i3 Energy Plc (AIM:I3E) Corporate and Operational Update

i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce the following corporate and operational updates.

Highlights:

· Reserve Report assesses 2P reserves of 11.7 MMboe, re-classified from 2C resources of 9.7 MMboe over i3’s 100% operated and owned Liberator field, with corresponding pre-tax net present valuation of $328 million

· Liberator’s re-classification results from the advanced preparedness of the development currently underway

· Critical equipment successfully contracted with two subsea trees and wellheads ordered for May and August 2018 delivery

· i3 continuing to source and align other key equipment and services, with drilling expected to commence first half of 2018

· Material asset identified by i3 which it will bid for in the UK’s 30th Offshore Licensing Round, independently assessed by third party with Mid case recoverable Contingent Resources (2C Development Unclarified) of 22 MMBO and potential best estimate recoverable Prospective Resources of 47 MMBO

Reserve reclassification and upgrade

Following i3’s submission of the Liberator Phase I Field Development Plan to the UK Oil & Gas Authority on 15th September 2017, the Company commissioned AGR TRACS International Limited (“AGR”) to prepare a Reserve Report (“RR”) over the Liberator field for the reserves that are expected to be developed and produced by i3 on a 100% basis subsequent to the approval of the Phase I Field Development Plan (as described in the Executive Summary of the RR). The Liberator field is planned to be developed via 2 horizontal producers in Phase I, targeting the Main and Northwest culminations of the Phase I area. A separate potential future Phase II plan is contemplated and may include further development wells, yet these potential reserves are not reported within the RR.

The RR has seen a material upgrade in volumes and has also seen these volumes re-classified from Contingent Resources to Reserves Justified for Development.

The certified reserves volumes and their valuations as at 1st November 2017 are as follows:

Liberator Phase I Reserves through 2030(1)

Reserves

1P

2P

3P

   Oil (MMbbl)

3.9

10.7

16.9

   Gas (BCF)

3.2

6.1

8.7

Total Reserve (MMboe)

4.5

11.7

18.3

Pre-tax NPV10 (US$ MM)(4)

$60

$328

$576

Post-tax NPV10 (US$ MM) (4)

$37

$200

$350

 The re-classification of the volumes at Liberator results from the advanced stage of preparedness regarding the development. The Company has previously announced that two development sites have been surveyed as the locations for Liberator’s two-well Phase I development, that engineering studies have commenced with the offtake host for tie-in implementation, and that the related environmental statement has been submitted for review and comment.

A copy of the RR will be made available on the Company’s website.

Operational update on the 2018 Liberator development

Critical equipment has been successfully contracted for i3’s 2018 development programme. Importantly, two subsea trees and wellheads have been ordered for May and August 2018 delivery, which supports the Company’s aspiration to bring two wells into production under Liberator’s Phase I plan subject to raising the necessary finance.

i3 continues to source and align other key equipment and services, with drilling targeted to commence during the first half of 2018.

Participation in the UK’s 30th Offshore Licensing Round

In order to broaden the Company’s development portfolio, a number of blocks currently available in the UK’s 30th Offshore Licensing Round have been evaluated in detail and seismic data was purchased specifically for this purpose. Following these evaluations, the Company has identified what it believes to be an opportunity to add a material new asset through the licensing round.

The Company engaged AGR to independently validate i3’s view of the targeted asset. AGR has now provided the Company with a draft Resources Report which the Company expects to be finalised shortly without material amendment, which reaffirms the Company’s conclusions of the asset’s potential. The Resources Report indicates that the target contains a Mid case STOIIP of 64 MMBO with associated recoverable Contingent Resources of 22 MMBO. These Contingent Resources have been ascribed a 63% chance of commercial success(2) due to the low risk nature of the discovery, reservoir properties, oil quality, and the proximity to infrastructure.

The Resources Report also confirms that a mapped extension of the target that lies above an established oil water contact offers further appraisal drilling opportunity to evaluate potential additional Prospective Resources, with a Mid case STOIIP of 135 MMBO that could provide potential Prospective Resources of 47 MMBO. The mapped extension and resulting Prospective Resources have been ascribed a 51% chance of commercial success(3).

The Company intends to submit a bid on a 100% basis for the target asset within the 30th Offshore Licensing Round which closes on 21st November 2017. UK License Rounds are a competitive process based on the technical content and quality of submitted bid work programmes. There is no certainty that the Company will be successful with its bid.

Funding

The Company continues to advance certain initiatives to fully fund the Liberator development, including access to debt and equity capital markets, joint venture partnerships, and private sources of funding.

A non-binding indicative proposal has been received from an existing investor to materially support both i3’s future fundraising initiatives and up to $13MM of the Company’s proposed work commitments for its 30th Licensing Round bid.

i3 is in a formal process seeking to secure a $25MM+ credit facility to be used for Liberator’s Phase I development. A senior lender has confirmed support of up to 50% of this facility subject to completion of due diligence and final approvals.

There can be no certainty that these indicative proposals or support will result in legally binding commitments.

Iain Campbell, i3’s Reservoir Manager, commented on the reserves upgrade

“Liberator’s development plan builds upon a great deal of nearby production history and demonstrable high recovery factors of over 60% for similar fluids and reservoir. Given Liberator’s proximity to available infrastructure and development readiness, I am delighted that the Liberator Field has been classified as reserves with a corresponding pre-tax value ascribed in the RR of $328 million.”

Neill Carson, i3’s CEO, commented

“We are very pleased with the Company’s continued progression of the Liberator development, which we believe the reclassification and reserves upgrade attest to, and are excited by our future growth opportunities in the UK North Sea. The delivery of fields such as Liberator are well-aligned with the OGA’s mandate to maximise economic recovery from the basin, and the licences available in the 30th Round will only serve to advance that objective.”

Notes:
1)     Due to rounding effects, numbers may not add up exactly
2)     70% chance of finding sufficiently large volume, 90% chance of commercial project reliant on obtaining licence
3)     Geological chance of success of 56.25%, 90% chance of commercial project reliant on obtaining licence
4)     Calculated using Sproule’s Q3 2017 Brent price assumption of 2018 $53.50/bbl, 2019 $57.00/bbl, 2020 $67.00/bbl, 2021 $72.00/bbl, 2022 $75.00/bbl, +2% inflation from 2023



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