Disclaimer
3
The information contained in this confidential document (“Presentation”) has been prepared by Independent Oil and Gas plc (the “Company”).
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information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all
such information being referred to as “Information”) and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors,
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This Presentation may contain forward-looking statements that involve substantial risks and uncertainties, and actual results and developments may differ materially from
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Strategy and Company Overview
4
Strategy
Deliver the Company’s significant gas reserves via two
production hubs and fully owned infrastructure
Company Overview
North Sea development and production focus:
• Targeting over 200 MMcfd gas production from
current portfolio (c.35 MMBOE [1],[2])
– 54.7 BCF 2P gas reserves in Blythe Hub[2]
– 248.6 BCF 2P gas reserves in Vulcan Satellites[2]
– £320.5 MM NPV10 of 2P Reserves at Blythe and
Vulcan Satellites Hubs [2]
– 114 BCF P50 to be appraised at Harvey[2]
• Portfolio offtake to be via 100% owned pipeline
• Experienced team with proven track record
– Gas hub strategy - CH4 Energy
– Clipper South development – Fairfield
• Supportive investors providing working capital to
progress development work
Sources: [1] Conversion factor of 5.8 BCF per MMBOE plus gas condensate
[2] ERC Equipoise CPR – October & November 2017
Blythe
Harvey
Elgood
Southwark
Elland
Nailsworth
Southern North Sea
Bacton
Theddlethorpe
Map: Wood Mackenzie PathFinder/IOG
Dimlington
Thames Pipeline
Vulcan Satellites HubBlythe Hub
Benefits of IOG’s UK Gas Hub Strategy
• Strong cash flows and investor returns
• Low costs and breakeven prices
• Stable UK gas prices of 43-44p/therm (see below)
• Portfolio of 6 fields diversifies risk
Economic Drivers
• Gas will remain vital part of UK energy supply
• High UK gas import reliance (see right)
• IOG to provide 15+ years of stable domestic gas supplies
• Reduces need for higher LNG or pipeline imports
• Gas as “bridge fuel” to lower carbon energy mix
• IOG’s 400+ BCF could heat up to 9 million UK homes for a year
Macro & Energy Security Factors
• Fulfilling the UK government’s Maximise Economic Recovery (MER UK) strategy
• Extending life of UK infrastructure (Thames Pipeline)
• Building on OGA’s SNS Tight Gas Strategy
Aligned with UK Oil & Gas Authority
Source: OGA/Bloomberg
UK’s Rising Gas Import Dependency
Source: ICE/IOG
UK Gas Forward Curve 5-Year Outlook (NBP in p/therm)
5
Experienced Team
Board
Chief Petroleum
Engineer
Colin Jones
Ex-Norsk Hydro and DNO
Former Chairman of Oslo SPE
Management
6 Directors and Management own 21.9% of IOG
Non-Executive
Director (LOG)
Martin Ruscoe
Director of London
Group plc
CEO & Interim
Chairman
Mark Routh
Founder and Ex-MD of
CH4 Energy Ltd
CFO
James Chance
Ex-Standard Chartered Oil &
Gas Banker
Non-Executive
Director
Andrew Hay
Adviser at Edmond de
Rothschild
SNS Project
Manager
Graham Cox
Formerly Project Manager on
Clipper South Development
Deputy CEO
Andrew Hockey
Ex-Fairfield, Sound Energy,
Eni & Fina
Head of Business
Origination
Peter Young
Ex-Standard Chartered, Mitsui,
and RBS
Non-Executive
Director (LOG)
Charles Hendry
Former UK Minister of
State for Energy
Technical
Director
Doug Fenwick
Founder and Ex-CEO of MPX
Energy
Financial
Controller
Gavin Milne
Ex-Sterling, Faroe, Celtique
and Valiant
Pipeline and
Subsea Engineer
Roger Farrow
Ex-Hess and BG
H S & E
Manager
Ian Pollard
Formerly H S & E Manager for
Fairfield Energy
Material Future Gas Production and Cash Flow
7
• First gas targeted by end of Q2
2019 from Blythe and Southwark
– All five fields in production by
2020
• Consistent strong cash flows
throughout 2020s
