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IOG plummets as North Sea project financing is delayed

"Unstable" equity markets are a challenge to IOG's funding plans

oil and gas operations
A final investment decision is now expected in the first quarter

Independent Oil and Gas Plc (LON:IOG) shares dropped around 20% in Thursday’s early deals as the North Sea firm cautioned that current oil price volatility and capital market conditions aren’t conducive to deliver its financing plan for the core Southern North Sea project before year-end.

The company, in a statement, told investors that its intention is to fund the project via a senior secured bond issue and an equity-based fundraise.

IOG added that advisors have been engaged to secure the required finance, and, it said that the investment case is compelling.

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Nevertheless, the timeline has slipped into the New Year.

The company said it is technically ready to achieve ‘first gas’ within 20 months of making its final investment decision, and, it is “fully ready” to progress its funding plans early in 2019 as soon as markets stabilize.

The final investment decision is now anticipated in the first quarter of 2019.

“The company considers that the current equity and debt market conditions are not sufficiently stable for IOG to proceed to complete the funding process before the year-end,” said Andrew Hockey, IOG chief executive.

“Having considered carefully and taken due advice, the Board believes that it is in the best interests of shareholders to do so as early as possible in the New Year.

“In our view, this short delay to the existing timetable is likely to enable an optimal funding outcome and maximise the value for shareholders.”

On AIM, IOG shares fell 5.6p or 19.65% to 22.9p.

Quick facts: Independent Oil & Gas PLC

Price: 11.375 GBX

Market: AIM
Market Cap: £54.62 m

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on 17/2/20

2 min read