Placing Result, AIM Re-Admission and Notice of GM

RNS Number : 7616V

i3 Energy PLC

11 August 2020

 

11 August 2020

i3 Energy plc

("i3" or the "Company")

Placing to fund acquisition of certain oil and gas assets owned by Gain Energy Ltd

Application for Re-Admission to trading on AIM and

Notice of General Meeting

i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce the conditional Placing and Subscription of 568,496,326 new Ordinary Shares at 5 pence per Ordinary Share ("Issue Price").  The Company has also conditionally placed 12,650,929 new Ordinary Shares at the Issue Price with UK retail clients of PrimaryBid.

The total fundraising is approximately £29 million and the Company has received a further subscription commitment of approximately £1m subject to regulatory approval.

On 6 July 2020, the Company announced that it had entered into a binding purchase and sale agreement ("PSA") to acquire all the petroleum and infrastructure assets of Gain Energy Ltd. ("Gain"), a  private  Canadian  company  with  operations  in  the  WCSB, for  CAD$80 million (c.US$58.8 million) (the "Gain Acquisition").

Since the announcement of 6 July 2020, the Company has agreed to sell, immediately following completion of the Gain Acquisition, those petroleum and infrastructure assets currently held by Gain which are located in Saskatchewan, to Harvard for CAD$45 million (c.US$33 million) (the "Harvard Sale"), conditional only on completion of the Gain Acquisition.

The Gain Acquisition and the Harvard Sale shall be collectively referred to in this announcement as the "Gain Transaction", and the petroleum and infrastructure assets of Gain which are to be retained by i3 following completion of the Gain Transaction shall be referred to in this announcement as the "Gain Assets".

The Gain Transaction is a reverse takeover under the AIM Rules for Companies and the Company's shares have been suspended pending the publication of a readmission document. The Company is publishing its readmission document today with a notice of general meeting and expects it shares to resume trading thereafter.

Highlights:

· Successfully raised £29 million to fund the acquisition of the Gain Assets and production enhancement opportunities:

o  Conditional placing of 376,996,326 new ordinary shares at the Issue Price

o  Conditional issue of 191,500,000 Subscription Shares (ordinary shares) to Subscribers at the Issue Price

o  Conditional issue of 12,650,929 new ordinary shares at the Issue Price to UK retail clients of PrimaryBid

o  A further commitment to subscribe for approximately £1 million in new ordinary shares at the Issue Price, subject to regulatory approval

· The Gain Assets delivered production of 8,948 boepd in June 2020 and would add 2P reserves of 53.8 MMboe with a before-tax NPV10 of c.US$182 million

· The key benefits of the acquisition of the Gain Assets are:

o  Diversification of i3 Energy's portfolio, adding a quality production base to provide internal free cash flow to grow the enlarged group and provide a near-term return to its Shareholders

o  Delivers compelling acquisition metrics of US$2,876/boepd and US$0.48 per 2P boe

· Prior to the end of Q1 2021, the Company anticipates it will begin paying a dividend of between 20 per cent. and 30 per cent. of free cash flow annually, progressively increasing this to 40 per cent. as i3's Canadian business expands

· The Admission Document, incorporating a Notice of General Meeting, will be posted to shareholders today and will be  available shortly  on the Company's website - https:// i3.energy  

· The Company expects its existing shares to resume trading today

· The Placing and Subscription and Gain Transaction remain subject to shareholder approval at a General Meeting of i3's shareholders. Accordingly, a General Meeting has been convened for this purpose and will be held at 2 Riding House Street, London, W1W 7FA on 27 August 2020 at 1:00 pm.

· Admission will be sought for the enlarged share capital to trade on AIM and admission of the new shares is expected on 28 August 2020

Majid Shafiq, CEO of i3 Energy commented:

"We look forward to the completion of this placing and subscription, which will allow us to acquire our first production assets and transform the Company's future potential as we look to build a large production base in the Western Canadian Sedimentary Basin. We are very grateful to our existing and new investors who have shown confidence in our business plan and growth strategy. Following completion of the Gain Assets acquisition we will focus on production optimisation and cost reduction opportunities in this extensive asset base, in parallel with the ongoing execution of our strategy to rapidly grow production, targeting accretive, material, and complementary assets."

ENDS

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.

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]
Mirabaud Securities Limited (Joint Broker) Peter Krens	Tel: [phone]
Camarco Georgia Edmonds, James Crothers	Tel: [phone]

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

Extract from the Admission Document of Part 1: Letter from the Chairperson of i3 Energy plc. Readers of the below should refer to the Admission Document for explanation of the defined terms included within the text but not shown below.

LETTER FROM THE CHAIRPERSON OF i3 ENERGY PLC

(Incorporated in England and Wales under the Companies Act 2006 with registered number 10699593)

Directors:  Registered office:

Linda Beal (Non-Executive Chairperson)  New Kings Court

Majid Shafiq (Chief Executive Officer) Tollgate

Graham Heath (Chief  Financial Officer)  Chandler's Ford

Neill Carson (Non-Executive Director)  Eastleigh Hampshire

Richard Ames (Non-Executive Director)  SO53 3LG

Dear Shareholders,

Proposed acquisition of certain oil and gas assets owned by Gain Energy Ltd. Placing, Subscription and PrimaryBid offer for 581,147,255 new Ordinary Shares at 5 pence per Ordinary Share Application for Re-Admission to

trading on AIM of 688,866,655 Ordinary Shares and Notice of General Meeting

1.  INTRODUCTION

On 6 July 2020, the Company announced that it had entered into a binding purchase and sale agreement (" PSA ") to acquire all the petroleum and infrastructure assets of Gain Energy Ltd. (" Gain "), a  private  Canadian  company  with  operations  in  the  WCSB, for  CAD$80 million (c.US$58.8 million) (the " Gain Acquisition ").

Since the announcement of 6 July 2020, the Company has agreed to sell, immediately following completion of the Gain Acquisition, those petroleum and infrastructure assets currently held by Gain which are located in Saskatchewan, to Harvard for CAD$45 million (c.US$33 million) (the " Harvard Sale "), conditional only on completion of the Gain Acquisition.

The Gain Acquisition and the Harvard Sale shall be collectively referred to in this document as the " Gain Transaction " and the petroleum and infrastructure assets of Gain which are to be retained by i3 following completion of the Gain Transaction shall be referred to in this document as the " Gain Assets ".

The Net Consideration payable by i3 to acquire the Gain Assets (i.e. after deduction of the proceeds to be received by the Group from the Harvard Sale) is CAD$35 million (c.US$25.7 million) and the Company announces today that this is to be funded by the Company's conditional: (i) placing of 376,996,326 new Ordinary Shares at the Issue Price; and (ii) issue of 188,500,000 Subscription Shares to Subscribers at the Issue Price. Out of the Fundraising proceeds, the Company also expects to use £2 million for finance & legal costs, £5 million for accelerating production and £3 million for general corporate purposes.

The Proposals are conditional, inter alia , upon Shareholder approval at the General Meeting, completion of the Harvard Sale and the satisfaction or waiver of the conditions precedent to the Gain Acquisition, as detailed in paragraph 12.9.1 of Part IX of  this Admission Document. If  such conditions are not satisfied, or, where applicable, not waived, the Proposals will not be implemented.

Due to its size and nature, the Gain Acquisition constitutes a reverse takeover of the Company pursuant to the AIM Rules for Companies.

The Gain Acquisition and the Fundraising are both subject to, inter alia , Shareholder approval at the General Meeting, notice of which is set out at in Part X of this Admission Document. The General Meeting is to be held at 2 Riding House Street, London, W1W 7FA on 27 August 2020 at 1 pm. Under the UK Government's current recommendations with regards to public gatherings, it will not be possible for all Shareholders to attend the General Meeting in person. We therefore strongly encourage Shareholders to vote on all resolutions by completing an online proxy appointment form appointing the Chairman of the meeting as their proxy, to register any questions in advance and not  to attend the meeting in person. Further details of the General Meeting can be found in the Notice of General Meeting in Part X of this document.

Shareholders should note that neither the Gain Transaction nor the Fundraising will occur if Resolutions 1, 2 and 3 are not passed.

This document contains detailed information about the Company, the Gain Transaction and the Fundraising and explains why the Directors consider the Gain Transaction and Admission to be in the best interests of the Company and its Shareholders. The Directors recommend that you vote in favour of the Resolutions to be proposed at the General Meeting, further details of which can be found in the Notice of General Meeting in Part X of this Admission Document.

2.  BACKGROUND TO THE COMPANY

i3 is an independent oil and gas company with assets and operations in the UK. The Company's UK operations are managed by its wholly owned subsidiary, i3 Energy North Sea. Its strategy is to focus on the development of discoveries located close to existing infrastructure and delineation appraisal drilling of prior discoveries to the point of development readiness. The Company's intent is to maintain a limited level of exploration exposure.

Further details regarding the acquisition of the Gain Assets are set out immediately below, with i3's operational and fundraising history following thereafter.

3.  INFORMATION ON THE GAIN ASSETS

On 3 July 2020, i3 entered a binding PSA with Gain to acquire 100 per cent. of its producing and non-producing assets in the Canadian provinces of Alberta and Saskatchewan. i3 has since agreed that immediately following completion of the Gain Acquisition it will sell those petroleum and infrastructure assets currently held by Gain which are located in Saskatchewan, to Harvard for CAD$45 million (c.US$ 33 million) and retain only the Alberta assets (such Alberta assets being referred to in this document as the Gain Assets). This Harvard Sale is conditional on completion of the Gain Acquisition.

In Q4 of 2019, the Gain Assets produced on average 9,509 boepd (40 per cent. liquids) to which GLJ had attributed PDP reserves of 21.5 MMboe with a before-tax NPV10 of  US$118 million, and  2P reserves of 61.3 MMboe with a before-tax NPV10 of US$307 million. As part of i3's re-admission process  (and  to  reflect  the  change  in  the  oil  price  environment  since  December  2019),   i3 commissioned GLJ to update the reserves associated with the Gain Assets. As at 30 June 2020, the updated reserves of the Gain Assets are 18.4 MMboe PDP with a before-tax NPV10 of  c.US$56.5 million and 2P reserves of 53.8 MMboe with a before-tax NPV10 of c.US$182 million. In 2019, the Gain Assets produced c.US$22 million in field EBITDA from 242 Gain-operated wells at an average working interest of 78% and 1,044 non-operated wells at an average working interest of 14%, and included 172k net developed acres and 186k net undeveloped acres of land.

i3, via its wholly owned subsidiary, i3 Canada, will be acquiring the Gain Assets free of all encumbrances (apart from industry standard or acceptable permitted encumbrances). The cash consideration to be paid to Gain under the PSA is CAD$80 million (c.US$58.8 million) (the " Gross Consideration "). The Net Consideration (CAD$35 million / c.US$25.7 million) will be funded by proceeds of the Fundraising. The Gross Consideration will be funded by i3 from: (i) the net proceeds of the Fundraising; and (ii) the net proceeds received from the Harvard Sale. The Gross Consideration will be adjusted by the income generated from all of Gain's assets since 1 May 2020, the economic effective date (the " Gain Effective Date ") of the Gain Acquisition, minus interest on the Gross Consideration accruing from the Gain Effective Date at Canadian Prime + 2 per cent. (totalling approximately 4.45 per cent.) and minus CAD$500,000 (c.US$368,000), per calendar month accruing from the Gain PSA Date to compensate Gain for its management of its assets while the parties complete the Gain Acquisition. Under the terms of the PSA, the Gain Acquisition remains subject to normal course conditions precedent.

