Corporate and Funding Update

RNS Number : 4673Y

i3 Energy PLC

02 January 2020

 

2 January 2020

i3 Energy plc

("i3" or the "Company")

Corporate and Funding Update

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

2020 planning and farm-out process underway

Following i3's 2019 drilling campaign at Serenity and Liberator, the Company is now preparing for a mid-2020 appraisal programme to delineate the fields which the Company believes could contain more than 600 MMbbls P50 STOIIP.

Well and fluid data from the Serenity 13/23c-10 discovery well encountered sweet, 31.5° API crude in 11 feet of upper Captain oil-bearing sands. The measured oil column on structure, observed through pressure data, was 604 feet true vertical depth (TVD). If the Serenity and neighbouring Tain oil field are in communication as i3 expects, then this infers an oil column height of 1124 feet TVD. On the basis of information recovered from the discovery well, the Company retains its pre-drill estimate of 197 mmbbls P50 STOIIP for Serenity. The Company expects the thickness of the upper Captain sands package to increase, potentially substantially, moving westward along structure, based upon a measured sand thickness of 115 ft true vertical thickness (TVT) immediately west of the Serenity accumulation in the 13/23a-7A well. The 13/23c-10 well has confirmed the strong commercial potential of the Serenity area, and reservoir model simulations demonstrate potential recovery factors above 60%.

Though Liberator wells 13/23c-9 and 13/23c-11 did not meet i3's expectations, the latter confirmed a migration path for hydrocarbons to move westward towards the "Minos High" where the upper Captain sands package is estimated to have a thickness of  circa 200 ft TVT above the oil-water contact. Post-drill mapping of the entire Liberator structure still shows potential in-place resources above 400 MMbbls.

With the highly successful Serenity discovery and remaining potential at Liberator, the Company has begun planning a mid-2020, multi-well appraisal programme and is simultaneously conducting a farm-down process of its licences to potentially fund the 2020 drilling campaign. The Company will continue working with its senior lenders on a development facility for its assets. Future drilling remains subject to funding and i3 will update the market on these endeavours in due course as material progress is made.

GE UK warrants for services rendered

As part of an agreement announced 2 July 2019, i3 Energy has issued a further 2,816,739 warrants to subscribe for Ordinary Shares at an exercise price of 56.85 pence per Ordinary Share to GE Oil & Gas UK Limited ("GE UK"), in addition to the 2,204,574 issued to GE UK and as announced on 29 October 2019.  As previously referenced in the Company's July announcement, these warrants relate to deferred payments for Oilfield Service ("OFS") contracts entered into between i3 and Baker Hughes. To 30 November 2019, Baker Hughes had performed and invoiced i3 Energy for £3,000,000 worth of oilfield services. GE UK can exercise the warrants via cash settlement or in exchange for payments due to Baker Hughes under OFS contracts with the Company. Junior Noteholders will be offered participation in warrants on the same terms as GE UK, pro-rata to their ownership of i3 Energy on a fully-diluted basis, and also pro-rata to the proportion of warrants issued to GE UK under this arrangement. Any warrants subscribed to by Junior Noteholders, in addition to 255,732 warrants remaining due to GE UK for OFS rendered by Baker Hughes, will be subject to shareholder approval at a General Meeting of the Company expected to occur before mid-February.

In accordance with the provisions of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the Company confirms its issued ordinary share capital comprises 107,719,400 Ordinary Shares of £0.0001 each. All of the Ordinary Shares have equal voting rights and none of the Ordinary Shares are held in Treasury. The above figure may be used by shareholders as the denominator for the calculations to determine if they are required to notify their interests in, or change to their interest in, the Company.

With the above issuance of warrants to GE UK, the Company now has 9,503,798 warrants exercisable at 40p/share, notional £8 million warrants exercisable at 40.7p/share, notional £8 million warrants exercisable at 48.1p/share, notional £8 million warrants exercisable at 55.5p/share, and 5,021,313 warrants exercisable at 56.85p/share which, when fully exercised in aggregate, would convert into 65,227,561 Ordinary Shares of £0.0001 each in the Company.

Majid Shafiq, CEO of i3 Energy commented:

"The discovery of the Serenity oil field was a transformational event in i3's history.  We are very excited about the further drilling operations we expect to conduct in 2020 and see this as the lowest risk path to unlocking substantial shareholder value. We believe our acreage, together with the data retrieved from our 2019 drilling campaign, will be very attractive to potential farminees looking to add material barrels and near-term production to their portfolios."

ENDS

CONTACT DETAILS:

i3 Energy plc Majid Shafiq (CEO) / Graham Heath (CFO) c/o Camarco Tel: [phone] WH Ireland Limited (Nomad and Joint Broker) James Joyce, James Sinclair-Ford Tel: [phone] Canaccord Genuity Limited (Joint Broker) Henry Fitzgerald- O'Connor, James Asensio Tel: [phone] Camarco Jennifer Renwick, James Crothers Tel: [phone]

Notes to Editors: i3 is an oil and gas development company initially focused on the North Sea. The Company's core asset is the Greater Liberator Area, located in Blocks 13/23d and 13/23c, to which i3's independent reserves auditor attributes 11 MMBO of 2P Reserves, 22 MMBO of 2C Contingent Resources and 47 MMBO of mid-case Prospective Resources. The Greater Liberator Area consists of the Liberator oil field discovered by well 13/23d-8 and the Liberator West extension. The Greater Liberator Area, along with the Company's Serenity Discovery located in the northern half of Block 13/23c and for which it carries a STOIIP of 197 MMbbls, are owned and operated on a 100% working interest basis. 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. 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 Mihai Butuc, i3's New Ventures Manager, is the qualified person who has reviewed the technical information contained in this document.  He graduated as a Diplomat Engineer, Geology and Geophysics from the University of Bucharest in 1985 and is a member of the Society of Petroleum Engineers.  Mihai Butuc consents to the inclusion of the information in the form and context in which it appears.

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" or "MMbbls"	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;
"MMstb"	millions (106) of stock tank barrels of oil;
"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.

 

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