By Victoria Masterson
THE chief executive of a North Sea-focused gas company has quit with immediate effect – a day after the company announced it had suffered major setbacks with flagship projects.
IOG announced that Andrew Hockey had decided to retire as chief executive and step down from the board straight away after nearly five years in the role.
The company, which has been backed by billionaire US investor Warren Buffett, said Mr Hockey would be replaced by chief financial officer Rupert Newall.
The change comes a day after shares in IOG slumped more than 60 per cent as the company slashed production estimates from two key gas fields amid a series of technical problems.
Mr Hockey said it had been a “real privilege” to serve as IOG’s chief executive since 2018.
“We have made great progress in that time and with IOG now established as a gas producer, it is the right time to pass on the baton,” he added.
Mr Newall said Mr Hockey had taken IOG from “an unfunded micro-cap to an established, cash-generative UK gas production company.”
IOG also announced that its chief operating officer, David Gibson, would step down with immediate effect and be replaced by the newly appointed Dougie Scott.
Mr Scott has 30 years of upstream operational experience, mostly in the southern North Sea, where he has led teams “delivering safe and reliable production, drilling, offshore hydraulic stimulation, green and brown field projects,” the company said.
IOG became the UK’s newest gas producer in March this year when its Blythe and Elgood fields – part of a cluster of gas fields off the Norfolk coast called Saturn Banks – produced their first gas.
Producing more gas domestically is “the right thing” for the UK to do in the current energy crisis, Mr Hockey had said at IOG’s half year results in August.
But the company has been plagued by production delays and technical problems.
On Wednesday, IOG cut production estimates for the second time in three months as it warned that it expected to recover less gas than hoped from its Blythe and Elgood wells.
On another Saturn Banks gas field, Southwark, work on one well has been suspended following “drilling fluid losses,” but IOG still hopes to produce first gas from a second well on the field as planned in the fourth quarter of the year.
To prepare for this expected first gas milestone, IOG said production from the Saturn Banks fields would have to be suspended in late October for four weeks while a defective pipeline valve was fixed.
This four-week outage, alongside current rates of gas flowing from the Blythe and Elgood wells so far in the second half of the year, led IOG to reduce its expected gas production rate from between 30 and 50 million standard cubic feet per day to between 22 and 28 million standard cubic feet per day.
IOG operates the Saturn Banks cluster of gas fields in a joint venture with CalEnergy Resources, an Iowa-based investor in upstream oil and gas projects that is owned by Mr Buffett’s investment company, Berkshire Hathaway.
Mr Newall said he was mindful that “we learn the lessons of previous setbacks to improve our future performance.”
IOG chair Fiona MacAulay said IOG was navigating “a challenging initial phase of production.”
At its half year results in August, IOG reported first revenues of £30.2 million, compared to nil for the previous pre-revenue period.
Pre-tax profits were £11.4m, compared to £209,000 for the first half of 2021.
After plunging 57% on Wednesday from 18.7p to 8p, IOG’s shares closed up 38% at 11.05p.
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