As i3 Canada does not at this stage have an operating licence in Canada from the AER to enable it to manage the Gain Assets, i3 Canada has entered into a management and administrative services agreement with Toscana, the commencement of which is conditional on completion of the Gain Transaction (the " Toscana Management Agreement "). Pursuant to the terms of the Toscana Management Agreement,  Toscana  will  provide  all  management  and  administrative  services  to  i3 Canada as are necessary for the proper management and administration of  the Gain Assets.  A summary of the terms of the Toscana Management Agreement is set out in paragraph 12 of  Part  IX of this document.

4.  POTENTIAL TRANSACTION INVOLVING TOSCANA ENERGY INCOME CORPORATION

As announced by the Company on 23 June 2020, i3 has agreed to acquire all of the issued and outstanding common shares of Toscana Energy Income Corporation, a TSX-listed oil and gas company.

Toscana had 2019 year-end 2P Reserves of 4.65 MMboe (53 per cent. gas, 47 per cent. oil) with a reserve life index of 14.7 years and average 2019 production of 1,065 boepd which generated CAD$5.5 million (c.US$4mm) in Field Netback (revenue minus royalties minus opex) from 13 low-decline, long-life  conventional  fields  producing  at  an  average  break-even  price  of  CAD$30.43/boe (c.US$22.38/boe). TEIC operates 62 per cent. of the producing wells in its portfolio at an average net working interest of 67 per cent. Importantly, TEIC has accumulated tax pools of c.CAD$128 million (US$94 million) that cash flow from the Gain Assets will benefit from.

As announced on 30 March 2020, i3 has already purchased the rights and interests in Toscana's CAD$24.8 million senior debt facility and CAD$3.2 million junior debt facility for a total consideration of CAD$3.0 million and CAD$0.4 million, respectively, with the cash consideration being paid 50 per cent. up front and 50 per cent. at 31 December 2020. The aggregate consideration being paid by   i3 for Toscana's debt and equity totals approximately CAD$3.85 million (c.US$2.83 million) and, in light of TEIC's 2019 production and reserves, represents approximately 0.7x Toscana's 2019 Field Netback of CAD$5.5 million (US$4 million), CAD$3,618/boepd (c.US$2,661/boepd), or CAD$0.83/boe (c.US$0.61/boe). Summaries of the finance documents pursuant to which i3 has acquired Toscana's senior and junior debt facilities are set out in paragraph 12.10 of Part IX of this document.

The Toscana Acquisition is to be consummated via a plan of arrangement, the terms of which have been agreed between i3 and Toscana in an Arrangement Agreement. Under the terms of the Arrangement Agreement, the consideration payable by i3 for all of the issued and outstanding common shares of TEIC will be wholly satisfied by the issue by i3 of 4,399,224 fully paid Ordinary Shares, which represent 4.08 per cent. of the Existing Ordinary Shares and 0.64 per cent. of the Enlarged Share Capital.

Due to its size and nature, the Toscana Acquisition will constitute a reverse takeover of the Company pursuant to the AIM Rules.  As a result, the Toscana  Acquisition will also require to be approved by i3 Shareholders by way of an ordinary resolution. Provided the Toscana Acquisition is approved by TEIC shareholders, the Company intends in due course to publish a new admission document detailing the terms of the Toscana Acquisition in accordance with the AIM Rules and convene a general meeting to allow i3 Shareholders to vote on the Toscana Acquisition.

Should the Toscana Acquisition complete, it is anticipated that:

l  i3's Ordinary Shares will be listed on TSX (in addition to AIM); and

l  subject to regulatory due diligence, a current member of the TEIC board, John Festival, will join the board of i3 as a non-executive director. John is a chemical engineer with over 35 years of experience in the WCSB's oil and gas sector and has an excellent track record of founding, growing and monetising oil and gas ventures in Canada. He is currently the CEO of Broadview Energy and was the President and CEO of Black Pearl Resources Inc. prior to its acquisition by International Petroleum in December 2018 in a stock and debt transaction valued at circa CAD$715 million. He was previously the founder and President of BlackRock Ventures Inc., which was established in 2001 and sold to Shell Canada for CAD$2.4 billion in 2006.

Completion of the Toscana Acquisition is conditional upon, inter alia , TEIC's shareholders holding at least 66 2/3 per cent. of the issued and outstanding common shares of TEIC voting in favour of the arrangement at a general meeting.

There can be no assurance that the required shareholder approval from either i3 Shareholders or Toscana shareholders will be received to enable to the Toscana Acquisition to take place and, consequently, there can be no assurance that the Toscana Acquisition will complete.

5.  KEY INVESTMENT PROPOSITION

Diversification into production to necessitate shareholder returns

i3 believes it is necessary to diversify its asset portfolio in order to spread and mitigate risk. Ideally this would diversify multiple aspects of its business, including geological, project life cycle, project capital intensity and capital market risks, whilst also being value accretive to Shareholders. The Company also believes it is critical to add production to its asset portfolio to provide internal free cash flow to grow the Enlarged Group and provide a near-term return to its Shareholders. Having considered a number of global oil and gas basins and specific opportunities, including in the UK sector of the North Sea in the context of the Company's acquisition criteria, it has concluded that the WCSB provides a unique, time-limited opportunity to build a portfolio of production assets on superior commercial acquisition metrics not achievable elsewhere. A short to medium term lack of infrastructure to transport Canadian oil and gas to international markets in combination with depressed gas prices in North America (due to the growth in gas supply from shale drilling) has led to many small and mid-cap oil and gas producers, particularly those with overleveraged balance sheets and heavily gas-weighted portfolios, to become financially distressed and to have limited access to the North American capital markets to fund maintenance opex or growth capex. Many of these companies contain excellent, long-life, low-decline production assets, with solid growth potential that may be acquirable at attractive metrics.

Prior to the end of Q1 2021, the Company anticipates to begin paying a dividend. of between 20 per cent. and 30 per cent. of free cash flow annually, progressively increasing this to 40 per cent. as i3's Canadian business expands. This is subject to the information on dividend policy and potential restrictions as contained in paragraph 29 of Part I and paragraph 5.3 of Part IX of this Admission Document.

It should be noted that i3 can only pay a dividend out of distributable profits. Currently the Company has retained losses, which prevent it from paying a dividend. Following Admission, the Company intends to effect a reduction of share capital to create distributable reserves. A reduction of share capital will require approval by Shareholders and the UK Courts. This process will take several months and there can be no assurance that approval will be obtained from both Shareholders and the UK Courts to enable the reduction of share capital to take place. The declaration, payment and amount of any future dividends of the Company are subject to the discretion of the Directors and will depend on, among other things, the Group's results of operations and financial condition, its future business prospects, its ability to repatriate cash from its subsidiaries, any applicable legal or contractual restrictions and availability of profits. The Directors intend to take professional advice on the most efficient route to repatriate cash from i3 Canada to enable dividends to be paid. If the reduction of share capital is not effected, it is unlikely that a dividend will be capable of being paid by i3 in the near to medium term.

Under current market conditions, the residual free cash flow will be redeployed to acquire additional developed producing reserves or to exploit the best production adding opportunities within the Gain Assets, in order to replace natural decline and increase production levels. At such time as markets improve and acquisition multiples become unattractive, i3 will focus on unlocking the material value held in the Gain Assets PUD and 2P inventory, which has the capacity to more than double current production levels into a strengthening commodity price environment. Fresh production will be at least partially hedged in these stronger markets to secure future cash flow or, alternatively, the Company may monetise new production in order to return additional value to Shareholders.

6.  SYSTEMIC ISSUES DRIVING WCSB OPPORTUNITY

The WCSB has been affected by a dearth of M&A and A&D transactions resulting from overleverage and/or a lack of support in Canadian equity and debt capital markets, the compounding effects of only having single-market access (other than domestic use, the United States has been the only buyer of Canadian oil and gas), and a US shale oil industry that has driven over-supply resulting in substantial pricing differentials between Canadian and US benchmark crude prices. These have all put downward pressure on small, typically overleveraged, upstream producers. This is enabling the opportunity to secure assets on very attractive acquisition metrics.

At a time when these difficulties for some WCSB producers are at an apex, a number of previously stalled, large-scale pipeline and infrastructure  projects  (eg.  Trans  Mountain  pipeline  expansion, TC Energy's Keystone XL, Enbridge Line 3 Expansion, Shell's US$40B LNG Canada project on the west coast) are progressing. Upon completion, these projects will increase the export capacity from the WCSB and should have the effect of normalising Canadian commodity prices to better align with world markets. i3 expects this to resolve one of the main issues that has instigated the financial hardship of many Canadian producers.

It is this backdrop of slumping deal activity and sector-wide depression in the Canadian upstream sector, converging with long-awaited systemic improvements to egress optionality, that the Directors believe will result in a rebound in Canadian asset values. The Company sees this as a time-limited opportunity to acquire undervalued asset portfolios.

7.  i3 ACQUIRING THE GAIN ASSETS ON STRONG METRICS

COVID-19 and a stand-off between large-scale producers, Russia and Saudi Arabia, drove unprecedented and not previously seen oil price volatility between March and May 2020 (with WTI going negative). This provided the Company with an excellent opportunity to capture assets at very attractive metrics in the context of historical transactions. The Gain Assets are expected to produce approximately US$23 million of Field Netback in the next twelve months . The consideration payable by i3 for the Gain Assets (after deduction of the proceeds to be received from the Harvard Sale) represents approximately 1.1x this figure at c.US$25.7 million.

As is demonstrated in the figures below, compared to the 10 most recent A&D transactions above CAD$20 million involving the WCSB up to April 2020 (as shown in the chart below), i3 is acquiring the Gain Assets for approximately one sixth of the market average.

http://www.rns-pdf.londonstockexchange.com/rns/7616V_1-2020-8-11.pdf

1)  Source: Bank of Montreal 8 April 2020

2)  Determined using 19 May 2019 forward strip pricing

i3's Net Consideration of c.US$25.7 million for the Gain Assets sees i3 acquiring a material portfolio that, at 30 June 2020 as verified by GLJ in i3's competent persons report on the Gain Assets, had

23.9  MMboe  of  proved  plus  probable,  developed  producing  reserves  and  53.8  MMboe  of 2P reserves from assets that produced at 8,948 boepd in June 2020. This results in i3's acquisition metrics for the Gain Transaction being US$2,876/boepd, US$0.48 per 2P boe.

Though world oil markets are highly volatile at present, the Gain Transaction will provide substantial revenue  to i3 from the long-life portfolio of  the Gain Assets, such assets having a large PUD and   2P reserves base that offers drillable upside potential at such a time as commodity prices strengthen.

