Independent Oil and Gas plc (IOG) swung to a loss as the company’s cash balance fell and the group recorded a net debt.
In its final audited results for the year ended 31 December 2020, the company reported post tax losses of £19.3 million compared with a 2019 profit of £15m generated by the CalEnergy Resources (UK) Ltd (CER) farm-out.
Losses include a £12.6m (2019: £nil) write down of the Harvey and Redwell assets following technical evaluation in 2020 of data from the appraisal well and the decision in Q4 2020 to partially redetermine the P2085 licence.
Group net debt at year end was £14.1m (2019: £9m net cash) primarily driven by the ongoing expenditure on Phase 1 operations.
Property, plant and equipment (PPE) oil and gas assets increased to £53.4m (2019: £28.9m), representing capital expenditure activities on the Core Project assets.
During 2020 end, IOG’s cash balance stood at £80.4m (2019: £98.3m) including restricted cash of £67m (2019: £82m).
Net administration expenses were £3.4m (2019: £2.6m) reflecting the allocation of a proportion of overheads to project assets ad cost cutting.
IOG used £43.8m of partner development carry from CER in the period under a farm-out agreement, and £48.3m in total since the final investment decision (FID), out of a total of £60m available.
Net cash inflows were £8m (2019: £15.9m outflow) from operations with £1.2m (2019: £83.3m used in) generated from investing activities, and £10.5m (2019: £109m generated from) used in financing activities.
During 2020, IOG reported no loan repayments (2019: £17.1m).
Last year, the company progressed with Phase 1 development works across all four key project elements of platforms, subsea, drilling and onshore.
IOG is targeting high returns via an infrastructure-led hub strategy and aims to deliver first gas during the third quarter of 2021.
“After a review of these forecasts the board have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and to deliver Phase 1 on time,” said chief financial officer Rupert Newall.
“Accordingly, the directors continue to adopt the going concern basis in preparing the consolidated financial statements.”
Chief executive Andrew Hockey added that the momentum towards production was increasing.
“Following a rigorous recent cost and schedule review, we expect to achieve first gas in the latter part of Q3 2021, funded by our 2019 farm-out and bond issuance.
“We see Phase 1 as the springboard for successive phases of growth under our infrastructure-led hub strategy, combining efficient development of nearby discovered resources with step-out exploration and appraisal activity.
“Our latest technical work has identified potential opportunities to develop additional gas hubs.”