Iog (LON: IOG) shares are down 32% again. IOG shares seem to be on that slide down into administration. It’s possible to think that this would be a shame and all but if there’s not much gas in the well, the amount of gas coming out of the well keeps decreasing and the gas price is down - then, well, it might be time to wrap up and go home.
It’s true that the bondholders have extended the grace period: “IOG plc ("IOG", or "the Company"), (AIM: IOG.L) confirms that bondholders controlling 70% of the Voting Bonds (representing 100% of the votes cast) have now voted in favour of the Bond Waiver Agreement described in the RNS of 2 August 2023, meaning this has now been formally approved.” But that’s a holding action, nothing more. Either the capital base of the company needs to get sorted out or gas production - or at least the revenue from gas production - has to soar.
Neither are really looking likely. For at each of the reports to the market the flow from that hopeful well is declining.
Iog share price from Google Finance
We’ve talked before about Iog: “The announcement itself: “The gas market environment has become increasingly challenging over recent months. In January 2023, the Company's average realized gas price was 214 p/therm. When the 2022 Annual Report and Accounts ("ARA") was released on 16 March 2023, the UK NBP Day-ahead gas price was 126 p/therm. This then fell to 64 p/therm by 6 June 2023. The average realized price for May 2023 was 72 p/therm and 2023 realized average to the end of May was 112 p/therm.” There is also that little difficulty with the two gas wells: “The well has flowed at a maximum dry gas rate of 22.8 mmscf/d and 280-336 bbl/d condensate at the export pipeline pressure of 1250psi, with no formation water observed. This is an improvement on current H1 rate, but below the expected initial H2 gas rate of 30-40 mmscf/d” The one well isn't producing well (aha) and the second not as well as expected. And, as above, the price paid for that declining production is falling off a cliff.”
We’d not say there’s any obvious way out of that. A refinancing is possible of course but there would need to be a darn good reason to do one.