8.  I3'S WCSB STRATEGY: ACQUIRE DEVELOPED PRODUCING PORTFOLIOS BELOW 3X FIELD NETBACK WITH PUD/2P RESERVES AT NO/LOW-COST

The Company is seeking out assets or portfolios that have developed producing reserves that can be acquired for less than 3x next 12 months Field Netback, but that also contain material PUD and  2P inventory that may be drilled at a later date under stronger commodity pricing. i3 will remain acquisitive as long as FD&A costs remain below F&D costs. Once FD&A costs overtake F&D costs, the Company will focus on drilling its highest return PUD and 2P inventory, and thereafter materially hedge this fresh production to secure future cash flow or, alternatively, consider selling either outright or partially this new production to capture value. The latter would give the Company the opportunity to potentially return additional value to Shareholders over and above its planned dividend policy. This strategy is expanded upon in the graphic below.

http://www.rns-pdf.londonstockexchange.com/rns/7616V_1-2020-8-11.pdf

To reiterate, the Directors believe there is a time-limited opportunity, driven by the systemic and market-based issues outlined above, within which to build a material Canadian production business through M&A/A&D that secures a portfolio of future growth opportunities at minimal or zero cost which can be exploited once oil and gas prices stabilise under the new normal that results from current world events.

9.  HISTORICAL DEVELOPMENT OF THE UK GROUP

The UK Group was established to identify, appraise, and develop underfunded oil and gas projects in the UKCS. The Company is headquartered in Aberdeen, Scotland, with its registered office in Eastleigh, Hampshire. The Company recently began to pursue production assets in the Western Canadian Sedimentary Basin. The history of the UK Group is set out below:

2014

l  Established i3 Energy North Sea and its near-term business plan.

2015

l  Commenced the targeting and screening of commercial opportunities.

2016

l  Pre-IPO financing secured and completed the purchase of Licence P.1987

•               Appointed operator status by the OGA 2017

l  Completed additional pre-IPO financing via private placement of loan notes totalling approximately £6.16 million

l  Admitted the Company to AIM

l  Established the Company as the parent company of i3 Energy North Sea

l  Applied for Licence P.2358 Block 13/23c containing a western extension of the Liberator field

2018

l  Awarded sole ownership of 30th Offshore Licensing Round Block 13/23c containing a material extension of the Liberator field referred to by i3 as Liberator West

l  Completed placements raising £2.57m and £1.62m before expenses through the issue of Ordinary Shares at a price of £0.30 and £1.05 per share, respectively

l  Deleveraged the Company's balance sheet through the conversion of US$2.5m of then existing loan notes into 5,220,580 Ordinary Shares at an average conversion price of US$0.48 per share

l  Redefined expected Liberator Phase I work programme to include 2 development wells in addition to the Company's commitment to appraise Liberator West

l  Worked   with the supply chain on development design and engineering

l  Conducted internal and third-party reservoir simulations to optimize and de-risk well locations and trajectories

l  Commissioned and completed feasibility and engineering studies for the tie-in of the planned Liberator production wells to the Bleo Holm FPSO Vessel

l  Contracted Gardline Limited to conduct a site survey at its Liberator field

l  Appointed Majid Shafiq as CEO and Neill Carson (previous CEO and co-founder) as Non-Executive Director

2019

l  Entered a minimum 94-day drilling contract with Dolphin Drilling Ltd for use of the Borgland Dolphin for i3 Energy North Sea's planned 2019 three-well campaign

l  Completed issuance of the Loan and Loan Note Warrants

l  Completed equity financings of £18 million in March and £5 million in November at an average price of £0.35 per Ordinary Share

l  Awarded a £3 million contract for oilfield services and equipment to Baker Hughes and issued them £3 million of notional warrants that could be exercised at £0.5685 per Ordinary Shares via cash settlement or in exchange for payments due under oilfield service or oilfield contracts with the Company

l  Extended the date by which the Company was to have a Liberator Phase I development facility in place from 30 November 2019 to 30 April 2020, under the terms of its Loan Notes

l  Issued 9.5 million warrants to Loan Noteholders at an exercise price of £0.40 per Ordinary Share

l                    Drilled the 13/23c-9 and 13/23c-11 wells at Liberator without finding an oil column sufficient for i3 to pursue a development well at these locations

l  Drilled the 13/23c-10 exploration well discovering the Serenity oil field 2020

l  The Company began planning a 2020, multi-well appraisal programme and simultaneously began a farm-down process of its Serenity and Liberator licences to potentially fund a 2020 appraisal drilling campaign

l  Resignation of David Knox, Chairman, who took on the top role at Australia's largest renewable energy provider

l  Linda Beal assumed the role of Interim Chairperson

l  Conducted a site survey of Serenity and Liberator West's Minos High structures

l  Entered into a drilling contract with Dolphin Drilling Ltd to conduct a multi-well drilling campaign during 2020 and 2021, subject to funding availability, and agreed a net revenue sharing agreement with Dolphin Drilling Ltd under which it could earn up to 10 per cent. of the Serenity field by foregoing drilling profits of up to US$14.4 million

l  Entered an option agreement to acquire Toscana, a TSX-listed company with producing assets in the WCSB, with the Company becoming Toscana's senior-secured lender through the purchase of the rights and interests in Toscana's senior and subordinated debt facilities

l  Announced a restructuring of the UK Group's Loan Notes and Loan Note Warrants

l  Replaced the Liberator Phase I Development Funding Long-stop Date with a Corporate Development Long-stop Date under which certain conditions would need to be achieved prior to September 2020 and April 2021;

l  Reset the exercise price of the Loan Note Warrants to £0.0001 per Ordinary Share (the nominal value of i3's Ordinary Shares);

l  Announced the proposed cancellation of certain of i3's management and Director share options, which will be replaced with new options that will replicate the amended Loan Note Warrants in relation to exercise price

l  Announced the Company's exercise of its option to acquire Toscana by way of a plan of arrangement

l  Announced its planned acquisition of the Gain Assets

l  Suspended trading while the Company completes the Gain Transaction and the Fundraising.

10.  FUNDING HISTORY OF THE UK GROUP

Prior to its introduction to the AIM in July 2017, the Company funded itself through founders' equity and the issuance of convertible loan notes totalling approximately £6.2 million. At the time i3's Ordinary Shares were first admitted to AIM, the Company had 25,690,892 Ordinary Shares outstanding, having converted £4.1 million in convertible loan notes at an average price of £0.44 per Ordinary Share.

During  the  course  of  2018,  i3  issued  £2.57  million  of  equity  at  £0.30  per  Ordinary  Share and

£1.54 million of equity at £1.05 per Ordinary Share. Also during 2018 the remaining £2 million of convertible loan notes that were issued prior to IPO converted into equity at an average price of

£0.35 per Ordinary Share, and the Company ended 2018 with 41,107,438 Ordinary Shares issued and outstanding.

In order to undertake a three-well appraisal drilling programme at its UK licences beginning in Q3 of 2019, in March 2019 i3 issued £18.1 million of equity at an average price of £0.35 per Ordinary Share (with one investor also receiving 4,225,204 warrants at an average exercise price of £0.471 per Ordinary Share) and in May 2019 i3 North Sea issued the Loan Notes. As part of the Loan Note issuance, £22 million of notional value warrants were issued which, upon exercise, would convert into 46,477,246 Ordinary Shares at an average exercise price of £0.471 per Ordinary Share. After a successful well result at its Serenity oil discovery, i3 issued an additional £5 million in equity at

£0.35 per Ordinary Share and, at the end of 2019, the Company had in issue 107,719,400 Ordinary Shares.

The two 2019 appraisal wells drilled at the Company's Liberator oil discovery did not produce a result capable of securing a reserve-based lending facility by November 2019, a condition of the Loan Notes, and a waiver was granted to extend the Development Funding Long-stop Date to 30 April 2020. At this time, approximately 9.5 million additional warrants were issued to the Loan Noteholders at an exercise price of £0.40 per Ordinary Share. Collectively with the abovementioned Loan Note Warrants, there were a total of approximately 56 million warrants held by the Loan Noteholders.

As the Company was not in a position to enter into a Liberator Phase I development credit facility by 30 April 2020, the Development Funding Long-stop Date obligation was removed as a condition of the Loan Notes and a new Corporate Development Long-stop Date was set for 30 September 2020 prior to which i3 has to achieve one of the following Corporate Development Long-stop Conditions:

l  Secure firm irrevocable commitments for a minimum of £15 million of unsecured or fully subordinated financing, subject only to closing mechanics; or

l  Agree a farm-out and/or funding term sheet, subject only to legal documentation to fund the drilling of at least one appraisal well on Serenity during 2020 or 2021; or

l  Execute an acquisition agreement for at least 2500 boepd of production net to i3.

In addition, the Company has an obligation under the Loan Notes to achieve net corporate production at or above 5,000 boepd by 30 April 2021.

The Gain Transaction, upon completion, will satisfy the above Corporate Development Long-stop Conditions and the condition to  achieve  net  corporate  production  at  or  above  5,000  boepd by 30 April 2021. A previous condition of the Loan Notes was for the Company to obtain a secondary public markets listing, however this has since been waived by the Loan Noteholders.

As part of the above Loan Note amendments, all Loan Note Warrants had their exercise price reduced to the nominal value of i3's Ordinary Shares of  £0.0001 per Ordinary Share. As a  requirement of the Loan Note amendments and in order to ensure alignment between the Loan Noteholders and management, certain employee share options will be cancelled and 11,847,241 replacement options will be issued to board and management at an exercise price of £0.0001 per Ordinary Share.

For the purposes of calculation, it should be considered that the Company currently has issued Ordinary Shares of 179,858,354, which takes account of all in-the-money equity-linked instruments.

The Company also has in issue 5,000 deferred shares of £10.00 each, 5,277,045 warrants with an exercise price of £0.5685 each, 1,201,201 warrants with an exercise price of £0.555 each, 1,386,001 warrants with an exercise price of £0.481 each, 1,638,002 warrants with an exercise price of £0.407 each and, 500,000 EMI options with an exercise price of £0.11 each.

As at the date of this Admission Document, the Loan Noteholders in aggregate represent c.37 per cent. of the fully-diluted share capital.

As at the date of this Admission Document, i3 employees and the Directors represent i3 ownership totalling c.18 per cent. on a fully-diluted basis.

11.  OPERATIONAL HISTORY OF THE UK GROUP

i3's entry into the UKCS came in December 2016 through its acquisition of Licence P1987 Block 13/23d, containing the Liberator oil discovery. During 2017, the Company conducted a site survey over that acreage and additionally acquired and analysed seismic covering 830 km2 across a number of blocks. During this process, i3 mapped a material extension of the Liberator structure into an adjacent, open-acreage licence area. The Company submitted an application (on a firm-well basis) for this licence area in the 30th UK Seaward Licensing Round. The open acreage was awarded to i3 in May 2018 as Licence P2358 Block 13/23c.

