Half-year Report

25 August 2022

1H 2022 Interim Results

IOG plc ("IOG" or the "Company" or "Group") (AIM: IOG.L), the Net Zero UK gas and infrastructure operator focused on high return projects, announces its unaudited results for the six months ended 30 June 2022.

Andrew Hockey, CEO of IOG, said:

"In March, IOG became the UK's newest gas producer when we brought Saturn Banks Phase 1 onstream - a major milestone that is testament to many years of hard work across the whole team and our robust partnership with CalEnergy Resources. Generating our first revenues and profit in this period is an important step forward for the business.

The current energy crisis amply demonstrates the importance of low carbon intensity domestic gas production in delivering secure, affordable and sustainable energy supply. Our high-margin Phase 1 gas production can help to meet this challenge and enable further investment in our next phases of growth.

With high salinity fluids currently being received onshore, we are temporarily producing the Blythe and Elgood wells independently to establish the source of these fluids and optimise the operating plans. In view of this, we have revised our 2H 2022 guidance to a more conservative 30-50 mmscf/d.

Our two other key priorities this year are delivering Southwark first gas and progressing our Phase 2 plans. We also aim to open up further synergistic gas hubs with the two exciting appraisal wells at Goddard and Kelham. We look forward to the rest of 2022 and beyond with a firm focus on maximising shareholder value."

1H 2022 Operating and Financial Summary

1H 2022 Highlights

·  Blythe and Elgood successfully brought onstream in mid-March 2022

o  Gross aggregate production of 34.0 mmscf/d from First Gas to 30 June 2022, at 59% uptime  

·  Strengthening gas market conditions during the period and particularly since period end

o  Volume weighted average gas price of 149 p/therm in 1H 2022

o  Rising to 254 p/therm over 2H 2022 to date⁴

o  UK NBP gas Winter-22 contract currently >600 p/therm and Summer-23 >500 p/therm

·  Generating cash flow and profit from production operations

o  Total revenue of £30.2 million (30 June 2021: £nil), split 94% gas and 6% condensate

o  Opex of 13.7 p/therm for the period (1H 2021: N/A)

o  EBITDAX of £25.9 million for the period (1H 2021: £0.1 million)

o  Post-tax profit of £11.4 million (30 June 2021: £0.2 million)

o  Unrestricted cash balance at period end of £12.3 million (31 December 2021: £31.3 million)  

·  New long-term gas sales agreement (GSA) executed with BP Gas Marketing Ltd (BPGM)

o  Covering Blythe, Elgood, Southwark, Nailsworth and Elland fields up to at least September 2023

·  Further progress towards first gas at Southwark, the third Phase 1 field, targeted for Q4 2022

o  Southwark A2 (East) well drilled by Noble Hans Deul rig in Q2 2022

o  Successful installation in Q2 2022 of 6km extension of 24" Saturn Banks Pipeline System to Southwark field location by Seven Borealis S-lay vessel

·  €100 million senior secured bond maturing September 2024 ("Bond") remains in place, with closing market price of 100.5 (0.5% premium to par) as at 30 June 2022

·  Total Reportable Incident Rate (TRIR) of 4.8 per 200,000 manhours for 1H 2022

Post-Period End and Outlook

·  One week planned shutdown completed in July 2022 for Blythe platform chemical injection modifications    

·  Gross average production of 34.4 mmscf/d for 2H 2022 to date, with 76% uptime and VWAP of 254 p/therm

·  High salinity fluids (MEG/water) being received onshore - Blythe and Elgood wells are being produced individually for periods to establish the source

·  2.7 mmscf/d fixed for August 2022 at 310 p/therm and September 2022 at 444 p/therm via BPGM

·  Gross 2H 2022 gas production guidance adjusted to 30-50 mmscf/d range (from 45-60 mmscf/d)   

·  2022 capex guidance reiterated at £70-85 million net to IOG

·  Opex guidance revised from 10-15 p/therm to 10-20 p/therm (~$8-15/boe) to account for additional costs of onshore fluids management and the revised production guidance 

·  Southwark A1 (West) production well drilling resumed in early Q3 2022; significant delays experienced to date due to drilling fluid losses, primarily in the Bunter Sandstone Formation

·  Southwark subsea, hook-up and commissioning works ongoing in parallel targeting first gas in Q4 2022

·  Goddard and Kelham North/Central appraisal wells to be drilled in direct continuation after Southwark 

·  Continued Phase 2 planning and engineering, and engagement with partner and regulators 

·  Panther/Grafton area seismic re-evaluation expected to be completed by year end

·  New licence applications planned for the next (33^rd) UK Offshore Licensing Round 

·  2022 Scope 1&2 emissions intensity projected to be among the lowest in the UK North Sea  

^{1 From First Gas on 13 March 2022 to 30 June 2022}

^{2 EBITDAX is defined as earnings from continuing activities before interest, foreign exchange gains and losses, tax, DD&A, impairment of PP&E and intangibles, and other exploration expenditure}

^{3 Net debt is defined as restricted cash (£3.5 million) plus cash & cash equivalents (£12.3 million), less outstanding loans (£94.1 million)}

^{4 2H 2022 to date refers to the period 1 July 2022 - 21 August 2022 inclusive}

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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