Shares in North Sea gas producer IOG (LON: IOG) have regained some of the yesterday’s loss following a reduction in production guidance and reserve estimates after IOG said that there is more than £36m in the bank, of which £5m is restricted.
Second half production guidance for the group was reduced from 30-50 mmscf/day to 22-28 mmscf/day. Blythe and Elgood gas accumulations are lower the previously thought and they have been cut by 32% and 47% respectively.
The share price jumped 38.1% to 11.05p, but it was above 18p earlier in the week. IOG has modelled scenarios including lower production, extended downtime and lower gas prices and there is no requirement for external funding. Capex plans are unchanged.
Management plans to restore production at Saturn Banks as early as possible after a pipeline connection and optimise production at Blythe.
Yesterday, IOG also said that it has suspended drilling at the Southwark A1 well due to fluid losses. The focus has moved to A2 so that IOG can produce gas from this area in this quarter.