Across the remainder of 2018, i3's technical team continued to analyse seismic over the P1987 and P2358 licences, mapping a large extension of the original Liberator discovery into Block 13/23c. This extension contains two key areas referred to by the Company as Liberator West and the Minos High. In addition to the southern half of Block 13/23c containing the Liberator structures, the Company began to assess a structure in the northern portion of the block. This structure, the Serenity prospect, was an amplitude supported feature having an areal extent of circa 10 km2 interpreted to be the westerly extension into Block 13/23c of the Repsol Sinopec operated Tain oil discovery. The Tain discovery well, drilled in September 2005, encountered 32° API oil in Captain and Coracle sands and the Tain field was subsequently appraised by three wells.

On 4 October 2019, the Company announced that the Serenity 13/23c-10 well had been spud. The purpose of this well was to confirm that the Serenity structure, which the Company estimated to have a P50 resource of 197 MMbbls of STOIIP (recovery factors are expected to be c.50 per cent.), was hydrocarbon bearing and that it was a material extension of the Tain field situated in the adjoining Block 13/23b. On 29 October 2019, i3 announced a successful oil discovery had been made at the Serenity structure and that key geologic horizons were encountered within the prognosis tolerances. The well, drilled down dip from the Tain discovery, encountered a sequence of Captain and Coracle sands with oil confirmed in the interval from 4740ft total vertical depth subsea (" TVDSS ") to as deep as 5252ft TVDSS. The oil water contact was estimated to be at 5270ft TVDSS based on pressure measurements, the same level as seen in the Blake and Liberator fields. The interval contained circa 339ft measured depth (" MD "), 165ft TVD of sand in total, with oil in the uppermost Captain sand and in the Coracle sands at the base of the interval, and, if connected to the Tain field as i3 anticipates, represents a mapped oil column of approximately 622ft TVD in the Captain sand alone. The net oil interval in the Captain sand was c.10ft of high porosity (30 per cent.) sand. This was thicker than in the up-dip Tain discovery and consistent with the Company's expectation that the Captain sands thicken to the west in Serenity (as demonstrated by the c.150 ft of sand seen in the offset 13/23a-7A well situated to the west of Serenity). Reservoir quality is expected to be equivalent to that seen in the Tain wells, one of which (13/23b-5Z) tested at an estimated 2750 bopd from a 5ft interval in the Captain sand. Oil samples recovered from the downhole sampling tool are expected to be of similar quality to the 32° API oil found in the Tain field. The results of the Serenity 13/23c-10 well closely aligned with the Company's expectations and confirmed the strong commercial potential of the Serenity area, of which i3 owns 100 per cent.

Countering the Company's Serenity success were the two wells drilled in the potential Liberator Phase I development area, the 13/23c-9 and 13/23c-11 wells, which delivered unexpected results, with the observed oil column in the 13/23c-11 well being thinner than the level i3 would target for a development well location. As the Phase I development could not immediately proceed on the back of these results, thereby pushing potential production cash flows from the Company's UK assets into the future, there was extreme downward pressure on the Company's share price.

In early 2020, the Company announced that it was planning for a 2020 appraisal campaign at Serenity, subject to funding, and that a farm out process had been initiated. The unprecedented events resulting from the COVID-19 pandemic and an international price war between oil superpowers put pressure on the prospects of a farm out that would result in that campaign proceeding during the 2020 drilling season. However, parties remain engaged with i3 on its UK  assets and the Directors remains hopeful that an offer will be made for early 2021 appraisal drilling that is capable of acceptance. Subject to having sufficient residual cash, i3 may in the future consider redeploying cash from its Canadian operations to fund further Serenity appraisal.

12.  CANADIAN OIL & GAS FISCAL REGIME

A  summary  of  the  Canadian  oil  and  gas  fiscal  regime  can  be  found  at: https://assets.kpmg/content/dam/kpmg/ca/pdf/2018/05/oil-gas-guide.pdf

http://www.rns-pdf.londonstockexchange.com/rns/7616V_1-2020-8-11.pdf

13.  FUTURE PROSPECTS AND STRATEGY OF THE ENLARGED GROUP

The Company's initial strategy post-Admission is to:

As it relates to the WCSB

l  to consider the use of entering into hedging contracts to avoid the impacts of volatile commodity prices;

l  integrate select staff from Gain to ensure operational continuity and knowledge retention;

l  optimise Gain's under capitalised portfolio, concentrating on low-cost workovers and opex that maintains or increases current production levels;

l  complete the Toscana Acquisition and undertake systems integration for the Enlarged Group;

l  identify non-core assets within the Gain and Toscana portfolios that can be divested or farmed out;

l  seek out additional overleveraged or non-core developed producing portfolios that contain material upside and can be acquired within i3's acquisition parameters; and

l  prioritise high-return, on-acreage drilling opportunities to deliver PUD and/or 2P reserves to production when demand and pricing across the commodity streams (oil, NGLs, gas) dictates.

As it relates to the UK North Sea

l  continue to pursue an appraisal farm-down of Serenity and Liberator West;

l  maintain rig and services optionality to conduct further appraisal drilling during optimal 2020 or 2021 seasonal windows; and

l  analyse potential assets coming available in upcoming licensing rounds.

In conjunction with the above, the Directors intend to grow the business in the longer term through the acquisition of additional production, development and appraisal assets using its existing networks within the oil and gas industry and in particular, in the UK North Sea and the WCSB. As part of this strategy, the Company intends to focus on opportunities which are broadly within the following criteria:

l  geographical location within proven and mature basins where the Enlarged Group has detailed knowledge;

l  assets in production with deliverable upside, having net reserves in excess of approximately 10 MMboe and production, or achievable near-term production, in excess of approximately 5,000 boepd;

l  opportunities whereby members of the Enlarged Group would assume operatorship of the underlying oil and gas assets, with a high percentage working interest;

l  low acquisition costs, appraisal and development capital expenditures, with the ability to generate significant value creation multiples;

l  low finding, development and operating costs; and

l  low exposure to decommissioning liabilities.

Whilst the Company is focused on entering accretive production ventures where additional value can be unlocked in the near term, this will not preclude it from considering each new opportunity in terms of relative value creation within the context of the overall objectives of the Company. This approach may include divestments, acquisitions, farm-ins, farm-outs and exchanges of interests. The Enlarged Group's acquisition strategy is intended to be primarily funded from cash flows produced from the Gain Assets. However, the Board may consider alternative funding sources as appropriate, including accessing equity and debt capital markets.

The Directors believe that the Proposals will offer the Enlarged Group numerous benefits, including:

l  greater potential access to capital in the future;

l  the potential to attract a broader investor base;

l  having an ongoing market for the Ordinary Shares of the Company; and

l  the ability to retain and attract high quality employees through performance-based equity incentives.

14.  KEY STRENGTHS

The Directors believe that the corporate strategies of the Company and the Enlarged Group are underpinned by the following key strengths:

The Enlarged Group's management team and Board have substantial experience in the oil and gas industry

The Enlarged Group has a strong technical team, with combined experience of approximately

200 years. In addition, the members of the senior management team have significant financial, geoscience and operational expertise and have demonstrated their ability to identify, acquire and evaluate highly productive E&P portfolios.

The Company's breadth of technical, operational and commercial expertise is complemented by the Board which has extensive experience in the oil and gas industry and a track record of creating and realising shareholder value through both organic growth and corporate activity. The Directors have held senior positions in large, medium and small oil and gas companies, several of which are listed on either AIM, the Main Market in London, Toronto's TSX or TSX Venture Exchanges.

The Company benefits from an international commercial and operational network

i3 has developed an international network of high-quality industry commercial representatives who provide the Company with a wide range of skills. These include verification of internal work, exposure to broader expertise and techniques, and greater access to international deal flow and field development services. A collaborative approach within this network has supported the Company in attaining a strong position for the identification, acquisition, and development of potential opportunities. This will continue to form a core part of the Enlarged Group's strategy.

Significant near-term cash flow plus upside potential from long-life, low-decline assets

The Gain Assets are expected to provide material cash flow from approximately 9,000 boepd of production. Free cash flow will be partially directed towards dividends to Shareholders with the residual being redeployed towards the acquisition of developed producing assets or the development of on-acreage PUD/2P reserves in order to increase shareholder value.

Low country risk

The Enlarged Group will operate in the UK and Canada, which are established petroleum regions with many oil and gas producers and significant infrastructure in place. The regulatory regimes in these countries are considered by the Directors to be both predictable and streamlined and the political situation is very stable in each, both ranking high on global transparency rankings. A summary of the regulatory environment of each country is set out in Parts VII and VIII of this Admission Document. The UK North Sea and Western Canadian Sedimentary Basin host a wide range of oil and gas companies from small independent start-ups to super-majors and there is an active market for buying and selling oil and gas assets and companies in each region.

15.  BOARD AND MANAGEMENT

i3 has assembled a highly experienced and qualified team of  technical, operational and financial   oil & gas professionals. The Aberdeen-based team has collectively accumulated approximately 200 years of direct operating experience through employment in a wide range of super major, large independent and start-up enterprises. Various members of the management team have extensive track records of building effective development and production organisations. Since being approved in December 2016 as an operator in the UKCS, i3 Energy North Sea has been strengthened by the addition of personnel with extensive North Sea development and operational experience. i3 Energy North Sea's core staff are supplemented by the insourcing of experienced consultants and through strategic alliances with key service providers. Current operations are run from i3 Energy North Sea's UK office located near Aberdeen, Scotland.

In total, the UK Group has 9 employees (excluding the two executive Directors) located in its Aberdeen and London UK offices and also utilises the services of several professionals on a consulting basis.

16.  DIRECTORS

At Admission, the Board will comprise two executive Directors and three non-executive Directors (including the Interim Chairperson) whose biographical details are set out below:

Majid Shafiq, Chief Executive Officer (aged 56)

Mr Majid Shafiq has over 30 years of technical and investment banking experience focused on the global E&P sector. Prior to founding Argentil Capital Partners (UK) Limited as CEO in 2015, Majid spent circa fifteen years in energy investment banking advising on asset level acquisitions and divestments, corporate M&A and equity financing for the private and public, small to mid-cap oil and gas sector. During that time he worked for Waterous and Co, Tristone Capital Ltd and latterly with FirstEnergy Capital LLP as Managing Director, Corporate Finance. Prior to his investment banking career, he worked for Mobil Oil Corporation for 13 years in various petroleum engineering and commercial roles in the UK and the Netherlands. Majid holds a Bachelors degree in Nuclear Engineering from Manchester University, a Masters degree in Petroleum Engineering from Heriot- Watt University and an MBA from London Business School.

Mr Shafiq served as a Non-executive Director of the Company until 8 October 2018 at which time he succeeded Mr Neill Carson as Chief Executive Officer of the Company.

