Update on Woodburn Forest-1 well and its funding

RNS Number : 2344M

Infrastrata PLC

19 January 2016

 

19 January 2016                                                          

InfraStrata plc

("InfraStrata" or the "Company")

Update on Woodburn Forest-1 well and its funding

InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, is pleased to announce that a series of Farmout Agreements ("FOA"s) have been entered into by InfraStrata and Brigantes Energy Limited ("Brigantes"), both together and separately, which together will result in completion of the funding for the planned Woodburn Forest-1 well in Northern Ireland if the conditions of the FOAs set out below are satisfied. In addition an Escrow Agreement has been signed by all new investors and existing partners in the project whereby the funds for drilling the well in H1 2016 are being transferred to an account being administered by the Company's solicitors, Fieldfisher LLP.

On 16 November 2015 the Company announced that together with Brigantes it was seeking to farmout a 60% interest in Northern Ireland Petroleum Licence PL1/10 ("PL1/10") to pay the outstanding 80% required to complete the funding of the Woodburn Forest-1 well. At the same time the Company announced it had signed a farm-in agreement with Ermine Resources Limited (15% interest).  The additional new investors that have now entered into FOAs for the remaining 45% are Tudor Hall Energy Limited (10%), Baron Oil Plc (10%), Southwestern Resources Limited (16%) and Petro River UK Limited (9%). All the parties are expected to acquire corresponding interests in the adjacent offshore Petroleum Licence P2123 ("P2123") for paying the costs attributable to that interest from the commencement of the licence term in December 2013.  

In order to facilitate the FOAs, the Company has also signed a Supplemental Sale and Purchase Agreement ("Supplement") with Brigantes, replacing the outstanding obligations under a Sale and Purchase Agreement, signed and previously announced on 18 March 2013. Under the Supplement there will be a transfer of a 5% interest in PL1/10 from Brigantes to InfraStrata, a 10% interest from InfraStrata to Brigantes in P2123 and the payment of £86,459 cash from Brigantes to InfraStrata.

All these licence interest assignments will be subject to the approval of the Department of Enterprise, Trade and Investment ("DETI") for PL1/10 and the Oil and Gas Authority ("OGA") for P2123.

Following the signature of the FOAs and Supplement, and subject to DETI approval, the Woodburn Forest-1 and PL1/10 licence interests will become:

Company	Current Licence Interest	Interest to be assigned from InfraStrata	Interest to be assigned from Brigantes	New Licence Interest
InfraStrata plc (operator)	45%	-30%	+5%	20%
Brigantes Energy Limited	45%		-35%	10%
Terrain Energy Limited	10%			10%
Ermine Resources Limited		+10%	+5%	15%
Tudor Hall Energy Limited		+10%		10%
Baron Oil Plc		+10%		10%
Southwestern Resources Limited			+16%	16%
Petro River UK Limited			+9%	9%
	100%			100%

A condition precedent of the Escrow Agreement and FOAs is that the well is drilled during the first half of 2016. To achieve this several factors need to be met, including securing the drilling rig and other contractual arrangements which are expected to be put in place in the next few weeks.  

The Company also announced on 16 November 2015 that as part of sale and purchase agreements with Corallian Energy Limited ("Corallian") (the "Corallian SPA"), and subject to the Woodburn Forest-1 well being fully funded (as now provided by the Escrow Agreement and FOAs) and proceeding as planned, 10% of InfraStrata's remaining interest in PL1/10 and P2123 would be assigned to Corallian, subject to DETI and OGA approval, in return for a further payment to InfraStrata by Corallian of £300,000 in cash. This payment must be received before the commencement of drilling operations, and after making enquiries with Corallian, it is expected that the funds will be available to complete the transaction as planned.

Assuming all agreements (the FOAs, Escrow Agreement, Supplement and Corallian SPA) become unconditional and proceed as announced and anticipated, InfraStrata will retain a 10% operated interest in PL1/10, carried through the Woodburn Forest-1 well.

A prospectivity review of the PL1/10 licence in Northern Ireland was prepared by project geoscience consultants Merlin Energy Resources Limited ("Merlin") in 2013 and published on the Company's website (www.infrastrata.co.uk). Merlin identified combined un-risked P50 prospective resources on the PL1/10 licence in the Triassic and Permian sandstone reservoir intervals of over 450 million barrels of oil ("mmbo"), of which 25 mmbo were ascribed to the first target Woodburn Forest prospect.

 

Commenting on the announcement, Andrew Hindle, CEO of InfraStrata said:

"This is the culmination of 5 years of hard work by InfraStrata and its joint venture partners. Work commenced on PL1/10 in 2011 with the acquisition of the first of two seismic surveys. The technical evaluation of the area has confirmed the presence of numerous prospects within the Larne-Lough Neagh Basin of Northern Ireland. There are three target conventional sandstone reservoir intervals, the Triassic Sherwood, Permian Lower Permian Sandstone and Carboniferous Sandstones.

With Northern Ireland dependent upon imported oil and gas, the development of an oil and gas industry could have a very positive impact on its economy. The drilling activity itself generates income for the local economy. InfraStrata estimates that the drilling of a deep borehole, Islandmagee-1, for its gas storage project in 2015 resulted in approximately £800,000 invested with local services and contractors. The Company expects a similar positive impact for the Woodburn Forest-1 well.

We now look forward to working with local stakeholders to complete the pre-drilling arrangements and then drilling the well with the minimum impact to local residents."

For further information please contact:

InfraStrata plc

Andrew Hindle, Chief Executive Officer                                                               020 8332 1200

Stewart McGarrity, Finance Director

Nominated Adviser and Joint Broker - Allenby Capital Limited

Jeremy Porter / Alex Brearley                                                                           020 3328 5656

Joint Broker - VSA Capital Limited

Andrew Raca/ Richard Buckle                                                                           020 3005 5004

Notes to Editors:

Background on InfraStrata plc

InfraStrata is an independent petroleum exploration and gas storage company focused on Northern Ireland.

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

In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed and signed off by the Chief Executive Officer of InfraStrata plc Andrew Hindle BSc, MSc, PhD, a Chartered Geologist with 30 years' experience, a Fellow of the Geological Society of London, and a member of the American Association of Petroleum Geologists and the Petroleum Exploration Society of Great Britain.

 

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