IOG PLC (AIM:IOG) Drilling update

IOG plc (AIM: IOG.L) has issued an update regarding the drilling of the Blythe H2 well. The Company had estimated that the H2 well would take approximately three months to complete after spudding on 5th March, subject to the usual operational risks.

The Shelf Perseverance jack-up drilling rig is being used to drill the H2 well under IOG’s contract with Shelf Drilling (UK) Ltd signed in 2020, with Petrofac serving as the Well Operator.

The H2 well reached the Basal Zechstein sequence successfully. However, while drilling through the Hauptdolomit formation within the Zechstein, an abnormally pressured gas and oil influx was encountered, leading to associated drilling fluid losses. The risk of this type of well control issue had been identified during the planning phase and is being safely managed by Petrofac, Shelf, and the IOG team. Nevertheless, this may delay the expected well duration by up to four weeks, with the associated cost impact contingent on the speed of resolution.

The influx discovered from the Hauptdolomit was determined to contain non-commercial quantities of oil and gas and was unrelated to the target Rotliegendes gas reservoir located over 500 ft deeper and isolated from the Hauptdolomit. The well was displaced to a mud weight above the formation pressure, and options for progress include isolating the influx zone with cement and, if necessary, side tracking the well.

According to Rupert Newall, IOG’s CEO, gas and oil influx while drilling through the overburden above the reservoir is a known risk in the Southern North Sea, with the associated drilling fluid losses presenting an additional challenge. Nevertheless, Petrofac, the Well Operator, Shelf, the drilling contractor, and the IOG team are actively and safely managing the situation to ensure that drilling can safely resume.

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