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Project and Funding Update

Independent Oil and Gas plc ("IOG" or the "Company"), the development and production company focused on becoming a substantial UK gas producer, is pleased to provide a project and funding update, further to recent announcements relating to the proposed farm-out (“Farm-out”) and bond issue (“Bond”).
Final Pre-FID Project Optimisation 
In line with its target schedule for Core Project Phase 1 Final Investment Decision (FID), the Company is in the advanced stages of retendering certain key project contracts and preparing to recommend final awards. Formal awards are expected to be made shortly after FID, which will follow directly from completion of the Farm-out and Bond. Assuming an early September FID date, under the development schedule to be submitted in the finalised Phase 1 Field Development Plan (FDP), First Gas is expected to be reached in July 2021 from the Southwark field.
In that context, the Company has chosen to optimise further the Phase 1 drilling schedule in the final FDP submission. In particular, the drilling and completion of the Elgood subsea well will be accelerated to bring Blythe and Elgood production online simultaneously three months after Southwark. This will entail higher capex spend prior to Phase 1 First Gas, but will increase production over winter 2021 given relatively high forecast initial rates from Blythe and Elgood, thereby improving cash flows. In the UK gas market, winter months typically exhibit substantially higher gas pricing than summer months.
Funding Sources and Uses 
In that context, and further to final tender clarifications and contract negotiations, the proposed amount of the contemplated Bond issue will be £88 million equivalent. The Company’s projected funding sources and uses to the nearest £million, from this point forward up to when Phase 1 reaches positive cash flow, are expected to be as follows:
Sources £m Uses £m
Farm-out up-front proceeds 40 Repay existing debt 17
Development carries 62 Capex to positive cash flow* 139
Bond issue 88 General corporate purposes** 31
Existing cash 12 Harvey appraisal 9
Warrant exercise premia 8 Cash buffer 15
Total Sources 210 Total Uses 210

*Includes contingencies
** Includes finance costs and deferred acquisition costs

Launch of Bond Process 
The Company expects to launch the marketing process for the proposed Bond this week. The objective is to complete both the Farm-out and the Bond simultaneously and proceed immediately to FID with its designated Farm-out partner in early September.
The Company has issued an updated Corporate Presentation on its website to reflect these updates.
Andrew Hockey, CEO of IOG, commented: 

We are very pleased to have finalised our project and financial planning and to now be ready to launch the bond process. In conjunction with the announced farm-out, this bond issue would see IOG fully funded for Phase 1 of our Core Project without any additional equity requirement. Phase 2 will in turn be funded by Phase 1 cash flows and the Phase 2 development carry. The bond marketing materials have now been finalised and a detailed long-form term sheet agreed. We are targeting completion of both the farm-out and bond in early September, which will lead straight to Phase 1 FID. This promises to be a very significant milestone for IOG, with the potential for a positive Harvey appraisal well result to follow. We look forward to a strong and successful alliance with our farm-out partner CalEnergy Resources which we believe will deliver excellent value to our shareholders.

Independent Oil and Gas plc                                                   +44 (0) 20 3879 0510
Andrew Hockey (CEO)
James Chance (CFO)
Rupert Newall (Head of Corporate Finance)
finnCap Ltd                                                                              +44 (0) 20 7220 0500
Christopher Raggett, Simon Hicks (Corporate Finance)
Camille Gochez (Corporate Broking)
Peel Hunt LLP                                                                          +44 (0) 20 7418 8900
Richard Crichton
David McKeown
Vigo Communications                                                             +44 (0) 20 7390 0230
Patrick d'Ancona
Chris McMahon
Simon Woods
About Independent Oil and Gas:
Subject to completion of the farm-out transaction announced on 26 July 2019, IOG will own and operate a 50% stake in substantial low risk, high value gas reserves in the UK Southern North Sea. The Company’s Core Project targets a gross 2P peak production rate of 146 MMCF/d (c. 25,000 Boe/d) from gross 2P gas Reserves of 302 BCF² + 2C gas Contingent Resources of 108 BCF³, via an efficient hub strategy. In addition to the independently verified 2P reserves at Blythe, Elgood, Southwark, Nailsworth and Elland and 2C Contingent Resources at Goddard, IOG also has independently verified best estimate gross unrisked prospective gas resources of 73 BCF³ at Goddard and management estimated best estimate gross unrisked prospective gas resources of 129 BCF¹ at Harvey. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns.
¹Updated management estimates based on interpretation and mapping of 3D seismic data reprocessed to Pre-Stack Depth Migration (PSDM) in 2018, subsequent to ERC Equipoise's 2017 Competent Persons Report
²ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression
³ERC Equipoise Goddard Competent Persons Report: October 2018