Placing to raise approximately £2.57 million

RNS Number : 4042D

i3 Energy PLC

31 January 2018

 

31 January 2018

i3 Energy plc

("i3" or the "Company")

Funding update

Placing to raise approximately £2.57 million

i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to update the market on its funding progress.

Highlights:

·   Strong progress has been made advancing multiple funding options to finance its 2018 development programme

·     Joint Venture ("JV") discussions are at an advanced stage with multiple industrial partners relating to both i3's 100% owned Liberator Oil Field and its 30^th Offshore Licensing Round ("30^th Round") application

o  Conclusion of commercial arrangements expected end of Q1 2018

o  On completion, the Company expects to maintain a working interest of no less than 67% of          Liberator and the 30^th Round application licences, after a multiple of the associated capital expenditures have been refunded to the parties from post-production cash flow

·     Indicative commercial interest received from a counterparty to provide 100% of the funding for a multi-well development on Liberator and the 30^th Round application block, amounting to an estimated capital programme of approximately US$200 million

·     Oversubscribed placing to raise approximately £2.57 million (US$3.65 million)

o  8,563,630 new ordinary shares in the Company will be issued at a price of 30 pence per share,  representing a 0.4% premium to the 30-day average for the week ending 26^th January 2018

o  The net proceeds of the placing will be used towards prerequisite engineering, trees and         wellheads for the Liberator development, and general corporate purposes

Multiple funding options at an advanced stage

As previously announced, the Company has been progressing multiple funding options to finance its 2018 development programme and is pleased to report that it is in advanced discussions with multiple industrial parties regarding potential JV arrangements relating to both its 100% owned Liberator Oil Field and its application within the UK's 30^th Round.

Pursuant to these discussions, the Company has received indicative commercial interest from a counterparty to provide 100% of the funding for a multi-well development on Liberator and the Company's 30^th Round application block, amounting to estimated total capital commitments of approximately US$200 million.

JV discussions have reached a mature stage and, should these commercial arrangements conclude in an expected six to eight weeks timeframe, the Company would maintain a working interest of no less than 67% in its Liberator and 30^th Round application blocks, after a multiple of the capital commitments have been refunded to the parties from post-production cash flow.

The Joint Venture discussions also contemplate capital being provided to i3 by an industrial party to enable the Liberator development to proceed utilising that party's funding alongside other credit facilities, even in circumstances where the Company is unsuccessful with its 30^th Round application.

There can be no certainty that these negotiations and discussions will lead to definitive agreements.

Oversubscribed placing to raise approximately £2.57m

The Company is pleased to announce that it has raised £2.57million (US$3.65 million) through the placing of 8,563,630 new ordinary shares in the capital of the Company to new and existing investors at an issue price of 30 pence per share, representing a 0.4% premium to the 30-day average for the week ending 26^th January 2018. The proceeds of the funding will be used towards prerequisite engineering, trees and wellheads for the Liberator development, and general corporate purposes.

GMP FirstEnergy and WH Ireland acted as joint brokers on the placing. The placing is conditional upon i3 entering into a placing agreement with the joint brokers.

City Financial Investment Company Limited has participated in the placing, subscribing for 970,711 new ordinary shares. As it currently has an interest in 11.97 per cent of the Company's issued share capital, the transaction is a related party transaction under the AIM Rules for Companies. The Directors consider, having consulted with its nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

Admission and Settlement

Application will be made for the admission to trading on AIM of the 8,563,630 new Ordinary Shares ("Admission"). Admission is expected to occur on 5 February 2018. Following Admission, the Company will have 34,254,523 Ordinary Shares in issue. There are no shares held in treasury. The total voting rights in the Company is therefore 34,254,523 and Shareholders may use this figure as the denominator by which they are required to notify their interest in, or change to their interest in, the Company under the Disclosure Guidance and Transparency Rules

Recap on the Liberator Field and 30^th License Round Application

Liberator Field Phase I

Following i3's submission of the Liberator Phase I Field Development Plan to the UK Oil & Gas Authority on 15^th September 2017, the Company commissioned AGR TRACS International Limited ("AGR") to prepare a Reserve Report ("RR") over the Liberator field for the gross reserves that are expected to be developed and produced 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 certified reserves volumes and their valuations as at 1^st 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

30th Round License Application

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 2C Contingent Resources of 22 MMBO (with 63% chance of commerciality)⁽²⁾ and Prospective Resources Best Estimate of 47 MMBO (with a 51% chance of commerciality)⁽³⁾, according to AGR. The 30^th Round application has been submitted to the UK's Oil and Gas Authority with work programme commitments totalling US$13 million.

