UK's IOG says first North Sea gas 'firmly in sight' amid high gas prices

UK-listed IOG -- which is developing a hub of gas fields in the Southern North Sea -- said Sept. 29 first gas was "firmly in sight" as it looks to benefit from the current record-high gas prices.

The first phase of IOG's gas development will see gas produced from the Blythe, Southwark, and Elgood fields, with the company targeting first gas in Q4.

"Gas market conditions not just for this coming winter but throughout the forward curve indicate the potential for very strong cash flow generation for IOG over the coming years," CEO Andrew Hockey said in a statement.

"We plan to start executing a sensible hedging strategy once onstream, while we also maintain our prudent planning price deck as we work up the next phases of growth," Hockey said.

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IOG said that in light of the "exceptionally high" forward gas prices, management expects that the company's cash flows over 2021-22 could substantially exceed its planning base case.

Gas prices across Europe are at record highs due to winter supply concerns.

S&P Global Platts assessed the UK NBP month-ahead price on Sept. 28 at 198.75 p/th (Eur78.65/MWh), up from just 34.08 p/th a year ago.

"First gas is now coming firmly into sight," Hockey said, adding that the company was now integrating data from the Blythe development well into its planning for the start-up of both Blythe and Elgood in Q4.

The Blythe well was tested at a rate of 45.5 MMcf/d and the company said it would give guidance on initial production rates once first gas was achieved.