Graham Heath, Chief Financial Officer (aged 46)

Prior to co-founding i3 in late 2014, Mr Heath served as VP Corporate Development and later as Interim CFO at Iona Energy Inc. ("Iona") from December 2010 alongside Mr Carson. During his time at Iona, Mr Heath worked with the senior management team to build the company from infancy to   40 MMboe of 2P reserves and production above 6,000 boe/day, listing the company on the Toronto Venture Exchange, and  structuring  equity, debt,  and  derivative  financings  in  excess  of  US$670 million. As VP Corporate Development he was a proactive engager of all external  stakeholders and as Interim CFO led a finance and administration team that expanded internal financial controls while improving quarter-on-quarter quality and delivery of financial reporting. Before joining Iona, Mr Heath's 14 year career focused on energy-related tech startups and consulting within Alberta's Oil and Gas Industry. Between 1998 and 2010, Mr Heath consulted to Colt Engineering, PanCanadian Petroleum, EnCana Corporation and Cenovus Energy. From 2002 to 2006, Mr Heath was Co- founder and VP of Strategic Development for The CO2 Hub - a marketplace created to facilitate the sale and purchase of carbon dioxide and its related purification, compression, storage, and transportation services - designed to foster the aggregation of CO2 supply and demand for its use in enhanced oil recovery. Mr Heath holds a Bachelor of Commerce from the University of Calgary.

Linda Beal (nee Coxon), Non-Executive Chairperson (aged 59)

Ms Linda Beal has over 30 years' experience advising international E&P clients and since 2016 has been a board member of numerous companies. As a director of other small cap natural resources businesses, she brings corporate governance and financial expertise and experience as Audit Committee Chair. Ms Beal joined Grant Thornton in 2014 as a Tax Partner and was Global Leader for Energy and Natural Resources, mandated to build its global energy and natural resources capability. Previously,  Ms Beal spent 30 years at PwC and its legacy firm Price Waterhouse in Audit and Tax,  16 of them as a Partner. Launching PwC's Natural Resources Independents business in the mid- 2000s, she focused on advising international E&P clients across the AIM, FTSE350, overseas listed and private sectors. Ms Beal graduated in 1982 from the University of Nottingham with a BSc (Hons) in Mathematics, thereafter qualifying at Price Waterhouse as a Chartered Accountant in 1985.

Neill Carson, Non-executive Director (aged 61)

Mr Carson has 38 years of management and international project experience in the oil  &  gas industry. On completion of his Bachelors (with First Class Honours) and Master degrees in the geosciences from Ulster University and Birmingham University respectively, he joined Amoco in 1981. During his 14 years with Amoco he was responsible for numerous exploration and production projects within the UKCS. His international career widened through exploration management positions for BP Amoco in the Netherlands, Bolivia, and Pakistan. As Performance Unit Leader for  BP Pakistan, Mr Carson was responsible for the delivery and growth of approximately 12,000 boe/ day and capital budgets in excess of US$50m. Through his career with BP Amoco, Mr Carson executed growth plans through successful oil and gas discoveries, and the development and management of commercial portfolios. He contributed as a select member of a targeted team to BP's world-wide new venture screening initiative in 2003. In early 2004, Mr Carson co-founded Ithaca Energy Inc. ("Ithaca") where he served as its President and a Director from April 2004 and acted as Chief Operating Officer until late 2007. While at Ithaca, Mr Carson was responsible for asset acquisitions, all aspects of operations and safety, general corporate strategy, and the drilling of four successful oil wells. Across his 4 years with Ithaca, the portfolio grew to 39 MMboe of 2P reserves and was on plan to deliver 8,000 boe/day of production. Mr Carson founded Iona in late 2007 where he served as Chief Executive Officer until his departure in mid 2014 to form i3. Responsible for all aspects of corporate strategy and portfolio development, he grew Iona to 40 MMboe of 2P reserves and saw peak production of 6,700 boe/day.

Mr Carson served as Chief Executive Officer of the Company until 8 October 2018 at which time he was succeeded by Mr Majid Shafiq.

Richard Ames, Non-Executive Director (aged 64)

Mr Richard Ames brings to the Board 36 years of broad range experience in the oil and gas industry with senior executive roles in full-cycle oil and gas exploration and production, information technology and oil and gas services. He has held several Vice President positions in TNK-BP, Sidanco, and Amoco in Russia & Kazakhstan, where he was responsible for government liaison, the implementation of business strategies and the management of exploration and new venture projects. He has recently held Board and Advisory Board of Director positions in Iona, Accenture Russia, the Kiawah Conservancy, and DataSpace. Mr Ames graduated from Duke University with a Bachelor of Science degree in Geology, and from the University of Georgia with a Master of Science in Geology. He joined Amoco in 1981 and worked as a geologist responsible for reserve definition in several international petroleum basins including the North Sea.

17.  SENIOR EMPLOYEES

In addition to the executive and non-executive Directors of the Company, the following senior employees are considered relevant in establishing that i3 has appropriate expertise and experience for the management of its business.

The management expertise and experience of these employees is set out below.

John Woods, Chief Development Officer

Mr Woods has 38 years of experience in the UK oil industry, including 14 years as a Petroleum Engineer and 21 years in Operations Management. He holds a Bachelor of Science degree in Engineering Science from Leicester University from where in 1981 he joined BNOC (based in Glasgow and Aberdeen) as a graduate trainee, gaining experience in all aspects of reservoir engineering, process engineering, petrophysics and joint venture management as well as working offshore on fixed production platforms and mobile drilling rigs. In 1987, Mr Woods moved to London working as a petroleum engineer for Texas Eastern before joining Amerada Hess Ltd in 1989. John was Lead Petroleum Engineer for Hess' Scott development project taking the project through concept selection, development drilling and construction. In 1992, Mr Woods moved to Aberdeen with Hess to establish their Operations Petroleum Engineering department in advance of the Scott project becoming operational. Mr Woods then moved into Operations Management, initially as field superintendent for the Hudson and Fife producing fields and then as Asset Manager for the Ivanhoe

/ Rob Roy complex and finally as Asset Manager for the Scott facility (one of the UK's largest producing assets). On leaving Hess in 2002, Mr Woods worked for a leading petroleum consultancy in charge of their wells and chemistry teams before taking up a role as Production Services Director at Wood Group Engineering in Aberdeen in 2003. After establishing Wood Group's operational capability as a service company 'Duty Holder', Mr Woods joined Ithaca Energy in 2006, serving as Chief Development Officer and Chief  Operations Officer through to 2015. Mr Woods saw the company through initial flotation on the London and Toronto Stock Exchanges and subsequent equity, debt and bond financings. Mr Woods developed several new North Sea oilfields as well as taking over operation of some very mature late life assets. Ultimately, oil production at Ithaca rose to over 15,000 bopd through organic project delivery, acquisition of shares in producing assets and acquisition of other companies. Whilst at Ithaca, his direct reports included the drilling, projects, production and safety departments. Mr Woods joined i3 in May 2016 to take up a similar role to that which he held at Ithaca.

Mihai Butuc, Manager New Ventures

Mr Butuc is a petroleum geoscientist with broad experience in oil and gas exploration and development, acquired in over 34 years of his international career. Specialising in interpretation and integration of data and disciplines, he is a generator of new and successful exploration ideas, a confirmed oil finder, mainly in highly explored basins. After graduating as a Diplomat Engineer, Geology and Geophysics from University of Bucharest in 1985, and after three years in the mining industry, Mr Butuc joined Prospectiuni S.A. as petroleum geologist where he specialised in seismic interpretation and basin modelling. Then, between 1993 and 1996 as Chief of  Integrated Interpretation Service of Petrom, he led successful exploration and reservoir projects on and offshore Romania. Mr Butuc joined Halliburton in 1996, and spent eight years as a consultant for Total in Paris working in new ventures, exploration and development projects in North and South America, Africa, Europe, Middle East and Central Asia. In 2004 he moved to Halliburton Asset Performance Centre in Aberdeen where, besides leading and working on projects mainly in Europe, Kazakhstan and the Middle East, he built and managed E&P portfolios for new entrants in the UKCS. He then focused on the North Sea and joined Ithaca Energy in 2006 followed by Dana in 2013, where besides supporting organic growth through new exploration prospects, he identified high return acquisition targets with significant upside and quick payback.

Canghu Yang, Senior Petroleum Engineer

Mr Yang has over 24 years in the oil & gas industry with well-established experience in a wide range of oil field developments in Offshore West Africa, the North Sea and onshore China, specialisation in reservoir performance analysis, matured field redevelopment, production optimisation, reservoir simulation, material balance, DCA, pressure analysis, EOR, and petroleum economics evaluation. Prior to joining i3 in early 2019, Mr Yang was Chief Exploitation Engineer at CNR International in Aberdeen, where he was responsible for all technical aspects of Reservoir Engineering for Canadian

Natural Resources Limited (CNRL)'s assets outside of Canada, including South and West Africa, and the North Sea, managing a dozen reservoir engineers to ensure high quality work on all projects in CNRL's international division. After spending the first 11 years of  his career as a reservoir engineer at CNPC and Sinopec in China, Mr Yang spent time as a research assistant on post-doctoral projects at Heriot Watt University in Edinburgh to investigate the impact of upscaling methods on reservoir simulation in a shallow marine depositional environment. Mr Yang has a Diploma in Petroleum Geosciences and an MSc in Petroleum Engineering from the Department of Petroleum Engineering at Chengdu College of Geology in China, and a PhD in Petroleum Engineering from the T. H. Huxley School of Environment, Earth Sciences and Engineering at Imperial College in London, England.

Colin Tannock, Geoscience Evaluator

Mr Tannock has over 38 years' experience in the UK North Sea. Colin started his career at Conoco North Sea in 1978 as a  development  geologist  and  petrophysicist  in  the  UK  North Sea  Fields. Mr Tannock went on to become Chief Geologist at Aran Energy Exploration before joining Talisman Energy UK as Area Exploration Manager at where he spent 11 years and was part of the team that discovered and appraised the Beauly oilfield, an untapped pool north of Beatrice and the  development of the Halley field for Shell's Fulmar platform. Most recently Mr Tannock was Chief of Subsurface at Iona Energy from 2011 to 2015. Prior to this Mr Tannock was the Geoscience and Exploration Manager for TAQA Bratani where he was a member of  the evaluation team that successfully proposed the acquisition of Shell's Northern Fields to TAQA. Mr Tannock gained a bachelors degree in geology from the University of Glasgow, followed by an MBA from the University of Strathclyde.

Ian Little, Drilling & Operations Manager

Mr Little has over 36 years of experience in the oil and gas industry with BP as a Vice President and Wells Engineering and Operations Manager. After leading wells teams across the globe, he became the Vice President of BP's global wells organisation, responsible for Major Projects and Operated by Others. In this role he developed BP's strategy for delivering wells as part of an integrated  organisation, from selecting the right concept through to delivering the detailed basis of design and cost estimates. The projects sanctioned under his leadership include the giant Shah Deniz phase 2 HPHT gas field in Azerbaijan, Oman's first onshore tight gas field and BP Trinidad's first subsea oil development. In this role he also developed BP's global strategy for wells decommissioning. Mr Little has led wells engineering and operations teams in established and emerging basins across North Africa, Gulf of Mexico, and the North Sea. In these roles he was seen as a leader who could build high performing multi-disciplinary teams and deliver technically challenging projects safely and competitively.

