activities are likewise being undertaken under a LoLC until the contract is signed.
Agreement in principle has been reached to purchase two subsea wellheads, trees and associated equipment, with one set to be used on the Elgood subsea well and the other available for Harvey or other incremental development opportunities.
Following a competitive process, IOG has selected an established
Proposals from several well-known rig contractors are undergoing technical and commercial evaluation as part of a competitive tender process for the Phase 1 jack-up drilling rig. Detailed commercial discussions are planned over the coming weeks, with commodity price volatility likely to imrpove the competitive landscape for rigs and offshore services.
Refurbishment of the onshore Thames Reception Facilities at Bacton is proceeding with engineering contractor Worley progressing FEED studies and close collaboration with
Since taking Phase 1 Final Investment Decision (FID) in Q4 2019, IOG has strengthened its lean organisation in line with its status as Operator of a substantial
Following further detailed planning of offshore infrastructure, the Company was required to undertake an additional public consultation period under the Phase 1 EIA completion process, in line with standard regulatory procedures. EIA approval is expected soon after this consultation period ends on 27 March. This in turn is a key prerequisite for OGA approval of the Phase 1 FDP, which is therefore expected during April. The Company is in regular ongoing dialogue with the relevant
Portfolio Development Activities
The Company is progressing its stated plans for further detailed analysis of the Harvey (P2085) and Redwell licences (P2441) to more accurately define in-place gas volumes via improved reservoir mapping and fault imaging. This entails further reprocessing of the 2018 Pre-Stack Depth Migration (PSDM) volume following integration of the 48/24b-6 Vertical Seismic Profiling (VSP) data into the 3D seismic volume.
Scoping economics for the currently estimated mid-case recoverable gas volumes of 40 Bcfe at Harvey and 100 Bcfe at Redwell indicate high-return incremental investments. These benefit from substantially lower capex requirements to integrate with the
IOG is also undertaking further seismic reprocessing and interpretation on the Vulcan Satellite fields, as well as Goddard and Abbeydale, to further advance the subsurface mapping and progress detailed well design.
In addition, comprehensive preparations have been made for engagement with the
Finally, the Company is evaluating several other nearby growth opportunities, taking a disciplined approach to prioritise the highest incremental returns to shareholders.
In terms of carbon intensity, IOG has well-established inherent advantages, including re-use of onshore and offshore infrastructure and use of environmentally and cost efficient small unmanned platforms in shallow water depths (average 27 metres).
The Company has calculated that its
In addition, the pivot towards increased use of gas to replace heavier fuels as drivers of economic growth over the next decades has become a major Energy Transition theme. As a pure domestic gas producer, IOG stands to make a positive contribution by reducing requirements for higher-carbon footprint fuels, which includes gas imported as LNG or via pipeline.
"Amid highly volatile market conditions, we are very pleased that IOG's core strengths and competitive advantages remain intact: fully funded to cash flow, proven gas resource base, ownership of key infrastructure, strong team, high calibre joint venture partner, robust project economics with low opex, an exceptionally low carbon footprint, and a clear value creation strategy. These advantages ensure we can maintain a rigorous focus on effective project execution, including utilising market dynamics to improve terms for key contracts.
With investors increasingly focused on ESG issues, we are proud to state that, without any adaptation of our existing plans, IOG will be a clear industry leader in carbon intensity, with an estimated average of just 0.2 kg CO₂/boe for our
Furthermore, our ongoing technical work on the Harvey-Redwell Area gives us confidence that these licences will deliver substantial additional value to shareholders. We continue to progress our plans to generate high return incremental investments in line with our stated value creation strategy."
Certain information communicated in this announcement was, prior to its publication, inside information for the purposes of Article 7 of Regulation 596/2014.
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IOG owns and operates a 50% stake in substantial low risk, high value gas reserves in the
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