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UK: Independent Oil and Gas announces final audited results for Y/E 31 December 2019


26 Mar 2020

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Independent Oil and Gas, the development and production company focused on becoming a substantial UK gas producer, has announced its final audited results for the Year Ended 31 December 2019.

2019 Highlights

Corporate and Operational  

  • Farm-out of 50% of Core Project to CalEnergy Resources Limited ("CER") with IOG retaining operatorship of all its assets
  • Acquisition of the onshore Thames Reception Facilities ("TRF") at Bacton Gas Terminal
  • Core Project Phase 1 Final Investment Decision (FID) taken in Q4 2019 with a view to first gas in Q3 2021
    • Development works kicked off across all four key elements: platforms, subsea, drilling and onshore
  • Harvey appraisal well, 48/24b-6, drilled safely in Q3 2019  
    • Initial analysis indicates c.40 Bcfe mid-case recoverable volumes at Harvey and c.100 Bcfe at Redwell
  • Strengthening of board, management and operational team
  • Alliance with CER for further Southern North Sea ("SNS") business development
    • Number of licence applications in 32nd Offshore Licensing Round in alliance with CER

Financial  

  • £40 million Farm-out up-front payment received from CER
    • £17.1 million used simultaneously to repay existing debt
  • £125 million of development carry committed under Farm-out agreement
    • £60 million for Phase 1 and £65 million for Phase 2  
  • €100m 5-year senior secured bond issue successfully raised from Nordic, European, UK and Asian institutional investors and subsequently listed on Oslo Børs 
  • Institutional equity fundraise, board/management subscription and Open Offer completed, raising combined gross proceeds of £18.9 million
  • Cash balance at period end of £98.3 million (2018: £0.7 million), including restricted cash of £82.0 million
  • Post tax profit for the year of £15.0 million (2018: Loss £5.6 million)
  • Group net cash at year end £8.0 million
  • Converted 8p convertible loan into Ordinary Shares at Farm-out completion
  • Restructured 19p convertible loan into a long-term, unsecured, non-interest bearing convertible Loan Note Instrument

Board and Management

  • Esa Ikaheimonen appointed as Non-Executive Director
  • Neil Hawkings appointed as Non-Executive Director
  • Rupert Newall appointed as Chief Financial Officer and Executive Director

Post Year End Developments

  • Platform construction activities underway
  • Competitive tender process commenced for jack-up drilling rig for Phase 1 drilling programme
  • Established Well Management Company selected to support IOG's in-house drilling team in delivering best in class well execution 
  • Onshore TRF refurbishment activities ramping up; FEED studies being executed by Worley
  • £60 million Phase 1 development carry and €100 million bond issue being utilised as planned
  • Further seismic reprocessing underway to support plans for Harvey and Redwell licences as incremental developments beyond the Core Project
    • Discussions ongoing as to potential CER participation in these licences following expiry of farm-in option in February 2020
  • Core Project platforms estimated to have industry-leading average carbon intensity at just 0.2kg CO 2 /boe, versus 21kg UK North Sea 2018 average  

Andrew Hockey, CEO of IOG, commented:  

'After a very successful 2019, and despite the unfolding Covid-19 pandemic, we at IOG are looking forwards from a position of fundamental strength to continuing our project execution throughout 2020. The two major financial highlights of last year, the £165 million farm-out to an exceptionally strong partner in CalEnergy Resources and the €100 million bond raise, enabled us to sanction Phase 1 of our substantial UK Southern North Sea Core Project. With funding in place we are firmly focused on cost-effective Phase 1 development execution as well as adding high-return incremental opportunities.

In 2019 we consolidated our competitive advantage in owning our infrastructure with the important acquisition of the Thames Reception Facilities at Bacton. We also safely drilled the Harvey appraisal well, demonstrating our operating capability and the potential to access additional resources and increased shareholder returns through our gas hub strategy. 

The tangible progress made in 2019 reflects both our resilience in overcoming challenges and our drive to seize new opportunities. Such attributes will again prove crucial in this time of unprecedented upheaval. With a strengthened team and a robust low-cost portfolio benefitting from very low carbon intensity, we are well placed not just to survive but to thrive by investing through this cycle. With our balance sheet strength, commitment to the project and CER partnership, we are well positioned to reduce costs in the current low commodity price environment.'

Click here for full announcement

Source: Independent Oil & Gas





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