A North Sea-focused firm backed by US billionaire Warren Buffett has seen its shares plunge 13 per cent after suffering a setback with a landmark development project.
IOG is working on a project to bring a cluster of undeveloped gas finds into production. Mr Buffett’s Cal Energy Resources bought into the project concerned in 2019.
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However IOG said yesterday that one of the finds, Elgood, may contain a smaller amount of recoverable gas than was expected, while the timetable for the start of production has slipped.
IOG said the Elgood development well flowed gas at better than expected rates but added.: “Management’s preliminary integration of the well data, prior to the well test, indicated that the range of ultimate recoverable gas may be less than the pre-well estimates.”
The company also noted that it experienced some mechanical issues on the Elgood well, following which production from the cluster is expected to start in the fourth quarter of this year. In May IOG said first gas was expected in the third quarter.
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Chief executive Andrew Hockey noted: "Initial field revenues look likely to be strong given the positive well test rates and the very buoyant gas market, with Winter 2021 prices currently over 90p/therm."
Shares in the firm, which used to be called Independent Oil & Gas, closed down 3p at 20.5p.
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