Update on the sale of equity

RNS Number : 7632V

Infrastrata PLC

08 November 2010

 



8 November 2010                                                                  For Immediate Release

PRESS RELEASE

Infrastrata provides an update on the sale of equity in the gas storage projects in Northern Ireland, Spain and Germany

The Directors of Infrastrata plc (AIM: INFA) ("Infrastrata" or "the Company") are today providing an update on the status of its ongoing sale of equity in its gas storage projects.

On 29 June 2010 the Company announced that it had signed a Memorandum of Understanding ("MOU") with eCORP International, LLC ("eCORP") relating to the Portland and Islandmagee Projects and outline terms relating to the Company's projects in Spain and Germany. On 4 October 2010 the Company announced that it had concluded an agreement with a subsidiary of eCORP in relation to the Portland Project, whereby eCORP has acquired a 50% interest in return for funding the next stage of the project, and Infrastrata will benefit from an income stream through a technical services agreement.

Discussions are continuing on the Islandmagee Storage Project, and eCORP, the Company and its partner Mutual Energy have agreed to extend the terms of the MOU until 30 April 2011, but on a non-exclusive basis.

Under the MOU and subject to agreement, eCORP retains an option to acquire an interest in the project company, Islandmagee Storage Limited ("IMSL") on terms specified in the MOU.  Should eCORP proceed with an investment in IMSL, eCORP would acquire 40% of the share capital of IMSL in return for funding the project through to the Financial Investment Decision point and paying Infrastrata and Mutual Energy a sum of up to £5m if the project proceeds to development. In addition, eCORP would refund all of the project development costs incurred by IMSL to the date of completion (these have been funded solely by Infrastrata).

Following a strategic review, the Company has decided to sell its entire interests in the gas storage projects in Spain and Germany, which are currently both at the exploration application stage, to focus on its core areas in the UK. Discussions will be held with eCORP and others with a view to concluding a sale during 2011.

Commenting on the news, Andrew Hindle, CEO of Infrastrata plc said:

"We are extremely pleased to have concluded our agreement with eCORP in respect of the Portland Project and look forward to the continued development of this project. The Islandmagee Storage Project is an important element of our portfolio and we remain hopeful that this strategic asset for Northern Ireland will be granted planning permission in the first half of 2011 to enable drilling of the first borehole to commence before the end of 2011. Infrastrata and Mutual Energy remain committed to introducing a further partner into the project and will be exploring the potential for joint development with eCORP and others over the coming months."

For further information please contact:

Infrastrata plc

Andrew Hindle, Chief Executive Officer                                                            020 8332 1200

Craig Gouws, Chief Financial Officer

Financial PR - Buchanan Communications

Richard Darby                                                                                              020 7466 5000

James Strong

Nominated Advisor and Broker - Seymour Pierce

Jonathan Wright                                                                                          020 7107 8000

Richard Redmayne

Notes to Editors:

Background on Infrastrata plc

Infrastrata plc is developing two gas storage projects in the United Kingdom at Portland, Dorset (50% interest) and at Islandmagee, County Antrim, Northern Ireland (65% interest). The two projects could between them provide over 10% of the total UK and Ireland peak daily demand in the latter part of this decade. 

Further information is available on the Company's website www.infrastrata.co.uk.

Background on the Islandmagee Storage Project

The proposed 500 million cubic metres ("mcm") facility would be the largest on the island of Ireland and the first for Northern Ireland. It would make a significant contribution to the security of gas supplies. The facility is being designed to inject gas at 12 mcm and withdraw gas at 22 mcm per day. The cost of construction has been estimated at circa £250 million, including cushion gas. The project is owned by Islandmagee Storage Limited ("IMSL"), an independent Northern Ireland registered company. Its two shareholders are a wholly owned subsidiary of Mutual Energy, an operator of existing key gas and electrical infrastructure in Northern Ireland, and a wholly owned subsidiary of Infrastrata plc.

A planning application for the Islandmagee Storage Project was submitted in March 2010. The submission of the planning application followed more than two years collating information and carrying out very thorough investigative studies into the development of a natural gas storage facility within a Permian salt sequence a mile beneath Larne Lough, including a 3D seismic survey carried out in 2007. Since then IMSL has been consulting extensively with stakeholders and local resident groups and held two well attended public exhibitions during 2009.

The storage of natural gas in salt caverns occurs throughout the world and facilities have been operating safely in the UK since the 1970s. Salt storage facilities can store and retrieve gas very quickly. This will be important for the availability of gas supplies for power stations to respond to intermittent wind generation in the future greener energy mix in Northern Ireland. The Larne area is the only area on the island of Ireland where a suitable salt sequence is present. In addition to the favourable geology of the area, Islandmagee already contains the main gas and electricity network required for a gas storage project, along with access to the water required to dissolve the salt to form the caverns. The proximity to this important infrastructure reduces the environmental impact of the facility.

In addition to the security benefits, the project would also result in the creation of more than 20 high quality permanent jobs for the Larne area, and bring in benefits for local businesses (e.g. support services, accommodation, retail etc.) during the construction phase.

Further information is available on the project website www.islandmageestorage.com.

 

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