IOG PLC (AIM:IOG) shares again plummeted as its well problems in the North Sea deepened, leaving management “very disappointed”.
Today’s news is that an intervention has significantly reduced water flows from the Southwark A2 well but crucially, this has not resulted in a greater flow of gas from the well.
The small-cap firm, in a statement, said that water flows from the well reduced to 380 barrels a day after remediation from 1,500 barrels a day before, but stabilised gas rates remained limited to 2.5mln cubic feet per day.
Such rates do not justify hooking Southwark A2 up for production currently.
IOG’s technical team will now return to the drawing board to consider the feasibility of cycled production and alternative longer-term remediation strategies.
Rupert Newall, IOG’s chief executive, described the latest result as “a very significant departure from our plans and expectations”.
The company is now moving its immediate attention to the Blythe H2 well which is planned to increase production rates and increase reserves recovery at the company’s Blythe field, as well as alleviate onshore water handling requirements.
Significantly, IOG told investors it is now reviewing its capital expenditure programme and will provide further updates in due course.
On AIM, the small-cap North Sea share was down 36.25%, losing 2.9p to trade at 5.1p in Monday’s early deals. At this level the company is valued by the market at just under £26.5mln.