– Economic life to mid-2030s
• Expected peak production of over
200 MMcfd (c.35,000 BOE/D)
• Harvey development could
extend the 100 MMcfd+ plateau
to 2023
• Thames Pipeline provides offtake
route for gas production for life of
IOG’s SNS Hub[1]
• 74 MMBOE total potential
production at £5+ unrisked
NPV/BOE
• Portfolio Gas Reserves [2]
1P/2P/3P = 201/303/435 BCF
• Portfolio Condensate Reserves[2]
1P/2P/3P = 1.1/1.7/2.4 MMBO
Thames Pipeline Landfall at Bacton Terminal
[1] Pipeline acquisition subject to completion
[2] ERC Equipoise CPR - October 2017
Old NameRevised
Name
Vulcan South Southwark
Vulcan
North WestNailsworth
Vulcan East Elland
Vulcan Satellites
Revised Field Names
Thames Pipeline: Enabling the Gas Hub Strategy
• 100%-owned 24-inch line with
significant capacity
• Recommissioning gives control from
field to market
– Export line for all IOG SNS gas
– Major cost savings of up to
£100m
– No transportation tariff reduces
opex
• Pigging and onshore facility
refurbishment in Q1 2018 [1]
• Enables IOG to maximise economic
recovery in the area
• Potential further activity:
– Acquire and develop other nearby
assets
– De-risk appraisal and exploration
targets
– Third-party tariff income
Areas highlighted in yellow denote IOG licences
Map: Wood Mackenzie PathFinder/IOG
8
Thames Pipeline – section to be recommissioned shown in bold
[1] Subject to completion of Thames pipeline acquisition
Thames Pipeline Recommissioning
• IOG’s intelligent pigging operation in early 2018 will measure
the status and wall thickness of the Thames Pipeline
– This will determine the safe Maximum Allowable Operating
Pressure (MAOP)
• Engineering studies have demonstrated the low risks of
recommissioning the line
– Estimated further life of 25-40 years based on observed
and expected corrosion rates
– Compared to 15-20 year life of IOG assets
• Natural production declines will reduce need for operating
pressure and wall thickness
– Use of onshore compression at Bacton also significantly
further reduces need for operating pressure
• The line was decommissioned only in 2015 and no subsequent
damage is expected
– In the event it is required, replacing damaged sections is
technically and economically feasible
– In the extremely unlikely event the line is damaged beyond
reuse, a new line could be installed inside the existing one
from the terminal, with the same landfall section and
onshore facilities still being used
9
Thames Pipeline landfall at the Bacton Terminal
Example of intelligent pig device
Vulcan Satellites Hub – 100% owned
• Large gas hub close to Thames pipeline
• CPR conducted in October 2017
confirms development ready
2P reserves of 248.6 BCF
• Low-cost shallow water developments
using unmanned platforms
• Peak production of over 150 MMcfd
from 8 hydraulically stimulated wells
– Target breakeven price <25p/therm
($20/BOE)
• FDP submitted October 2017
• Current activities:
– Consultation on Environmental
Impact Assessment
– Offtake and Contractor funding
discussions
– Preparing for surveys
– Platform FEED
10
Vulcan Satellites Hub Location in relation to IOG’s other assets
Source: [1] ERC Equipoise CPR - October 2017
Vulcan Satellites Gas Initially in Place (BCF)[1] Gas Reserves (BCF)[1]
Field Low Best High 1P 2P 3P
Nailsworth 100.5 160.9 232.5 60.4 99.4 147.2
Elland 51.8 73.7 97.0 39.9 55.0 72.9
Southwark 84.2 128.5 178.6 61.2 94.2 137.7
Total (arithmetic sum) 236.5 363.1 508.1 161.5 248.6 357.8
Map: Wood Mackenzie PathFinder/IOG
Vulcan Satellites Hub – 2017 CPR [1]
Southwark
Elland
Nailsworth
Vulcan Satellites Hub: Subsurface Work
11
Nailsworth – Top Rotliegend Depth Map [1]
Elland – Top Rotliegend Depth Map [1]
Southwark – Top Rotliegend Depth Map [1]
49/21c
49/21c & 49/21d
Disciplined Subsurface In-House Work Flow 1H 2017
• Acquire 3D seismic dataset
• Proprietary mapping and resource assessment
