IGas has announced its unaudited interim results for the six months to 30 June 2021.
Corporate & Financial Summary
- Cash balances as at 30 June 2021 were £2.8 million (H1 2020: £2.6 million) with net debt of £13.2 million (H1 2020: £11.2 million).
- £2.6 million of capex incurred during six months to 30 June 2021. Net cash capex for FY 2021 expected to be £5.6 million, primarily relating to our conventional assets.
- Operating cash flow before working capital movements and realised hedges in H1 2021 of £6.4 million (H1 2020: cash outflow £1.4 million).
- Successful Reserve Based Lending facility (RBL) redetermination in June (a semi-annual recalculation), confirming US$27 million (£19.5 million) of debt capacity and headroom of US$8.8 million (£6.4 million).
- Hedging in place for H2 2021 of 190,800 bbls using swaps and collars. Average price including collar upside of c.$49/bbl. 126,000 bbls are currently hedged in 2022 using swaps at an average price of $63/bbl and 114,000 bbls using puts with an average guaranteed minimum price, net of premiums, of $44/bbl. The RBL requires IGas to hedge c.50% of the next twelve months' production on a rolling basis.
- Net production averaged 2,005 boepd in H1 2021 (H1 2020: 1,940 boepd) with operations, maintenance and project activities all being directly and indirectly impacted by COVID-19. Excluding the total COVID-19 impact in H1 2021, which averaged c.180 boepd, production in H1 2021 would have been 2,185 boepd.
- Full year net production is now forecast to be c.2,000 boepd, with underlying cash operating costs per boe anticipated to be c.$38/boe (based on an exchange rate of £1:$1.39).
- Material progress on deep geothermal
- Planning approval received for Stoke-on-Trent and MoU with SSE to deliver the heat network
- Constructive discussions with Government in respect of downstream financial support. In addition, there has been a geothermal Ministerial roundtable and a Westminster Hall Debate - on 'Opportunities for geothermal energy extraction.'
- MoU signed with CeraPhi to jointly develop geothermal energy projects which repurpose and utilise IGas's existing wells and other infrastructure and use CeraPhi's patented technology, CeraPhiWell, a closed loop downhole heat exchanger.
- The planning applications for the Albury and Bletchingley hydrogen projects have been submitted and validated by Surrey County Council.
- Full CPR published in February 2021: 2P reserves replacement ~ 250% (1P ~275%)
- 1P NPV10 of $150 million: 2P NPV10 of $204 million*
*based on forward oil curve of: 2021 $53/bbl; 2022 $56/bbl; 2023 $58/bbl; 2024 $59/bbl; 2025 $62/bbl (for full price deck see CPR).
Commenting today Stephen Bowler, Chief Executive Officer, said:
'The health, safety, societal and economic impacts of the COVID-19 pandemic have presented a unique set of challenges for our production business. Despite these challenges, production remains robust. We continue to focus our technical and operational expertise on offsetting the underlying natural decline in our fields through the execution of incremental production opportunities that demonstrate commercial benefit via our delivery assurance processes.
The Group's existing operational expertise as the UK's largest onshore operator gives us the opportunity to use our existing business platform to play an important role in the UK's transition to net zero. Our sub-surface expertise is relevant both to drilling for geothermal resources, and assessing the potential for carbon capture and storage. We have extensive experience of dealing with onshore regulators and planning authorities. We have predictable operating cash flows to help fund new initiatives and assets to repurpose in a readily accessible onshore environment.
We have progressed our low-carbon projects during the period. We have submitted planning applications to produce hydrogen from two existing sites in Surrey - Albury and Bletchingley. Should we be successful in developing these blue hydrogen projects, IGas is on track to produce the UK's first blue hydrogen ahead of other, refinery scale projects. This demonstrates that small-scale, distributed hydrogen production will allow blue hydrogen to be offered to the market rapidly and will build resilience into new energy networks.
In geothermal, the Stoke-on-Trent project could be the first in a new generation of British-backed heat plants. It will support the decarbonisation of heat, move us along the path to net zero and help tackle climate change. Whilst we await the necessary Government support for the Stoke-on-Trent project, we are receiving an increasing number of enquiries from local councils and other large-scale users of heat.
We believe there is significant commercial potential for geothermal energy production and the development of localised hybrid energy systems generating both heat and power.'