13th Sep 2023 11:18
(Alliance News) - IOG PLC on Wednesday said operating efficiency for the Blythe H2 well in the UK North Sea was up in August compared to the year-to-date, but still expressed concerns about its financial position and that the gas rate fell over the month.
Shares in IOG were down 32% to 1.14 pence each in London on Wednesday, late morning.
The London-based, UK-focused gas developer and producer said Blythe H2 operating efficiency in August stood at just under 97% compared to over 94% in the year-to-date, although the gas rate declined to 21.2 million standard cubic feet per day from 27.7 million across August.
IOG said the one-week planned Bacton terminal shutdown was successfully completed in early August, resulting in production efficiency for the month of under 78% from over 82% in the year-to-date and an average gross realised gas rate of 17.8 million standard cubic feet per day from 15.7 million in the year-to-date.
The average realised gas price for August was 85.1 pence per therm, IOG said, from 107.5p per therm.
IOG said planning is underway for a Blythe H1 production trial to assess a sustainable gas rate and associated water rate, with a view to potentially enhance low-cost production.
Looking at its portfolio, IOG said pre-development work continues to focus primarily on conventional discovered gas opportunities in the southern and central clusters.
Meanwhile, the UK North Sea Transition Authority has informed IOG's joint-venture that it does not intend to extend the Nailsworth P2342 and P130 licences beyond their current expiry dates.
Accordingly, these licences will expire on September 30 and December 31 respectively. IOG said this will have no effect on its net 2P reserves, although it will likely affect the potential of licence P039 at Elland.
IOG noted that both Nailsworth and Elland are "unconventional (tight gas) fields" which have been undergoing technical re-evaluation following the Southwark A2 well.
At a corporate level, IOG said active bondholder discussions on near-term liquidity and longer-term capital structure solutions continue under the current bond waiver, which it said remains in place until September 29.
"August saw stable production at the Blythe H2 well, with 97% operating efficiency and the Bacton shutdown works successfully completed early in the month. However, with H2 production seeing natural decline and realised day-ahead gas prices remaining far below last year's levels, the company's financial position remains challenging," said Chief Executive Officer Rupert Newall.
"With the gas winter starting next month, the team are working on options to maximise production while managing costs, including a production trial on the Blythe H1 well. Whilst we are now primarily focused on conventional assets, we have been informed that our request to extend the unconventional Nailsworth licences will not be approved, which is also likely to impact the commerciality of Elland."
IOG's cash balance at August 31 stood at GBP14.5 million, of which GBP7.3 million is restricted, from GBP20.3 million and GBP7.3 million respectively on June 30, and from GBP31.9 million and GBP6.8 million respectively on April 30.
By Greg Rosenvinge, Alliance News reporter
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