Independent Oil and Gas plc ("IOG"), the development and production company focused on becoming a substantial UK gas producer, whilst noting the current market volatility, provides an update on its Core Project and wider portfolio development activities.

Highlights

• Key Core Project Phase 1 infrastructure development workstreams are proceeding to plan  

o  Platform designs at advanced stage and construction activities now underway
o  Pipelay campaign for lines connecting to Thames Pipeline scheduled for 2H 2020  
o  Onshore Thames Reception Facilities refurbishment activities ramping up; FEED studies being executed by Worley

• Competitive tendering ongoing for rig and offshore services for five-well Phase 1 drilling programme, with increasingly favourable contracting conditions

o  Final selections expected in Q2 2020 and drilling to start in Q1 2021   
o  Established Well Management Company selected to support IOG's in-house drilling team in delivering best in class well execution  

• Environmental Impact Assessment (EIA) and Field Development Plan (FDP) approvals expected in April 2020

• Average carbon intensity of IOG's Core Project platforms estimated at just 0.2kg CO ₂ /boe versus 21kg UK North Sea 2018 average, making IOG a clear industry leader in environmental footprint

• Ongoing work on 40 Bcfe Harvey and 100 Bcfe Redwell structures indicate strongly value-accretive incremental investment opportunities

o  Additional seismic reprocessing underway to support Harvey development plans
o  Further reprocessing also being done on Vulcan Satellites, Goddard and Abbeydale

• Strengthened team pursuing portfolio development activities against stringent value criteria

o  32nd Round OGA interviews scheduled in March; results expected in mid-Q2 2020
o  Several other nearby growth opportunities under evaluation

• Audited full-year financials planned to be released on 26 March 2020

Core Project Phase 1

Detailed design for the two Phase 1 Normally Unmanned Installation (NUI) platforms is well advanced and fabrication activities are now underway. This work is proceeding as planned under a Letter of Limited Commitment (LoLC), which will be converted into a full contract upon FDP approval.

Most bulk materials for pipelines connecting Phase 1 fields to the main Thames 24" export line have been ordered and plans are in place for a pipelay programme in the second half of 2020. Pipeline and subsea activities are likewise being undertaken under a LoLC until the contract is signed.

Agreement in principle has been reached to purchase two subsea wellheads, trees and associated equipment, with one set to be used on the Elgood subsea well and the other available for Harvey or other incremental development opportunities.

Following a competitive process, IOG has selected an established Well Management Company to support its Phase 1 drilling campaign, which consists of three wells at the Southwark field, one at Blythe and one at Elgood. This contractor is assisting IOG's in-house team on detailed well planning, design and regulatory processes, and will function as Well Operator for the Phase 1 wells.

Proposals from several well-known rig contractors are undergoing technical and commercial evaluation as part of a competitive tender process for the Phase 1 jack-up drilling rig. Detailed commercial discussions are planned over the coming weeks, with commodity price volatility likely to imrpove the competitive landscape for rigs and offshore services.

Refurbishment of the onshore Thames Reception Facilities at Bacton is proceeding with engineering contractor Worley progressing FEED studies and close collaboration with Perenco UK Ltd, operator of the Bacton Gas Terminal.

Since taking Phase 1 Final Investment Decision (FID) in Q4 2019, IOG has strengthened its lean organisation in line with its status as Operator of a substantial UK offshore project. High quality hires have been made to ensure best execution across several key areas, including onshore project management, subsurface, drilling, finance, procurement, HSE and planning.

Following further detailed planning of offshore infrastructure, the Company was required to undertake an additional public consultation period under the Phase 1 EIA completion process, in line with standard regulatory procedures. EIA approval is expected soon after this consultation period ends on 27 March. This in turn is a key prerequisite for OGA approval of the Phase 1 FDP, which is therefore expected during April. The Company is in regular ongoing dialogue with the relevant UK regulatory authorities in this respect.

Portfolio Development Activities  

The Company is progressing its stated plans for further detailed analysis of the Harvey (P2085) and Redwell licences (P2441) to more accurately define in-place gas volumes via improved reservoir mapping and fault imaging. This entails further reprocessing of the 2018 Pre-Stack Depth Migration (PSDM) volume following integration of the 48/24b-6 Vertical Seismic Profiling (VSP) data into the 3D seismic volume.

Scoping economics for the currently estimated mid-case recoverable gas volumes of 40 Bcfe at Harvey and 100 Bcfe at Redwell indicate high-return incremental investments. These benefit from substantially lower capex requirements to integrate with the Core Project assets, in line with IOG's focused hub strategy. Alongside IOG's incremental planning, commercial discussions on the Harvey-Redwell Area continue with the joint venture partner CalEnergy Resources Limited ("CER").

IOG is also undertaking further seismic reprocessing and interpretation on the Vulcan Satellite fields, as well as Goddard and Abbeydale, to further advance the subsurface mapping and progress detailed well design.

In addition, comprehensive preparations have been made for engagement with the UK Oil and Gas Authority (OGA) on the 32nd Offshore Licensing Round applications, results of which are expected in mid-Q2 2020. IOG took a focused approach to the process, applying specifically for licences with sufficient subsurface potential lying in range of tie-back to the Thames Pipeline.

Finally, the Company is evaluating several other nearby growth opportunities, taking a disciplined approach to prioritise the highest incremental returns to shareholders.

Environmental Impact

In terms of carbon intensity, IOG has well-established inherent advantages, including re-use of onshore and offshore infrastructure and use of environmentally and cost efficient small unmanned platforms in shallow water depths (average 27 metres).

The Company has calculated that its Core Project platforms will have an average carbon intensity of just 0.2kg CO ₂ /boe, given their projected maximum individual power demand of 35 kW. This places IOG at the very lowest end of the carbon footprint spectrum within both the North Sea and global upstream industry. The UK North Sea average carbon intensity in 2018 was 21 kg CO ₂ /boe (source: OGUK Environment Report 2019).

In addition, the pivot towards increased use of gas to replace heavier fuels as drivers of economic growth over the next decades has become a major Energy Transition theme. As a pure domestic gas producer, IOG stands to make a positive contribution by reducing requirements for higher-carbon footprint fuels, which includes gas imported as LNG or via pipeline.

Andrew Hockey, CEO of IOG, commented:  
"Amid highly volatile market conditions, we are very pleased that IOG's core strengths and competitive advantages remain intact: fully funded to cash flow, proven gas resource base, ownership of key infrastructure, strong team, high calibre joint venture partner, robust project economics with low opex, an exceptionally low carbon footprint, and a clear value creation strategy. These advantages ensure we can maintain a rigorous focus on effective project execution, including utilising market dynamics to improve terms for key contracts.

With investors increasingly focused on ESG issues, we are proud to state that, without any adaptation of our existing plans, IOG will be a clear industry leader in carbon intensity, with an estimated average of just 0.2 kg CO ₂ /boe for our Core Project platforms versus a 2018 UK North Sea average of 21 kg CO ₂ /boe.

Furthermore, our ongoing technical work on the Harvey-Redwell Area gives us confidence that these licences will deliver substantial additional value to shareholders. We continue to progress our plans to generate high return incremental investments in line with our stated value creation strategy."