• Build in-house static model to estimate gas in place
• Model hydraulic stimulation to understand potential
• Build dynamic reservoir model to forecast production
Outcome
• Proprietary reservoir model
• High quality input to field development plan
Source: [1] Beagle Geoscience / IOG November 2016
Blythe Hub – 100% owned
12
Sources: [1] Competent Person's Report: ERC Equipoise - October 2017
• Two proven gas discoveries to be developed
jointly and exported via Thames Pipeline
• CPR conducted in October 2017 confirms
Blythe 2P Gas Reserves of 33 BCF, Elgood
2P Gas Reserves of 22 BCF
• Unmanned platform at Blythe, Elgood
subsea tie-back
• First gas in Q2 2019, target peak production
85 MMcfd[1]
– Target breakeven price <25p/therm
($20/BOE)
– Total recovery 54.4 BCF[1] (2P case)
• FDP submitted July 2017
– Preparing for surveys
– Platform FEED underway
– Preparing Environmental Impact
Assessment
• Contracting and funding processes
combined with Vulcan Satellites hub
• Gas offtake agreement with BP Gas
Marketing for Blythe
Blythe Hub Gas Initially in Place (BCF) Gas Reserves (BCF)
Field Low Best High 1P 2P 3P
Blythe 31.9 47.9 65.9 25.2 33.0 44.1
Elgood 21.8 28.8 36.3 14.7 21.7 32.6
Total (arithmetic sum) 53.6 76.9 102.1 39.9 54.7 76.7
Blythe Hub – 2017 CPR [1]
Map: Wood Mackenzie PathFinder/IOG
Blythe
Elgood
Blythe Hub Location in relation to IOG’s other assets
Blythe Hub: Subsurface Work
13
Sources: [1] Schlumberger WesternGeCo
[2] Beagle Geoscience / IOG November 2016
[3] ERC Equipoise / IOG May 2017
Elgood Top Rotliegend Depth Map[2]
Elgood
Blythe Top Rotliegend Depth Map [2]
Blythe
Disciplined Subsurface In-House Work Flow:
Work completed in Q3 16 – Q2 17
• Reprocessed 250 km2 3D seismic data[1]
• Seismic mapping and amplitude analysis[2]
• Resource Assessment
• Reservoir Modelling[3]
– Static model confirms Gas in Place estimates
– Dynamic model forecasts gas production
Outcome
• Proprietary IOG reservoir model
• High quality input to Field Development Plan
Harvey Appraisal - Significant Upside
14Source: [1] ERC Equipoise CPR - November 2017
• A potential significant structure which could be the largest gas
field across IOG’s SNS portfolio
• Significant reprocessing and reinterpretation work completed
• Previous well indicated gas in system, appraisal well required
to confirm gas column and volumes
• CPR Geological Chance of Success (50%) [1]
• Reservoir quality is good
• Over 400 ft relief in Maximum Case
• Unrisked prospective resource estimates (Low-Best-High) [1]
• GIIP (structure): 71 – 176 – 437 BCF
• Resource (structure): 45 – 114 – 286 BCF
• GIIP (on block): 56 – 139 – 345 BCF
• Resource (on block): 36 – 90 – 226 BCF
N.B. Plans underway to licence all Harvey resources
• If successfully appraised, Harvey would be developed as a tie-
back to the Thames pipeline
• Appraisal well committed to be drilled by late 2019. Near term
drilling under consideration
• Extension to the current licence term requested in order to plan
and drill the appraisal well
Current activity:
• Reservoir modelling and well design
Harvey Top Rotliegend Depth Map
Target Timeline to First Gas
15
2020Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
BlytheReservoir
Studies
Site
Surveys
Well
permitsDrilling
First Gas
Elgood Reservoir
Studies
Site
Surveys
Well
permitsDrilling
First Gas
SouthwarkReservoir
Studies
Site
Surveys
Well
permitsDrilling
First Gas
NailsworthReservoir
Studies
Site
SurveysConstruct & install infrastructure
Well
permitsDrilling
First Gas
EllandReservoir
Studies
Site
SurveysConstruct & install infrastructure
Well
permitsDrilling
First Gas
FDP & EIA Application FDP Approval & Final Investment Decision
Vu
lcan
Sat
elli
tes
Hu
b Construct & install
infrastructure
Construct & install
subsea infrastructure
Construct & install
infrastructure
2018 2019
