IOG PLC (AIM:IOG) shares slumped some 55% after the company downgraded production guidance and a well was suspended amidst "fluid loss" problems.
The North Sea firm, in a statement, told investors that the Southwark A1 well has been “securely suspended”.
The statement comes after it was determined that fluid losses from the well had not been "sufficiently cured" to drill ahead safely and the resulting delays have impacted the available time for drilling, before the scheduled arrival of a hydraulic stimulation vessel which will now move on to work on the A2 well.
"Drilling the Southwark A1 well has continued to be very challenging with further fluid losses at the base of the Bunter Shale,” said chief executive Andrew Hockey.
“To preserve the opportunity to deliver first gas in this quarter, we have decided to suspend operations on A1 in order to ensure that A2 stimulation work proceeds in the scheduled window."
IOG now expects to deliver first gas from Southwark, from the A2 well, by mid-December (within Q4 as targeted previously).
Elsewhere, production guidance for the second half of 2022 has been slashed to 22mln-28mln cubic feet gas per day, from 30mln-50mln previously.
Presently, the company’s average production rate is 28.6mln cubic feet per day from the Blythe and Elgood fields. Volumes are constrained by "aqueous liquids production" at the Blythe field and associated liquids handling capacities, the company noted.
Meanwhile, at the Elgood field, production and pressure data is being assessed for the six-month period since it came online. The company noted that daily volumes recently fell below 10mln cubic feet and rates are expected to decline further by year end.
Analysis by the company suggests that ultimate recoveries from Elgood may reduce to around 7.5bn cubic feet, of which some 4bn has been produced to date.
“Latest analysis indicates that the Blythe H1 well will ultimately recover 29 BCF, given limited connectivity to other parts of the field and that Elgood is a smaller structure than previously estimated, with projected ultimate recovery of 7.5 BCF,” Hockey added.
“In this context, we have reforecast 2H 2022 production guidance to 22-28 mmscf/d.”
The company also noted that the Saturn Banks facilities are to be shut-in for four weeks to enable connection with Southwark.