Final Results for the Year Ended 31 December 2021

17 March 2022

IOG plc

Final Audited Results for the Year Ended 31 December 2021

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), the Net Zero UK gas and infrastructure operator focused on high return projects, is pleased to announce its final audited results for the Year Ended 31 December 2021.

2021 Highlights

Corporate and Operational

·Phase 1 Blythe and Southwark normally unmanned platform installations were mechanically completed in April 2021 and safely installed at their offshore field locations in May-June 2021 

·Elgood well 48/22c-7 was successfully completed in July 2021, testing at a surface-constrained maximum rate of 57.8 mmscf/d of gas and 959 bbl/d condensate through an 80/64^th inch choke

o  Reservoir encountered 39ft deep to prognosis and having integrated well data into subsequent technical analysis, management has updated its gross estimated 1P/2P/3P reserves to 9.7/14.1/18.3 billion cubic feet (BCF)

·Blythe development well 48/23a-H1 successfully drilled, cleaned up and flow tested to a maximum gas rate of 45.5 mmscf/d through an 80/64^th inch choke within two months of spud

o  Having integrated well data into subsequent technical analysis, management has updated its gross estimated 1P/2P/3P reserves to 25.4/42.5/55.8 BCF   

·Offshore subsea and hook-up scopes for Blythe and Elgood fields completed in November 2021, with one million Phase 1 cumulative manhours passed in September 2021

·First Southwark development well initially spudded in December 2021 following repair of the Noble Hans Deul rig leg in Dundee (Southwark drilling subsequently suspended due to seabed scour issues and expected to resume in March/April 2022 with Southwark First Gas  targeted in Q3 2022).

·Phase 1 Duty Holder contract for Installation and Pipeline Operator, as well as facilities operations and maintenance ("O&M"), awarded to ODE Asset Management ("ODEAM")  

·Inaugural Emissions Assessment released, projecting Phase 1 lifetime average Scope 1 and 2 emission intensity at under 4 kg kgCO2e/boe, versus North Sea average of 20.2 kgCO2e/boe

·Commitment to Scope 1 and 2 Net Zero emissions from 2021 via investment in accredited voluntary offsets 

·Potential for valuable multi-field "Southern hub" demonstrated with identification of Kelham North, Kelham Central, Thornbridge and Thornbridge Deep prospects on the P2442 licence

·Collaboration agreement signed with GeoNetZero Centre for Doctoral Training to support carbon capture & storage research on quads 48, 49, 52 & 53 (broader Bacton catchment area)

Financial

-      Cash balance at period end of £34.7 million (2020: £80.4million), including restricted cash of £3.4 million (2020: £67.0 million)

-      Post tax loss for the year of £4.3 million (2020: £19.3 million)

-    Group net debt¹ at year end £56.6 million (2020: £14.1 million)

-    Remaining £11.7 million out of £60 million Phase 1 partner development carry from CER fully utilised

-    £140.0 million invested in the Phase 1 development, of which CER funded £70.0 million for their non-operated share

-    Remaining €65.8 million (£59.2 million) drawn down from Bond escrow account 

-    €9.7 million (£8.9 million) in Bond interest payments, of which €4.8 million (£4.4 million) was drawn from the Debt Service Retention Account (DSRA)

-      Gross proceeds of £8.5 million raised through placing and subscription in September 2021 at 25p/share, a 1% premium to 30-day volume weighted average price, primarily to fund the Kelham North/Central appraisal well 

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.

Board and Management

·David Gibson appointed as Chief Operator Officer (COO) in February 2021

·Operational and technical teams further strengthened to support Phase 1 and facilitate further phases of growth

Post Year End Developments

·Commissioning of onshore Saturn Banks Reception Facilities completed on 4 March 2022, enabling backgassing of the offshore Saturn Banks Pipeline System out to Blythe and Elgood 

·Phase 1 First Gas was safely and successfully achieved from the Blythe well on 13 March 2022   

·Southwark drilling operations suspended in January 2022 pending remediation of the drilling location seabed to ensure safe operations with resumption expected by late Q1 or early Q2 2022  

·New gas sales agreement (GSA) signed with BP Gas Marketing Limited (BPGM), covering all of the Phase 1 fields as well as Nailsworth and Elland, replacing the 2014 Blythe GSA

·Planning and contracting continuing for the appraisal wells at Kelham North/Central (P2442: Block 53/1b) and Goddard (P2342: Block 48/11c and 12b), to be drilled by the Noble Hans Deul rig after the second Southwark well on the same competitive day rate as the Phase 1 wells

o  Petrofac appointed Well Operator for these wells and pre-drill site surveys initiated in Q1 2022

·3D seismic reprocessing to Pre-Stack Depth Migration underway on licence P2589 (Panther / Grafton area adjacent to Elland), expected to provide enhanced view of subsurface and commercial potential later in 2022

·Further to an ongoing comprehensive process of subsurface re-evaluation of the Company's asset portfolio, revisions to management's gross volumetric estimates have been made as follows:

o  1P/2P/3P reserves for the Blythe field revised to 25.4/42.5/55.8 BCF

o  1P/2P/3P reserves for the Elgood field revised to 9.7/14.1/18.3 BCF

o  1P/2P/3P reserves for the Southwark field revised to 46.3/71.2/104.7 BCF

o  1C/2C/3C contingent resources for the main Goddard discovery revised to 52.0/115.0/169.0 BCF

o  Low/Mid/High prospective resources revised to 16/27/42 BCF and 30/50/73 BCF for the two Goddard flank structures, both with 71% Geological Chance of Success (GCoS)

o  Low/Mid/High prospective resources for the Kelham North and Kelham Central prospects of 30.0/48.0/67.0 BCF and 12.0/21.0/32.0 BCF respectively, both with 72% GCoS

o  Low/Mid/High prospective resources for the Thornbridge prospect estimated at 19.0/35.0/57.0 BCF, with 64% GCoS 

o  Low/Mid/High prospective resources for the Thornbridge Deep prospect revised to 55.0/107.0/167.0 BCF, with 18% GCoS

o  1C/2C/3C contingent resources for the part of the Orrell discovery lying within the P2442 licence area estimated at 13.0/18.0/21.0 BCF

o  No changes at the current time to the management estimates of reserves at Nailsworth and Elland, to the contingent resources at Abbeydale, Panther and Grafton, or to the prospective resources at Southsea 

Andrew Hockey, CEO of IOG, commented:  

"Last year saw an immense effort by the whole IOG team to progress towards production, culminating in the safe and successful delivery of First Gas from the Blythe and Elgood fields on 13 and 15 March 2022 respectively. I am very proud of our team for overcoming the many challenges we've faced and achieving this major milestone. By working closely together, guided by our core values of resourcefulness, innovation, drive, efficiency, resilience and safety, we have turned IOG from an unfunded micro-cap into a material UK gas producer with exciting further growth plans.

We can now start to reap the benefits of our strategic focus on UK gas, which has always had compelling economic logic: the UK remains highly dependent on this commodity that will be pivotal in the global energy transition. Phase 1 production gives IOG both the operational platform and the financial capacity to deliver incremental value for our shareholders.

I believe we have the right people, assets and partnerships to build on what we have achieved so far and deliver exciting further phases of growth over the years ahead: what I call our "project factory". I would like to thank the whole team, our partner CER and all our contractors for their dedication in making Phase 1 production a reality. I also owe all our shareholders my sincere thanks for their continued support in helping us turn IOG, your company, into a respected UK gas developer and producer. I believe this is just the start and I look forward to delivering further growth on your behalf."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

Enquiries:

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