IGas Energy Announces Interim Results for the Six Months Ended 30 June 2022

Source: www.gulfoilandgas.com 9/15/2022, Location: Europe

Commenting today Chris Hopkinson, Interim Executive Chairman, said:
"Commodity prices were exceptionally strong during the period with a resulting positive impact on income and cash generation from the underlying conventional oil and gas assets. This continues to give us financial flexibility, enabling a reduction in our net debt by over £2.5 million and allowing capital to be allocated to sustaining, and in the future, increasing our conventional production as well as to our growth businesses, geothermal and now shale.

We welcomed the Government's announcement last week on the lifting of the effective moratorium on hydraulic fracturing in England and the review of energy regulation. However, the accelerated development of this strategic natural resource, which we believe is imperative in helping with the ongoing energy and cost-of-living crisis, can only be achieved through a streamlined regulatory process, something the Government has committed to and we look forward to working constructively with the new administration.

With the submission of grant applications to the Green Heat Network Fund for our pathfinder Stoke-on-Trent geothermal project and the building of a strong pipeline of project opportunities, we are moving the geothermal business forward materially.

With strong commodity prices forecast well into 2023, we expect to continue to be able to support both growth and debt reduction in the business."

Results Summary:

Six months to 30 June 2022 (£m): 30.5
Six months to 30 June 2021 (£m): 16.6

Adjusted EBITDA*
Six months to 30 June 2022 (£m): 10.7
Six months to 30 June 2021 (£m): 2.7

Profit/(loss) after tax - continuing activities
Six months to 30 June 2022 (£m): 19.4
Six months to 30 June 2021 (£m): (12.2)

Operating cash flow before working capital movements and realised hedges*
Six months to 30 June 2022 (£m): 16.4
Six months to 30 June 2021 (£m): 6.4

Net debt* (excluding capitalised fees)
Six months to 30 June 2022 (£m): 9.7
Six months to 30 June 2021 (£m): 13.2

Cash and cash equivalents
Six months to 30 June 2022 (£m): 2.7
Six months to 30 June 2021 (£m): 2.8

Corporate & Financial Summary

- Cash balances as at 30 June 2022 were £2.7 million (31 December 2021: £3.3 million) with net debt of £9.7 million (31 December 2021: £12.2 million), a reduction of £2.5 million since year end.
- Operating cash flow before working capital movements and realised hedges in H1 2022 of £16.4 million (H1 2021: £6.4 million).
- £2.8 million of capex incurred during six months to 30 June 2022. Net cash capex for FY 2022 expected to be £10.2 million, primarily relating to our conventional assets. In addition, we have £1.8 million of cash outflow in 2022 for projects executed towards the end of 2021.
- Successful Reserve Based Lending facility (RBL) redetermination in July (a semi-annual recalculation), confirming US$22.0 million of debt capacity. We had headroom of US$12.0 million (£10.3 million) as at 31 August 2022.
- We are required to hedge our production under the RBL and as at 31 August 2022, we had 70,000 bbls hedged with swaps at an average price of $76.4/bbl and 35,000 bbls hedged with puts at a floor price of $44.7 for 2022. We also have 60,000 bbls hedged with swaps for H1 23 at $95.0/bbl.
- The estimated Energy Profits Levy for the period ended 30 June 2022 is £0.2 million.
- Ring fence tax losses of £263 million.

Operational Summary

- Net production averaged 1,865 boepd in H1 2022 (H1 2021: 2,005 boepd) impacted by equipment failure as a run-on consequence of COVID-19 supply chain issues.
- Full year net production is now forecast to be in the range of c.1,900-1,950 as we resolve the issues in H1 and wells come back on-line. Underlying cash operating costs per boe anticipated to be c.$40.4/boe (based on an exchange rate of £1:$1.24).
- Moratorium on shale lifted in England and Government commits to a review of energy regulation.
- We continue to mature our growth opportunities within the existing conventional assets, including our East Midlands projects at Corringham and Glentworth.
- An application to the Government's Green Heat Network Fund (GHNF) for the Stoke-on-Trent geothermal project was made on 26 August 2022.
- Applications for grant funding from the Public Sector Decarbonisation Scheme will be made in partnership with the Carbon Energy Fund to support the development of six geothermal schemes, supplying renewable heat to NHS Trusts.

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