Sheri Barton, Manager Finance and Admin, Corporate Secretary

Ms Barton has over 30 years of extensive finance and administration experience in various private and public companies. She has held senior management positions relating to finance, regulatory reporting, administration, controls and reporting procedures, strategic planning, acquisitions, due diligence and business development. Prior to joining i3, Ms Barton held the role of International Corporate Manager at Iona, working with its senior management team in the areas of finance and administration. Previously, Ms Barton owned a consulting firm working with numerous start-up and mid-size companies in all aspects of their business. She has additionally worked with numerous senior management teams to list companies on various Canadian exchanges, developing and executing their investor relations programs, and performing corporate secretarial duties.

18.  DETAILS OF THE FUNDRAISING

a)  The Placing

Each of the Brokers has conditionally agreed, pursuant to the Placing Agreement, to act as agent for the Company and use its reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing is not being underwritten. The Placing will raise approximately £18.85 million (approximately US$24.69 million) for the Company (before commission and expenses). The Placing Shares are being placed with certain existing and new institutional and other sophisticated investors.

The Company has conditionally placed the Placing Shares. As the Company does not have sufficient authority to allot the Placing Shares in full for cash on a non pre-emptive basis, the

placing of the Placing Shares is conditional upon, inter alia , the passing of Resolutions 2 and 3 at the General Meeting, which is expected to be held on 27 August 2020, and admission of the Placing Shares occurring on or before 28 August 2020 (or such later date as the Brokers may agree, not being later than 11 September 2020). Following their admission, the Placing Shares will represent approximately 54.73 per cent. of the Company's then Enlarged Share Capital.

The Placing Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, paid or made after the date of issue, and will be placed free of any expenses and stamp duty.

Under the terms of the Placing Agreement, the Brokers will receive commission from the Company conditional on Admission and the Company will give customary warranties and undertakings to the Brokers in relation, inter alia , to its business and the performance of its duties. There is no other investment banker, broker, finder or other intermediary other than PrimaryBid that has been retained by or is authorised to act on behalf of the Company who might be entitled to any fee or commission in connection with the Placing. In addition, the Company has agreed to indemnify the Brokers in relation to certain liabilities that they may incur in undertaking the Placing. Each of the Brokers has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event that there has been, inter alia , a material breach of any of the warranties given by the Company and/or the Directors to the Brokers.

In the case of investors receiving Placing Shares in uncertificated form, it is expected that the appropriate CREST accounts will be credited for the Placing Shares with effect from 28 August 2020. In the case of investors receiving Placing Shares in certificated form, it is expected that certificates will be dispatched by post, within 14 days of the date of Admission.

Further details of the Placing Agreement are set out in paragraph 12.1.1 of Part IX of this Admission Document.

b)  The Subscription

The Subscribers have entered into the Subscription Letters with the Company pursuant to which the Subscribers have agreed, conditional upon Admission occurring, to subscribe for the Subscription Shares at the Issue Price to raise approximately £9.425 million. For further information on the Subscription Letters, please refer to paragraph 12.1.1 of Part IX of this Admission Document.

In addition, each of the Funds has entered into a further conditional subscription letter with the Company  (the  " Conditional  Subscription  Letters ")  to  collectively  subscribe  for  up  to

£942,637 worth (the " Maximum Subscription Amount ") of new Ordinary Shares at the Issue Price (such shares being the " Bybrook Further Subscription Shares "), which if allotted, would result in the Company raising gross proceeds of £30 million between the Fundraising and this subscription. It is anticipated that the Bybrook Funds will on Admission collectively be interested in just under 30 per cent. of the Enlarged Share Capital. Accordingly, to the extent that allotting the Bybrook Further Subscription Shares would result in the Bybrook Funds collectively being interested in 30 per cent. or more of the Company's issued share capital following such allotment, it will be a condition of such allotment that it be approved in advance by both the Panel and the i3 Shareholders in a general meeting in accordance with the Takeover Code and that Admission shall have occurred by no later than 28 August 2020 (or such later date as may be agreed) (the " Implementation Conditions "). The Bybrook Funds subscribed for Ordinary Shares in the Company in December 2019. Accordingly, and in accordance with the Takeover Code, it is anticipated that the earliest time that the Company could seek satisfaction of  the Implementation Conditions would be during December 2020.  To the extent the Implementation Conditions are not capable of satisfaction, the  Bybrook Further Subscription Shares shall never be allotted and the associated subscription monies not received by the Company. The Maximum Subscription Amount will be reduced on a pound for pound basis, by (i) any cash amounts subscribed for new Ordinary Shares secured by, or on behalf  of,  the Company between the date of  publication of  this Admission Document and   31 October 2020, and/or (ii) an amount equal to any pre-completion downward adjustment to the Net Consideration payable by the Company. Accordingly, the Maximum Subscription Amount may be reduced to £nil and the Bybrook Further Subscription Shares therefore may never be allotted. As consideration for entering into the Conditional Subscription Letters, the

Company has agreed to pay the Bybrook Funds an aggregate fee of £150,000 conditional upon Admission. Such fee shall be settled in full by the issue of 3,000,000 new Ordinary Shares (the " Bybrook Fee Shares ") on Admission. Such fee shall be payable regardless of whether all or any part of the Maximum Subscription Amount is subscribed pursuant to the Conditional Subscription Letters. For further information on the Conditional Subscription  Letters, please refer to paragraph 12.2 of Part IX of this Admission Document.

The Subscription Shares, together with the Bybrook Fee Shares, will represent 27.79 per cent. of the Enlarged Share Capital on Admission.

The Company has conditionally placed the Subscription Shares and the Bybrook Further Subscription Shares. As the Company does not have sufficient authority to allot the Subscription Shares and the Bybrook Further Subscription Shares in full for cash on a non pre- emptive basis, the proposed issue of the Subscription Shares and the Bybrook Further Subscription Shares is conditional upon, inter alia , the passing of Resolutions 2 and 3 at the General Meeting, which is expected to be held on 27 August 2020.

The Subscription Shares and the Bybrook Further Subscription Shares will rank pari passu in  all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, paid or made after the date of issue, and will be issued free of any expenses and stamp duty.

c)  PrimaryBid

PrimaryBid has conditionally agreed, pursuant to the PrimaryBid Engagement Letter, to act as agent for the Company and use its reasonable endeavours to procure subscribers for the PrimaryBid Shares at the Issue Price. The PrimaryBid Offer is not being underwritten. The PrimaryBid Offer has raised £632,546 (approximately US$828,636) for the Company (before commission and expenses).

The Company has conditionally placed the PrimaryBid Shares. As the Company does not have sufficient authority to allot the PrimaryBid Shares in full for cash on a non pre-emptive basis, the placing of the PrimaryBid Shares is conditional upon, inter alia , the passing  of  Resolutions 2 and 3 at the General Meeting, which is expected to be held on 27 August 2020. Following their admission, the PrimaryBid Shares will represent approximately 1.84 per cent. of the Company's then Enlarged Share Capital.

The PrimaryBid Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, paid or made after the date of issue, and will be placed free of any expenses and stamp duty.

In the case of investors receiving PrimaryBid Shares in uncertificated form, it is expected that the appropriate CREST accounts will be credited for the PrimaryBid Shares with effect from  28 August 2020. In the case of investors receiving PrimaryBid Shares in certificated form, it is expected that certificates will be dispatched by post, within 14 days of the date of Admission.

Further details of the PrimaryBid Engagement Letter are set out in paragraph 12 of Part IX of this Admission Document.

19.  USE OF PROCEEDS

The gross proceeds of the Fundraising to the Company are approximately £29 million (approximately US$38 million) and are currently intended to be applied as follows:

Net Consideration  £20 million

Finance & Legal Costs  £2 million General Corporate Purposes  £2 million Production acceleration  £5 million

20.  EMPLOYEES, EMPLOYEE SHARE SCHEMES AND PENSION SCHEMES

i3 employs 9 staff, excluding the two Executive Directors.

Employees participate in share option schemes and all current employees are entitled to participate in the Employee Plan, see paragraph 6 of Part IX of this Admission Document for details.

The Company currently operate a pension scheme through NEST for all eligible employees.

21.  CORPORATE GOVERNANCE AND BOARD PRACTICES

The Board recognises its responsibility for the proper management of the Company and is committed to maintaining a high standard of corporate governance. The Directors also recognise the importance of sound corporate governance commensurate with the size and nature of the Company and the interests of its Shareholders. The Corporate Governance Code does not apply to companies quoted on AIM and there is no formal alternative for AIM companies. The Quoted Companies Alliance has published a set of corporate governance guidelines for AIM companies, which include a code of best practice comprising principles intended as a minimum standard, and recommendations for reporting corporate governance matters. The Directors intend to comply with the QCA Corporate Governance Guidelines for Smaller Quoted Companies so far as it is practicable having regard to the size and current stage of development of the Company. The Board currently comprises two executive Directors (being the Chief Executive Officer and the Chief Financial Officer) and three non-executive Directors (including the interim Chairperson).

Ms Linda Beal, Mr Neill Carson and Mr Richard Ames (these being the three non-executive Directors) are, in the opinion of the Board, independent in character and judgment.

The share options held by the non-executive directors and the ordinary shares held by Neill Carson from his time spent as an executive director of  the Company are outlined in paragraph 6 of  Part IX of this Admission Document. Ms Linda Beal and Mr Richard Ames hold an interest in shares through holding options over 123,508 and 534,376 Ordinary Shares, respectively. Mr Richard Ames also currently holds 204,575 Ordinary Shares. Consequently, given this relatively small percentage of options over which they hold shares, it is not considered that such an interest would compromise their independence with regards to the Board's decision-making process.

The Board's decision-making process is not dominated by any one individual or group of individuals. None of the Directors have any potential conflicts of interest between their duties to the Company and their private interests and/or duties owed to third parties.

The composition of the Board will be reviewed regularly and strengthened as appropriate in response to the Company's changing requirements. Appropriate training and an induction programme will be undertaken in respect of all Directors on appointment and subsequently as necessary, taking into account existing qualifications and experience.

The Board intends to have a minimum of four Board meetings per year, including physical meetings  at least two times a year, which also shall include an annual strategy day. At these meetings, the Board will review the Company's long-term strategic direction and financial plans. All necessary information will be supplied to the Directors on a timely basis to enable them to discharge their duties effectively. Certain matters are reserved for consideration by the Board whilst other matters are delegated to Board committees. The Board is responsible for leading and controlling the Company and, in particular, for formulating, reviewing and approving the Company's strategy and budget.

The Board has established the following committees:

(a)  Audit Committee

The role of the audit committee is to assist the Board in discharging its responsibilities with regard to monitoring the integrity of the Company's financial reporting, to review the Company's internal control and risk management systems, to monitor the effectiveness of the Company's external and internal audit function and to oversee the relationship with the Company's external auditors. The audit committee focuses particularly on compliance with legal requirements, accounting standards and the AIM Rules and ensures that an effective system of internal financial control is maintained.

