Final Results for the Year Ended 31 December 2020
18 March 2021
Independent Oil and Gas plc
Final Audited Results for the Year Ended 31 December 2020
Independent Oil and Gas plc ("IOG" or "the Company"), (AIM: IOG.L), the UK gas company targeting high returns via an infrastructure-led hub strategy, is pleased to announce its final audited results for the Year Ended 31 December 2020.
Corporate and Operational
· Phase 1 development works extensively progressed across all four key project elements: platforms, subsea, drilling and onshore, with a view to safely and successfully delivering first gas in Q3 2021
· EPCI contract signed with HSM for the Phase 1 Blythe and Southwark normally unmanned installation platforms
o Engineering and fabrication activities progressed through 2020 at HSM's yard in the Netherlands
· Phase 1 SURF scope EPCI contract signed with Subsea
o Fabrication, transportation, preparation and installation of Blythe 12" and Elgood 6" lines completed
· Extensive preparation, contracting and procurement undertaken for the five-well Phase 1 drilling programme
o Rig contract awarded to Noble Corporation's Noble Hans Deul jack-up following a competitive selection process
o Petrofac was awarded a well management contract and approved as Well Operator for Phase 1
o Detailed Well Design initiated and extensive Tier 1, 2 and 3 services and tangibles contracts awarded
· Engineering, procurement and construction work progressed at the Thames Reception Facilities (TRF) onshore at the Bacton Gas Terminal (BGT), where IOG's gas will land to shore
o Tie-ins to LAPS facilities successfully completed and TRF slugcatchers cleaned out for reuse
· Phase 1 Environmental Impact Assessment (EIA) and Field Development Plan (FDP) approved in April 2020
· Portfolio expanded via award of new licence P2589 (Panther and Grafton), operated by IOG (50%) with CER as non-operating partner (50%), in 32nd Offshore Licensing Round
· Reprocessing of 3D seismic to PSDM across full portfolio to enhance subsurface understanding and optimise development planning
· New Climate Change and Sustainability Policy and Social Policy adopted; Health, Safety and Environment (HSE) Policy updated
· Adapted to Covid-19 restrictions throughout the year, maintaining three fundamental priorities: protecting our people, delivering the project and ensuring business continuity
· Cash balance at period end of £80.4 million (2019: £98.3 million), including restricted cash of £67.0 million (2019: £82.0 million)
· Post tax loss for the year of £19.3 million (2019: Profit £15.0 million)
· Group net debt1 at year end £14.1 million (2019: £9.0 million net cash)
· £43.8 million of partner development carry from CER utilised in the period under Farm-out agreement, and £48.3 million in total since FID, out of a total of £60 million available
· €11.7 million (£10.0 million) drawn down from Bond escrow account in the period, leaving a balance of €66 million (£59.2 million) in escrow at year end, to be drawn at further milestones as laid out in Bond terms
· €9.7 million (£7.7 million) in Bond interest payments made from Debt Service Retention Account (DSRA)
Board and Management
· Operational and technical teams significantly strengthened, with all key discipline leads brought in-house, to optimise Phase 1 execution and prepare the way for further phases of growth
· Mark Hughes stepped down as Chief Operating Officer (COO) and Executive Director
Post Year End Developments
· Appointment of David Gibson as Chief Operating Officer in February 2021
· Guidance reaffirmed for first gas by late Q3 2021, with Phase 1 gross capex outturn projected to come within 10% of initial £306 million budget
· Phase 1 platforms set for mechanical completion in early Q2 ahead of installation later in Q2
· Detailed well design, final contracting and permitting being concluded before first of five development wells spuds in early Q2
· Further drawdown of €27.3 million (£23.7 million) from the Bond escrow account made in Q1
o The two final Bond drawdowns are expected to be made early in Q2
· Management estimated resources increased for the P2438 (Goddard) and P2442 (Abbeydale) licences based on interpretations of newly reprocessed seismic data
· Phase 1 gas sales tender process initiated, with Energy Contract Company as advisor, and over 10 integrated energy firms, utilities and trading houses formally expressing interest
· Independent emissions assessment for Phase 1 initiated in Q1, with initial results expected later in Q2
1Net debt is defined as total loans, less restricted cash and cash and cash equivalents, adding back the financial asset being the Company's holding of its own bonds.
Andrew Hockey, CEO of IOG, commented:
"Last year we made tangible progress towards the safe, efficient and timely delivery of first gas, despite the challenges of Covid-19 and volatile industry conditions. That momentum is ramping up as we progress through 2021, with our strengthened team executing the platform, subsea, drilling and onshore project scopes. Following a rigorous recent cost and schedule review, we expect to achieve first gas in the latter part of Q3 2021, funded by our 2019 farm-out and bond issuance.
We see Phase 1 as the springboard for successive phases of growth under our infrastructure-led hub strategy, combining efficient development of nearby discovered resources with step-out exploration and appraisal activity. Our latest technical work has identified potential opportunities to develop additional gas hubs to build further shareholder value.
Besides generating strong returns, we believe IOG's strategy can contribute to the UK's Net Zero journey. By delivering domestic gas resources directly into the import-dependent UK market at low cost and with low carbon intensity via our reused infrastructure, we will be reducing reliance on more carbon-intensive imports."
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
|Independent Oil and Gas plcAndrew Hockey (CEO)Rupert Newall (CFO)James Chance (Head of Corporate Finance & IR)||+44 (0) 20 7036 1400|
|finnCap LtdChristopher RaggettSimon Hicks||+44 (0) 20 7220 0500|
|Peel Hunt LLPRichard CrichtonDavid McKeown||+44 (0) 20 7418 8900|
|Vigo CommunicationsPatrick d'AnconaChris McMahonSimon Woods||+44 (0) 20 7390 0230|
Please find the associated PDF document to view the full annoucement.
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