Further details of the Company's portfolio and targeted 30^th Round opportunity can be found in the current Corporate Presentation on i3's website.

Neill Carson, i3's CEO, commented:

"We have been incredibly busy progressing multiple funding options for both our 100% owned Liberator development and the low risk development growth opportunity we have applied for in the 30^th Round.

"There is strong momentum within the Company and today's funding strengthens our financial position allowing us to continue our engineering plans for our Liberator development ensuring the Company is ready for the next operational stage of the project. We look forward to updating our shareholders in due course."

Graham Heath, i3's CFO, commented:

"We would like to welcome our new shareholders and express our appreciation to those who have and continue to support us. This fundraise enables the Company to quickly advance key initiatives and procurement for our Liberator development, in addition to funding engineering activities that we believe will assist in concluding a successful joint venture in the near future."

                                                                     ENDS

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

CONTACT DETAILS:

	i3 Energy plc
	Neill Carson (CEO) / Graham Heath (CFO)		c/o Camarco Tel: [phone]
	WH Ireland Limited (Nomad and Joint Broker)
	James Joyce, James Sinclair-Ford		Tel: [phone]
	GMP FirstEnergy (Joint Broker)
	Jonathan Wright, David van Erp		Tel: [phone]
	Camarco Georgia Edmonds, Jane Glover, James Crothers		Tel: [phone]

Glossary

"BCF" or "bscf"	billion (109) standard cubic feet;
''Boe''	barrels of oil equivalent.  One barrel of oil is approximately the energy equivalent of 6,000 standard cubic feet of natural gas;
"boepd"	Barrels of oil equivalent per day;
"MMBO"	millions (106) of barrels of oil;
"MMboe"	millions (106) of barrels of oil equivalent;
"MMcfd" or "MMscfd"	millions (106) of standard cubic feet per day;
"Net Present Value" or "NPV"	the discounted value of an investment's cash inflows minus the discounted value of its cash outflows;
"PRMS"	The SPE/WPC/AAPG/SPEE Petroleum Resources Management System for Reserves and Resources Classification;
"standard cubic feet" or "scf"	standard cubic feet measured at 14.7 pounds per square inch and 60 degrees Fahrenheit;
Stock Tank Oil Initially In Place or "STOIIP"	a method of estimating how much oil in a reservoir can be economically brought to the surface;
RESOURCES
"Contingent Resources"	those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies;
"Prospective Resources"	those estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled;
"P10 resource" "High case resource"	reflects a volume estimate that, assuming the accumulation is developed, there is a 10% probability that the quantities actually recovered will equal or exceed the estimate.  This is therefore a high estimate of resource;
"P50 resource" "Mid case resource"	reflects a volume estimate that, assuming the accumulation is developed, there is a 50% probability that the quantities actually recovered will equal or exceed the estimate.  This is therefore a median or best case estimate of resource;
"P90 resource" "Low case resource"	reflects a volume estimate that, assuming the accumulation is developed, there is a 90% probability that the quantities actually recovered will equal or exceed the estimate.  This is therefore a low estimate of resource;
RESERVES
"Proved Reserves"	those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods and government regulations.  Proved reserves can be categorised as developed or undeveloped.  If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered.  If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate;
"Probable Reserves"	those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable.  In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable reserves;
"Possible Reserves"	those additional reserves which analysis of geological and engineering data suggests are less likely to be recoverable than Probable Reserves.  In this context, when probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable plus Possible reserves;
"Reserves"	those quantities of hydrocarbons which are anticipated to be commercially recovered from known accumulations;
"Justified for Development"	implementation of the development project is justified on the basis of reasonable forecast commercial conditions at the time of reporting, and there are reasonable expectations that all necessary approvals/contracts will be obtained;
"1P"	the Proved Reserves;
"2P"	the sum of Proved plus Probable Reserves;
"3P"	the sum of Proved plus Probable plus Possible Reserves.

Notes to Editors:

i3 is an oil and gas development company initially focused on the North Sea. The Company's core asset is the Liberator oil field discovered by well 13/23d-8 located in License P.1987, Block 13/23d in which it has a 100% operated interest.

The Company's strategy is to acquire high quality, low risk producing and development assets, to broaden its portfolio and grow its reserves and production.

i3 has a strong management team with a track record of delivery and was founded by Neill Carson, previously founder and CEO of Ithaca Energy, where he built an asset portfolio including multiple developments.

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

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.

 

END

 

 

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