The audit committee is chaired by Ms Beal and the other member is Richard Ames. The audit committee will meet at least two times a year with further meetings as required. The Chief Executive Officer, the Chief Financial Officer, other Directors and representatives from the finance function may also attend and speak at meetings of the audit committee. No members of the audit committee have links with the Company's external auditors.

The terms of reference of the audit committee are available on the Company's website.

(b)  The Corporate Governance Committee (" CG Committee")

The primary purposes of the CG Committee are to develop and recommend to the Board guidelines, policies and procedures relating to corporate governance; identify individuals qualified to become Board members; recommend to the Board director nominees for election to the Board; recommend to the Board committee composition and appointments; evaluate the performance and effectiveness of the Board and committees of the Board; and, review and make recommendations to the Board on non-employee director compensation.

The CG Committee will meet at least twice a year or as otherwise required. The CG Committee is chaired by Ms Beal and the other member is Neill Carson. The Chief Executive Officer, the Chief  Financial Officer and other Directors may also attend and speak at meetings of  the  CG Committee.

The terms of reference of the CG Committee are available on the Company's website.

(c)  Reserves Committee

The reserves committee assists the Board in monitoring and reviewing the appointment of an independent engineering firm retained by the Company to report on the quantity and the value of the Company's oil and gas reserves and resources. The reserves committee reviews the procedures by which the Company provides information to the independent engineering firm to be used as the basis of evaluation and audit, ensuring disclosure complies with applicable laws and regulations, and is also responsible for matters relating to the preparation and public disclosure of estimates of the Company's reserves and resources. In addition, the reserves committee would monitor any of the Company's future joint venture partners to ensure policies and procedures are in place to minimise environmental, occupational health and safety and other risks such that damage to or deterioration of asset value is mitigated.

The reserves committee will meet at least twice a year. The reserves committee is chaired by Mr Carson and the other member is Mr Ames. The Chief Executive Officer, the Chief Financial Officer and other Directors may also attend and speak at meetings of the reserves committee.

The terms of reference of the reserves committee are available on the Company's website.

(d)  Remuneration Committee

The role of the remuneration committee is to determine and agree with the Board the broad policy for executive and senior employee remuneration, as well as for setting the specific remuneration packages (including pension rights and any compensation payments of all executive Directors and the Chairman) and recommending and monitoring the remuneration of the senior employees. In accordance with the remuneration committee's terms of reference, no Director shall participate in discussions relating to or vote on his own terms and conditions of remuneration. Non-executive Directors' and Chairman's fees will be determined by the Board.

The remuneration committee will meet at least twice a year and as otherwise required. The remuneration committee is chaired by Mr Ames and the other member is Ms Beal. The Chief Executive Officer, the Chief Financial Officer and other Directors may also attend and speak at meetings of the remuneration committee.

The terms of reference of the remuneration committee are available on the Company's website.

22.  TAXATION

Your attention is drawn to the taxation section contained in Part IX of this Admission Document. If you are in any doubt as to your own tax position, you should consult your own independent financial adviser without delay.

23.  HEDGING

The Company has a policy to hold cash balances in the most appropriate currency to mitigate foreign exchange price exposures.

The Gain Transaction comes without hedging. Following completion of the Gain Transaction, i3 will seek to hedge a quantity of future production that will protect the Company's intention to pay a dividend of between 20 per cent. and 30 per cent. of free cash flow to Shareholders. This is subject to the information on dividend policy as contained in paragraph 29 of Part I and paragraph 5.3 of Part IX of this Admission Document.

24.  CURRENT TRADING AND PROSPECTS

In addition to the transactions discussed within this document, the Company's management intends to remain lean and cost efficient while the oil & gas sector continues to struggle under the impacts  of COVID-19, making  access  to  capital  more  difficult  for  smaller  companies  such  as  i3.  As at 4 August 2020, the Group had approximately £883,233.50 of cash in the bank.

25.  LOCK-IN ARRANGEMENTS AND ORDERLY MARKETING UNDERTAKINGS

Pursuant to Rule 7 of the AIM Rules for Companies, the Directors (for themselves and persons associated with them) have undertaken to the Company and WH Ireland not to dispose of their respective interests in Ordinary Shares for a period of 12 months following Admission subject to the exceptions provided for in Rule 7 of the AIM Rules for Companies.

The Directors have further agreed with the Company and WH Ireland not to dispose of any of their interests in Ordinary Shares, for a further 12 months, except through the Brokers, so as to maintain an orderly market in the Ordinary Shares. Further details of these arrangements are set out in paragraph 12 of Part IX of this Admission Document.

26.  SHARE OPTIONS

The Company considers it essential that its Directors, Senior Managers and employees are appropriately incentivised to create future value for Shareholders. This is particularly important in the context of the Enlarged Group, whereby it will be important that key employees of Toscana, who it is anticipated will become part of the Enlarged Group in due course, are appropriately incentivised.

The Company currently has in place the i3 Energy plc 2017 Employee Share Option Plan (the " Employee Plan ")  and  the  i3  Energy  plc  2017  Non-Employee  Share  Option  Plan  (the " Non-Employee Plan " and, together with the Employee Plan, the " Existing Share Plans "), further details on which are disclosed in paragraphs 6 of Part IX of this Admission Document.

As disclosed in the Company's RNS dated 23 June 2020, it is a condition of the amendments that were made to the Loan Notes and the associated Loan Note Warrant Instruments on 24 June 2020 that the outstanding options under the Existing Share Plans will be cancelled and replaced with new options (the " Re-priced Options "), which replicate the terms of the Loan Note Warrants Instruments (as amended) in relation to the exercise price, to seek alignment between Loan Noteholders and the Company's management and Directors. Accordingly, it has been agreed that, following the publication of this Admission Document, the Company will proceed to cancel all of the outstanding options under the Existing Share Plans and replace them with 16,157,612 the Re-priced Options  i3 intends to reserve 4,097,741 of the Re-priced Options for employees of Toscana who join the Group following completion of the Toscana Acquisition. The Re-priced Options will have an exercise price of £0.0001 and will vest as follows:

l  a total of 4,223,528 Re-priced Options will vest immediately (equivalent in number to previously vested options granted under the Existing Share Plans);

l  50 per cent. of the unvested Re-priced Options will vest on the earlier of the Company obtaining: (i) £15 million of unsecured or fully subordinated financing; (ii) an appraisal farm-out or funding term sheet for Serenity; and (c) a net acquisition of 2,500 boepd; and

l  50 per cent. of the unvested Re-priced Options (or 100 per cent. if 50 per cent. have not yet vested under the bullet above) vest on the earlier of: (i) the Company achieving 5,000 boepd of corporate production; and (ii) 31 October 2021.

Further details of the Re-priced Options are set out in paragraph 6 of Part IX of this Admission Document.

The Company also intends to make: (i) conditional on Admission, awards over 43,248,832 Ordinary Shares to employees and Directors of the Enlarged Group; and (ii) awards over 31,935,420 Ordinary Shares to employees of i3 Canada following completion the Gain Transaction and, separately, the Toscana Acquisition (together, the " New Options "). The New Options will have an exercise price equal to the Issue Price and be granted under the terms of the Existing Share Plans.

The New Options will vest after three years, subject to accelerated vesting on the following performance targets being met:

(a)  For employees of i3 North Sea (other than the executive Directors and those employees in corporate roles)

l  One-third on Admission;

l  One-third at spud of the next Serenity / Liberator appraisal well; and

l  100 per cent. upon a third-party reserve auditor attributing 25 MMbbls 2P post drilling of a Serenity / Liberator appraisal well.

(b)  For future employees of i3 Canada following completion the Gain Transaction and, separately, the Toscana Acquisition

l  One-third immediately;

l  One-third if July 2021 production exits at or above 9,000 boepd; and

l  100 per cent. upon the addition of 5,000 boepd or 25 MMboe 2P reserves.

(c)  For Directors and those employees of the Enlarged Group in corporate roles

l  One-third on Admission;

l  One-third: (i) on spud of the next Serenity / Liberator appraisal well; or (ii) if July 2021 production exits at or above 9,000 boepd; and

l  100 per cent. upon: (i) a third-party reserve auditor attributing 25 MMbbls 2P post drilling of a Serenity / Liberator appraisal well; or (ii) the addition of 5,000 boepd or 25 MMboe 2P reserves.

In addition, to incentivise the UK and Canadian offices of the Enlarged Group to work as one team and assist each other as required going forward, if one of the offices satisfies one of  the early vesting criteria for the New Options (other than Admission (for employees of i3 North Sea) or on grant of the award (for future employees of i3 Canada)), then the equivalent vesting criteria for the other office shall be deemed 20 per cent satisfied (and a further 6.67 per cent. of  the New Options held  by employees in the other office would vest immediately).

Further details of the New Options are set out in paragraph 6 of Part IX of this Admission Document.

At present, the Existing Share Plans permit the grant of awards over issued or unissued Ordinary Shares equal to, in aggregate, up to 15 per cent. of the Company's fully diluted share capital. This aggregate limit will remain in place following Admission and will encompass the Re-priced Options and the New Options.

27.  HEALTH, SAFETY AND ENVIRONMENT

The operations of the Company are subject to a variety of laws and regulations governing the discharge of materials into the environment or otherwise relating to environment protection. Failure to comply with these laws and regulations can result in the imposition of substantial fines and penalties as well as potential orders suspending or terminating rights to operate. Some environmental laws to which the Company is subject provide for strict liability for pollution damage, rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. In addition, the Company's operations are subject to particular hazards incidental to exploration, development and production of oil and gas, such as blowouts, cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires and pollution and other risks. These hazards can cause personal injury or death, damage or destruction of property and equipment, pollution or environmental damage and suspension of operation. The Company has put in place and will maintain as appropriate, insurance against the risks associated with its activities, in line with legislation and standard industry practice.

i3 is a member of the Offshore Pollution Liability Association Ltd., the voluntary oil pollution  compensation scheme which all offshore operators currently active in exploration and production on the UKCS are party to. The Company maintains an Environmental Management System in line with the requirements of OSPAR Recommendation 2003/5 to Promote the Use and Implementation of Environmental Management Systems by the Offshore Industry, as implemented in the UK by the

OGA. The Company is committed to following good practice in respect of environmental matters and its environmental policy includes, amongst other things, compliance with applicable laws and regulations, implementation of systems to identify and manage risks associated with its activities and ensuring that its employees and contractors are adequately trained in the environmental aspects of their jobs.

The Board intends to establish an Environmental Management Committee which will be responsible for formulating and recommending policies on environmental issues relating to the Company's operations.

28.  IRREVOCABLE UNDERTAKINGS

The Company has received irrevocable undertakings from the Bybrook Funds to vote in favour of all the Resolutions in respect of, in aggregate, 14,938,717 Ordinary Shares, representing approximately

13.87 per cent. of the Existing Ordinary Shares.

