Final Results for the Year Ended 31 December 2022

16 March 2023 

IOG plc

Final Audited Results for the Year Ended 31 December 2022

IOG plc ("IOG", or "the Company"), (AIM: IOG.L), is pleased to announce its final audited results for the Year Ended 31 December 2022.

2022 Highlights

Corporate and Operational

• First Gas delivered from Blythe on 13 March and Elgood on 15 March 2022  
• Gross average gas sales of 27.4 mmscfe/d and condensate sales of 1067 MT from First Gas to year end, at average Production Efficiency of 58.6%
• Southwark A1 well drilling suspended due to fluid losses above reservoir section
• Southwark A2 well drilled, completed and stimulated, but suspended post-year end after achieving 2.5 mmscf/d gas flow rate on well test after remediation of water producing stimulated zones
• 2022 Scope 1 and 2 emissions intensity estimated at 0.8 kgCO₂e/boe (North Sea average: 21.2 kgCO₂e/boe¹)
• Total Reportable Incident Rate (TRIR²) of 3.6 per 200,000 manhours for 2022

Financial

• Total revenue before sales deductions of £79.6 million (2021: £nil), of which £76.0 million related to gas and £3.6 million condensate
• Weighted average realised 2022 gas price of 201.4 p/therm and $805/MT for condensate
• Gross profit of £51.8 million, cost of sales of £23.6 million and EBITDAX³ of £63.1 million for the period
• Net loss of £28.4 million (2021: £2.4 million), including a £43.4 million impairment of Southwark and £7.6 million impairment of Nailsworth and Elland
• Loss per share of 5.4p (2021: 0.4p loss); adjusted earnings per share⁴ of 4.3p after exceptional one-off items  
• Cash balance at period end of £32.4 million (2021: £34.7 million), including restricted cash of £5.7 million (2021: £3.4 million)
• Group net debt⁵ at year end £68.2 million (2021: £56.6 million)
• Accrued opex of £10.1 million, equating to gross unit opex of 24.0 p/therm (2021: N/A)
• £8.6 million (2021: £8.3 million) interest paid on €100 million September 2024 senior secured bond ("Bond")  
• 2.7 mmscf/d fixed month-ahead in certain months in 2H 2022 at prices from 263 p/therm to 444 p/therm 

Board and Management

• Rupert Newall appointed as Chief Executive Officer (CEO), Dougie Scott as Chief Operating Officer (COO) and Executive Director, and John Arthur as Chief Financial Officer (CFO, non-board) in October 2022

Post Year End Developments

• Southwark A2 well suspended and further in-depth review of deliverability initiated
• Blythe H2 well spudded in March 2023, intended to increase gas production, limit water production and maximise reserve recovery from the Blythe reservoir
• Nine Southern North Sea blocks applied for across five licences areas in the 33^rd UK Offshore Licensing Round, as operator of the 50:50 joint venture with CER
• Fiona MacAulay to stand down as Chair of the Company at the 2023 AGM, with Esa Ikaheimonen named as Interim Chair and a process underway to recruit two further Non-Executive Directors
• Cash balance of £32.6 million as at 15 March, including restricted cash of £6.2 million
• Over January and February 2023, gross average production from the Blythe H1 well was 15.9 mmscf/d, with Production Efficiency of 89.7%

¹ Emissions intensity is measured in kilograms of carbon dioxide equivalent per barrel of oil equivalent of production, kgCO₂e/boe, on a Scope 1 and 2 basis. North Sea average is taken from the NSTA Emissions Monitoring Report, September 2022.

² Total Reportable Incident Rate (TRIR) includes all incidents reportable by law to UK regulators, irrespective of size or consequence, whether involving IOG personnel, duty holders or contractors, per 200,000 hours worked

³ EBITDAX is defined as profit or loss before net finance expense, income tax expense, depreciation of property, plant and equipment and right-of-use assets, amortisation of intangible assets, impairment of property, plant and equipment, and foreign exchange gain or loss.

⁴ Adjusted earnings per share is defined as earnings per share before exceptional one-off items, i.e. in respect of 2022, the Southwark, Nailsworth and Elland impairments

⁵ Net debt is defined as total loans, primarily the EUR denominated Bond, less restricted cash and cash equivalents.

Rupert Newall, CEO of IOG, commented: 

"Having become the UK's newest gas producer in March 2022, IOG then experienced a number of production issues followed by the very disappointing Southwark A2 well result shortly after year end. Our FY 2022 results reflect this operational performance amid a very volatile gas market. Pending the outcome of the detailed evaluation of options for a commercial forward plan for Southwark, we have taken a significant impairment. While this non-cash impairment drove a full-year loss, adjusted earnings of 4.3p/share reflect underlying profitability.

As a very well aligned new leadership team, we are already rolling out our operational and financial improvement strategy, seeking to deliver production resilience, reduce costs and maximise cash flow. Operating efficiency at Blythe is much improved this quarter and we spudded the Blythe H2 well on 5th March, targeting 30-40 mmscf/d initial gross production rates by mid-year. We also continue with rigorous review of our portfolio to ensure we allocate capital in a prudent and disciplined way."

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.

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