2 December 2019
Independent Oil & Gas plc
Statement by Joint Administrators to LCF Bondholders
IOG plc ("IOG" or the "Company"), the development and production company focused on becoming a substantial UK gas producer, has been informed that the Joint Administrators of London Capital & Finance Plc (in administration) ("LCF") issued an update to LCF Bondholders after market close on Friday 29th November 2019.
We have been told that the statement will be uploaded later today to https://smithandwilliamson.com/en/services/restructuring-and-recovery-services/london-capital-finance-plc/
It is understood that the statement refers to IOG in the following terms:
"Some Bondholders have asked about the value of London Oil & Gas Limited's ('LOG') interest in Independent Oil & Gas plc ('IOG'). As previously explained, the Joint Administrators of LOG will continue to take expert, independent professional advice on a strategy designed to achieve the best outcome for its lender LCF, and hence for the LCF Bondholders, in a reasonable timeframe and in line with the orderly market restrictions. At present, our advice is that the share price is currently at a significant discount to IOG's estimated net asset value. By way of illustration, if LOG were to realise its entire interest in IOG at a share price of 30p, the estimated total recoveries for LOG would be approximately £83m, before costs, while at a share price of 40p the estimated total recoveries would be approximately £106m, before costs. Bondholders should be aware, however, that there can be no certainty as to the return, if any, that will ultimately be achieved."
Andrew Hockey, CEO of IOG, commented:
"Since the Joint Administrators of LOG took on what appears to be a very challenging administration process, we have developed a very constructive working relationship with them in order to facilitate their understanding of our business. This recent statement provides some helpful clarity as to the Joint Administrators' approach to their stake in IOG and they understand that the fundamental value is significantly in excess of the current IOG share price. For our part, we at IOG are absolutely focused on ensuring we unlock the significant value within our business for the benefit of all stakeholders.
It is also worth reiterating that IOG has already repaid over £17.1 million (including interest) of the aggregate £34.6 million originally borrowed from LOG and a further £12.5 million of the amount originally borrowed has been converted into equity. This represents a significant return of capital to our lender within a short timeframe and is a direct result of having delivered on our stated plans to fully fund our Core Project."
Independent Oil and Gas plc +44 (0) 20 3879 0510
Andrew Hockey (CEO)
Rupert Newall (CFO)
James Chance (Head of Corporate Finance & IR)
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
Vigo Communications +44 (0) 20 7390 0230
IOG owns and operates 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 140 MMcfe/d (c. 24,000 Boe/d) from gross 2P gas Reserves of 302 Bcfe¹ + 2C gas Contingent Resources of 108 Bcfe², 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 Bcfe² at Goddard and is in the process of updating its management estimate of gas resources at Harvey. Alongside this IOG continues to pursue value accretive acquisitions to generate significant shareholder returns.
1ERC Equipoise Competent Persons Report: October 2017, adjusted by Management to account for updated project timing and compression
2ERC Equipoise Competent Persons Report: October 2018