IOG fully funded to Blythe FID. Names new CEO

UK-based Independent Oil and Gas (IOG) has secured a loan of up to £10 million ($14 million) with London Oil and Gas (LOG).

The loan means IOG is now fully funded to Final Investment Decision on its UK Southern North Sea dual gas hub development project (Blythe and Vulcan Satellites), expected in August 2018.

The loan facility is in addition to existing loans from LOG from December 2015 and February 2016.

Michael Starkie, finance director of LOG, said: “We are delighted to have supported IOG with this financing which will ensure these highly attractive UK gas assets reach FID in the coming months.

He said: “We have every confidence that the company will deliver full project funding to achieve FID in August 2018 and first gas by late 2019. We are also excited by the portfolio growth and production opportunities being actively pursued on the solid foundations of the SNS gas hub strategy.”

According to IOG, proceeds from the new loan facility will primarily be used to fund the 2018 work program to the expected Final Investment Decision.

The 2018 Work Program

The company has two 100% owned gas hubs, the Blythe and Vulcan Satellites hub developments which consist of five fields with independently verified 2P reserves of 303 BCF (54 mmboe).

The EIA has been submitted for the Blythe Hub, which includes the Blythe and Elgood fields and the EIA for the Vulcan Satellites Hub is expected to be submitted shortly.

IOG is still targeting August 2018 for a final investment decision (FID) at both hubs with first gas scheduled for Q4 2019, subject to project financing.

The company’s pre-FID work on the SNS gas hubs project includes an ongoing site survey program for the Thames pipeline and other project pipeline routes, as well as all future platform locations.

IOG’s pre-FID work also entails intelligent pigging operation to confirm the integrity of the decommissioned Thames pipeline in late March, a platform and pipeline FEED as well as the Thames gas reception facility refurbishment FEED work at Bacton terminal.

Apart from the SNS hubs, the company is planning to drill the Harvey appraisal well. This includes commissioning of pre-stack depth migration of the 3D seismic on the Harvey license. Under the current license IOG has until December 2019 to drill the well. The decision when to drill the well will be made later this year.

IOG also applied for three new areas in the UK 30th Offshore Licensing Round.

CEO Change

The current CEO Mark Routh will be named the non-executive chairman, and Andrew Hockey will step up from deputy CEO to lead IOG’s executive function as CEO. As part of the transition, Mark Routh will continue to be available to provide certain executive functions as requested by the company for a minimum period of three months which may be extended by the parties each quarter as required.

Commenting on the new loan, Mark Routh, now a chairman of IOG, said: “IOG is pleased to deepen its strategic relationship with LOG to advance its highly attractive SNS development project to FID and beyond.

“This is an exciting year for IOG, with funding in place and a busy work schedule ahead. We are on track by the end of this month to complete the acquisition of the Thames Pipeline, the cornerstone of IOG’s SNS gas hub strategy.

“The new financing enables us to complete the remaining engineering studies, technical and planning work ahead of FID on what will be a highly cash generative gas portfolio. Development funding plans are progressing well with a view to finalizing the optimal mix of conventional debt, offtake-linked finance, and contractor finance to take the project to first gas.

“I wholeheartedly congratulate Andrew on his new role as CEO. Andrew has been with IOG since March 2017 as deputy CEO, working closely with me and has a deep technical and commercial understanding of the business and an excellent SNS development track record.”

Andrew Hockey, CEO of IOG, added: “IOG has a fantastic set of assets, an excellent team, new funding in place and a clear growth strategy focused on UK offshore gas. I look forward to continuing to work with Mark and the wider team to deliver significant shareholder value by bringing our proven assets into production while further expanding our portfolio.”