The Company has received irrevocable undertakings from the following Directors (or persons connected with them) to vote in favour of all the Resolutions in respect of the following number of Ordinary Shares:

                                    Aggregate number of

Ordinary Shares  % of Existing

Director  voted in favour  Share Capital

Graham Heath                                                                                                                       6,816,213  6.33

Neill Carson                                                                                                                         6,712,133  6.23

Majid Shafiq                                                                                                                             143,765  0.13

In addition to the Directors (and persons connected with them), certain other employees have irrevocably undertaken to vote in favour of the Resolutions in respect of Existing Ordinary Shares in which they are interested, as follows:

Aggregate number of

Employee	Ordinary Shares voted in favour	% of Existing Share Capital
John Woods	1,326,944	1.23
Mihai Butuc	1,221,580	1.13
Ian Little	208,853	0.19
Sheri Barton	912,665	0.85
Colin Tannock	195,522	0.18

29.  DIVIDEND POLICY

Prior to the end of Q1 2021, the Company anticipates to begin paying a dividend of between 20 per cent. and 30 per cent. of free cash flow annually, progressively increasing this to 40 per cent. as i3's Canadian business expands. This is subject to the information on  dividends  contained  in  paragraph 5.3 of Part IX of this Admission Document.

The declaration, payment and amount of any future dividends of the Company are subject to the discretion of the Directors and will depend on, among other things, the Group's results of operations and financial condition, its future business prospects, its ability to repatriate cash from its subsidiaries, any applicable legal or contractual restrictions and availability of profits. The Directors intend to take professional advice on the most efficient route to repatriate cash from i3 Canada to enable dividends to be paid.

It should be noted that i3 can only pay a dividend out of distributable profits. Currently the Company has retained losses, which prevent it from paying a dividend. Following Admission, the Company intends to effect a reduction of share capital to create distributable reserves and bring these forward to offset the retained losses and create surplus profits. A reduction of share capital will require approval by Shareholders and the UK Courts. This process will take several months and there can be no assurance that approval will be obtained from both Shareholders and the UK Courts to enable the reduction of share capital to take place. If the reduction of share capital is not effected, it is unlikely that a dividend will be capable of being paid by i3 in the near to medium term.

It should also be noted that while any of the Loan Notes remain outstanding, no dividend can be paid by i3 without the prior consent of Loan Noteholders. Although i3 expects that Loan Noteholders will be supportive of any decision to pay a dividend, there can be no assurance that such consent will be given by Loan Noteholders on terms acceptable to the Enlarged Group.

30.  RELATED PARTY TRANSACTION - SUBSCRIPTION

The Subscription by the Bybrook Funds for 210,352,745 new Ordinary Shares in the Company constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies as a result of the current shareholding position of the Bybrook Funds. The Company's board of directors considers, having consulted with the Company's Nominated Adviser, WH Ireland Limited, that the terms of the Subscription by the Bybrook Funds are fair and reasonable insofar as the shareholders of the Company are concerned.

31.  SHARE DEALING CODE

The Company has adopted a share dealing policy which sets out the requirements and procedures for the Board and applicable employee's dealings in any of its AIM securities in accordance with the provisions of MAR and of the AIM Rules. All Directors have received training on MAR, and this has also been cascaded down to all employees who may come into possession of inside information or become aware of information that could potentially be inside information, to ensure they are aware of how to handle it.

32.  TAKEOVER CODE

The Takeover Code is issued and administered by the Panel. The Panel has been designated as the supervisory authority to carry out certain regulatory functions in relation to takeovers pursuant to the Directive. Following the implementation of the Directive by the Takeovers Directive (Interim  Implementation) Regulations 2006, the rules set out in the Takeover Code now have a statutory basis.

The Company is a public limited company incorporated in England & Wales and is admitted to trading on AIM. Accordingly, the Takeover Code applies to the Company.

Under Rule 9 of the Takeover Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer to all the shareholders of that company to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry not less than 30 per cent. of the voting rights of a company and does not hold shares carrying more than 50 per cent. of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested, a general offer will normally be required in accordance with Rule 9.

An offer under Rule 9 must be made in cash (or be accompanied by a cash alternative) and at not less than the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Under the Takeover Code a concert party arises when persons acting together pursuant to an agreement or understanding (whether formal or informal) cooperate to obtain or consolidate control of, or frustrate the successful outcome of an offer for, a company subject to the Takeover Code. Control means an interest or interests in shares carrying an aggregate of 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control. Under the Act, if an offeror were to make a takeover offer for the Ordinary Shares and were to acquire or unconditionally contract to acquire 90 per cent. of the shares to which the offer relates, and 90 per cent. of the voting rights attached to those shares, within three months of the last day on which its offer can be accepted, it could compulsorily acquire the remaining 10 per cent. It would do so by sending a notice to outstanding Shareholders telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the Company, which would hold the consideration on trust for outstanding Shareholders. The consideration offered to the Shareholders whose shares are compulsorily acquired under the Act must, in general, be the same as the consideration that was available under the takeover offer.

The Act would also give minority Shareholders in the Company a right to be bought out in certain circumstances by an offeror who had made a takeover offer. If a takeover offer related to all the Ordinary Shares and, at any time before the end of the period within which the offer could be accepted, the offeror held or had agreed to acquire not less than 90 per cent. of the Ordinary Shares to which the offer relates, any holder of Ordinary Shares to which the offer related who had not

accepted the offer could by a written communication to the offeror require it to acquire those Ordinary Shares.

The offeror would be required to give any Shareholder notice of his right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority Shareholders to be bought out, but that period cannot end less than three months after the end of the acceptance period. If a Shareholder exercises his or her rights, the offeror is bound to acquire those Ordinary Shares on the terms of the offer or on such other terms as may be agreed.

Further information on the provisions of the Takeover Code can be found in paragraph 17 of Part IX  of this Admission Document.

33.  GENERAL MEETING

Set out at the end of  this Admission Document is a notice convening a General Meeting to be held at the offices of the Company, at 2 Riding House Street, London, W1W 7FA at 1 pm. on 27 August 2020 at which the following Resolutions will be proposed:

l  Resolution 1: an ordinary resolution to approve the Gain Transaction for the purposes of Rule 14 of the AIM Rules for Companies;

l  Resolution 2: subject to the passing of Resolution 1, an ordinary resolution to:

-  authorise the Directors to allot the Placing Shares, the Subscription Shares, the Bybrook Further Subscription Shares, the PrimaryBid Shares, the Re-priced Options and the New Options; and

-  authorise the Directors to allot further Ordinary Shares representing up to one-third of the Enlarged Share Capital;

l  Resolution 3: subject to the passing of Resolution 2, a special resolution to dis-apply statutory pre-emption rights in relation to the allotment of:

-  the Placing Shares, the Subscription Shares, the Bybrook Further Subscription Shares, the PrimaryBid Shares, the Re-priced Options and the New Options; and

-  further Ordinary Shares representing up to one-third of the Enlarged Share Capital;

l  Resolution 4: a special resolution to approve the purchase of the Company's own shares.

If Resolutions 1, 2 and 3 are not passed, the Gain Transaction and the Fundraising will not proceed To be passed:

l  Resolution 1 requires a simple majority of Shareholders voting in person or proxy to vote in favour;

l  Resolution 2 requires a simple majority of Shareholders voting in person or proxy to vote in favour;

l  Resolution 3 requires a majority of not less than 75 per cent. of Shareholders voting in person or by proxy to vote in favour; and

l  Resolution 4 requires a majority of not less than 75 per cent. of Shareholders voting in person or by proxy to vote in favour.

34.  ADMISSION, SETTLEMENT AND DEALINGS

Trading in the Existing Ordinary Shares is expected to recommence at 8.00 a.m. today. Assuming the Gain Transaction becomes unconditional in all respects (save for the payment of the Gross  Consideration), the Fundraising Shares will be issued and, simultaneously with the cancellation of the Company's existing quotation on AIM, admission of the Enlarged Share Capital will occur. The Company expects that the Gain Transaction will become unconditional in all respects (save for the payment of the Gross Consideration) on or around 27 August 2020 and therefore Admission of the Enlarged Share Capital is expected to occur on or around 28 August 2020.

35.  CREST

CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument in accordance with the CREST Regulations.

The Ordinary Shares are eligible for CREST settlement. Accordingly, following Admission, settlement of transactions in the Ordinary Shares may continue to take place within the CREST system if a Shareholder so wishes.

CREST is a voluntary system and Shareholders who wish to receive and retain share certificates are able to do so.

For more information concerning CREST, Shareholders should contact their stockbroker.

36.  RISK FACTORS AND ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in Parts II to X (inclusive) of this Admission Document. You are recommended to read all the information contained in this Admission Document and not just rely on the key or summarised information. In particular Shareholders should read in full the Risk Factors set out in Part III of this Admission Document.

The technical information contained in this Admission Document, which has been extracted from the Competent Person's Reports in Parts VI of this Admission Document, has been reviewed and approved by GLJ and TRACS, respectively, in the form and context in which they appear. GLJ and TRACS have also reviewed the Admission Document in its entirety. Both parties have consented to  the inclusion of the technical information extracted from their Competent Person's Reports in this Admission Document in the form and context in which it appears.

37.  ACTION TO BE TAKEN

Under the UK Government's current prohibition on public gatherings, it will not be possible for all Shareholders to  attend  the  General  Meeting  in  person.  We therefore  strongly  encourage Shareholders to vote on all Resolutions by completing an online proxy appointment form appointing the Chairman of the meeting as your proxy, to register any questions in advance and not to attend the meeting in person.

You will not receive a form of proxy for the General Meeting with this Admission Document. Instead,  if you would like to vote on the resolutions, you may appoint a proxy via www.signalshares.com by following the instructions on that website or, if you hold your shares in CREST, via the CREST system. Notice of your appointment of a proxy should reach the Company's Registrar, Link Asset Services, by no later than 1:00 pm. (BST) on 25 August 2020.

You may request a hard copy form of proxy directly from the Company's Registrar, Link Asset Services, by calling 0871 664 0391. Calls cost 12p per minute plus your phone company's access charges. If you are outside the United Kingdom, please call [phone]. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between

9.00 am. - 5.30 pm. (BST), Monday to Friday, excluding public holidays in England and Wales.

If you hold your shares through a nominee service, please contact the nominee service provider regarding the process for appointing a proxy.

Shareholders are encouraged to submit their voting instructions as soon as possible. See below for details with regard to voting instructions.

Shareholders can submit questions to the Board in advance of the General Meeting by emailing such questions to [e-mail] by no later than 1:00 pm. (BST) on 25 August 2020. The Board will consider all questions received and provide a written response.

The health and well-being of our Shareholders and colleagues remains our priority and the steps set out above are necessary and appropriate ones given the current pandemic.

38.  DIRECTORS' RECOMMENDATION AND VOTING INTENTION

The Directors consider that the Proposals are in the best interests of the Shareholders and the Company as a whole, and, accordingly, the Directors recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they have irrevocably undertaken to do so in respect of their own beneficial holdings of 13,876,686 Ordinary Shares, representing approximately 12.88 per cent. of the Existing Ordinary Shares.

Shareholders should note that in the event the Resolutions are not approved, amongst other things, the Gain Transaction will not proceed and the Fundraising Shares will not be issued. For this reason, the Company strongly encourages Shareholders to vote in favour of the Resolutions.

 

END

 

 

IOEKKDBKABKKBFD