Bly
the
Hu
b
Hub Field 2017
Pip
elin
e In
telli
gen
t P
iggi
ng
Op
erat
ion
s
CH4 Energy: Proven Track Record of Gas Hub Strategy
Mark Routh was the Founder and CEO of CH4 Energy
Founded in 2002 with £750k from 3i and £250k from
management
Strategy
• Hub strategy focused on North Sea gas
Key Actions
• Acquired 25% of ETS pipeline - instant tariff income
• Markham gas field acquired from Eni became CH4’s first
hub
• Markham infill well increased production by 30%
• Acquired 100% of Chiswick field building on hub strategy
• Installed production platform at Chiswick for tie back via
a new pipeline to a new compression platform at
Markham
Result
• CH4 was sold to Venture Production in 2006 for
£154.4m
➢ Realised 7.3 multiple on initial investment for 3i
Hub Strategy – North Sea
• Venture Production also executed a successful Hub
Strategy
• North Sea hub strategy now pursued by EnQuest,
Faroe, Ithaca and others
16
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2002 2003 2004 2005 2006
Bo
ep
d
Year
CH4 Energy Net Production & History
Acquired Markham from ENI
Drilled B6 infill well, acquired Chiswick
47.430.11.0 2.3
12.6
124.4
0
20
40
60
80
100
120
140
160
180
2002 2003 2004 2005 2006
Val
uat
ion
(£
m)
Year
CH4 Energy: Investment vs. Sale ValueEquity Debt
Sold to Venture for £154.4m
>7.3x equity multiple for 3i
>7.8x total equity multiple
Invested Realised
Clipper South: Proven Track Record with SNS Tight Gas
17
1992 Appraisal Well (48/19c-13S1)
High angle well
1200 ft net reservoir section
Flowed 2 MMscfd
1983 Discovery Well (48/19a-3)
Vertical well
Small frac of 60 ft interval at top
Flowed 3 MMscfd
Added 120 ft unstimulated in lower sands
Flowed 5 MMscfd
Source: DEA
Source: SPE 164826
IOG Deputy CEO Andrew Hockey was a founder and General
Manager Joint Ventures and New Business of Fairfield Energy
Founded in 2005 with $200 million from a consortium including
Warburg Pincus and Kern Partners
Strategy
• Late life production, redevelopment, dormant discoveries
and stranded assets
Key Actions
• Fairfield acquired dormant tight gas discovery Clipper South
100% from Shell and Esso in 2008
– 15km north of Vulcan Satellites and similar
characteristics
• No development funding requirement for Fairfield
– Farmed down 50% to RWE and 25% to Bayern Gas to
finance development to first gas in 2012
– Debt-funded remaining development drilling
programme with Credit Suisse
• Drilled 4 horizontal hydraulically stimulated wells
• Increased per well productivity from 3-5 MMcfd to >35
MMcfd with stimulation
Result
• Clipper South production exceeds expectations at 75 MMcfd
• 25% Clipper South interest was sold to Ineos in 2015
IOG Conclusion: Creating value via high-margin gas hubs
18
Monetising strong value
Creative commercial
strategy
Proven track record
Building genuine scale
Innovative funding
approach
Catalysts ahead
• Efficient hub strategy
• Low capex in $10/BOE range
• ~$8/BOE unrisked 2P NPV
• Thames recommissioning
• Full field-to-market control
• Contractor funding
• 2P+P50 416 BCF (74 MMBOE)
• Peak production >200 MMcfd
• Target breakeven <25p/therm
• Raising offtake finance
• Partnering with supply chain
• Minimising equity dilution
• Development funding
• FDP approvals
• Potential acquisitions
• Extensive SNS experience
• CH4 7.3x return
• Clipper South development
Sources: [1] ERC Equipoise CPRs – October & November 2017
[2] Net resources on block are 79%. Plans underway to licence all resources.
Map: Wood Mackenzie PathFinder/IOG
Vulcan Satellites, Blythe and Elgood[1] 1P 2P 3P
Economic Gas Reserves BCF 201 303 435
Oil Equivalent Reserves (incl. condensate) MMBoe 36 54 77
Post-Tax NPV10 (incl. IOG’s tax losses) £ MM 97 321 584
Pre-Tax NPV10 £ MM 119 453 880
Pre-Tax NPV0 (undiscounted) £ MM 295 843 1,530
Harvey[1] Low Best High
Gas Resources (gross)[2] BCF 44 114 290