IGas Energy Announces Trading and Reserves Update

Source: www.gulfoilandgas.com 3/2/2022, Location: Europe

IGas has provided an operational, reserves and financial update for the year ended 31 December 2021. The information contained in this statement has not been audited and may be subject to change.

Operational Highlights

· Net production, in line with guidance, averaged 1,962 boepd for the year, with operations, maintenance and project activities all being directly and indirectly impacted by COVID-19. Excluding COVID impacts, production would have been c.2,100 boepd.

· Underlying operating costs for the year were c.$37/boe (at an average 2021 exchange rate of £1:$1.38).

· We anticipate net production of c.2,000 boepd and operating costs of c.$38/boe (assuming an exchange rate of £1:$1.35) in 2022, albeit subject to the ongoing challenges that COVID-19 still presents.

· Stockbridge 27 project is on track - a suspended injection well, is being recompleted as a water disposal well. Upon successful completion of the project in early Q2, a c.50 bbls/d uplift in production is anticipated.

· Surrey County Council is still to confirm the date of the planning committee determination hydrogen projects at Albury and Bletchingley.

· Deep Geothermal:

o At the Stoke-on-Trent project, we are working with SSE Energy Solutions towards agreeing a thermal purchase agreement for the offtake of geothermal heat in Q3 this year and subject to securing government support, this will enable the project to progress towards financial close in Q4 2022.

o We are engaging with network operators to utilise capital from The Green Heat Network Fund (GHNF) Transition Scheme which supports the commercialisation of low-carbon heat network projects.

o We are currently reviewing additional sites for geothermal at strategic locations across the North West of England and we would expect to announce the acquisition of our first site in the Manchester area in H1 2022.

o We have had several meetings with senior ministers including the Secretary of State for the Department for Business, Energy and Industrial Strategy (BEIS) where it is recognised that the next challenge for the UK in meeting its net zero ambitions is the decarbonisation of heat

§ As a result, a working group has been established by BEIS to look at the policy gap for the long-term support of deep geothermal heat.

· Following the announcement of an agreement with CeraPhi, a programme has been agreed with an initial single well to be repurposed at Nettleham, to the northeast of Lincoln. Following the repurposing, scheduled for April/May 2022, a period of testing will be undertaken.

· IGas recently announced Heads of Terms with Cornish Lithium to jointly develop geothermal energy projects in areas where it is believed there are significant lithium resources. The projects will supply renewable heat to end users whilst lithium is extracted from the brines.

Reserves Update

Key highlights from the Competent Persons Report (CPR) carried out by DeGolyer & MacNaughton (D&M).

IGas Group Net Reserves & Contingent Resources as at 31st Dec 2021 (MMboe)*

Financial Highlights

· RBL redetermination exercise concluded in December 2021 confirming £19.3 (US$26.2) million of debt capacity and headroom of £7.1 million as at 31 December 2021.

· 231,000 bbls are currently hedged in 2022 using swaps at an average price of $74/bbl and 114,000 bbls using puts with an average guaranteed minimum price, net of premiums, of $44/bbl.

· Cash balances as at 31 December 2021 were £3.6 million with net debt of £12.2 million. The Company incurred net cash capex of £4.8 million in 2021.

· Ring fence tax losses at 31 December 2021 were £267 million.

Stephen Bowler, Chief Executive, commented:

"2021 was a challenging year for all, with COVID-19 impacting production through resource and supply chain constraints. As we emerge out of the pandemic, and with higher commodity prices, we will balance capital investment with deleveraging the Group.

The recognition that the strength and depth of our existing operational onshore expertise gives us in playing an important role in the UK's transition to net zero, is evidenced by the number of new opportunities that we have announced over the last few months.

The rationale for the rapid development of deep geothermal in the UK is compelling. A combination of higher gas prices and a need to decarbonise large scale heat has resulted in a number of proposals and enquiries for this technology to provide a solution for end users.

We believe in the opportunities that the energy transition presents and that they will create value for our shareholders as well as contributing to the low carbon ambitions of the UK."

Ross Pearson, Technical Director of IGas Energy plc, and a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, March 2006, of the London Stock Exchange, has reviewed and approved the technical information contained in this announcement. Mr Pearson has 21 years' oil and gas exploration and production experience.

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