i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce that it has applied for acreage, made available within the UK’s 30th Offshore Licensing Round, on a 100% basis.
The Company has targeted and extensively evaluated seismic and well data on a highly attractive region of acreage that if awarded to i3 would add to the Company’s portfolio, as announced on 3 November 2017, 2C Contingent Resources of 22 MMBO (with a 63% chance of commerciality1) and Mid case Prospective Resources of 47 MMBO (with a 51% chance of commerciality2), according to the opinion of AGR TRACS International Limited, the Company’s Competent Person. Further details of the Company’s portfolio and targeted opportunity can be found in the current Corporate Presentation on i3’s website.
The Company is also pleased to confirm that a binding agreement has been entered into with an existing loan note investor to provide financial backing in the form of an investment and net revenue sharing agreement (the “NRSA”). Under the terms of the NRSA, the Company can draw US$13 million to advance its 30th Round bid commitments and work programme. In consideration of those funds being made available and utilised, the investor will become entitled to share in certain of the after-tax revenues (“ATR”) generated from the acreage after first oil. The arrangements for sharing the ATR are as follows.
(a) Firstly, the ATR generated will be shared on the basis that an amount equal to 200% of the Investor’s invested funds will be paid to the Investor, and an amount equal to 200% of the Company’s pre first oil capital expenditure (“capex”) will be retained by the Company (collectively “Payback”).
(b) Secondly, the ATR generated after Payback will be retained by the Company until the total amount of ATR reaches an amount equal to (i) all of the Company’s remaining (non capex) pre first oil costs; (ii) all of the Company’s post first oil costs (non capex) and (iii) 200% of the Company’s post first oil capex.
(c) Lastly, ATR generated thereafter will be shared on the basis that 33% will be paid to the investor and 67% will be retained by the Company.
The availability of the funding is subject to, amongst other things, the Company being awarded the targeted acreage, OGA consenting to the terms of the agreement, and certain production targets from existing assets of the Company being met. In addition, at any time prior to initial utilisation of the investor funding, the Company may cancel the agreement without any fee, cost or penalty being payable.
There can be no certainty that the abovementioned application will result in the successful award of the acreage under application and successful awards may not be announced until Q1 2018.
Neill Carson, i3’s CEO, commented
“We have made significant progress in moving forward the Liberator Development with regard to reserves, development readiness, and the most recently announced indicative proposal and confirmed support for a $25 million credit facility that will, upon completion of final due diligence and loan documentation, assist our development funding.”
In order to broaden our portfolio, the UK licensing round offers an exciting opportunity, if successfully awarded, to add a lower risk development growth opportunity that lies near infrastructure and yet bears further significant upside potential into an established prospective trend. We are also very pleased by the endorsement of the quality of the application opportunity through the financial backing of an additional $13 million to support our bid by an existing investor.”
1) 70% chance of finding sufficiently large volume, 90% chance of commercial project reliant on obtaining licence
2) Geological chance of success of 56.25%, 90% chance of commercial project reliant on obtaining licence
Qualified Person’s Statement:
In accordance with the AIM Note for Mining and Oil and Gas Companies, i3 discloses that Iain Campbell, i3’s Reservoir Manager is the qualified person who has reviewed the technical information contained in this document. He has an MEng in Petroleum Engineering and has been a member of the Society of Petroleum Engineers since 1985. He has over 40 years’ experience in the oil and gas industry. Iain Campbell consents to the inclusion of the information in the form and context in which it appears.
