INFA.L Share News (INFA)

(Sharecast News) - Natural gas storage development company InfraStrata updated the market on progress on its Islandmagee gas storage project on Wednesday, reporting that due diligence had been ongoing with its second potential equity partner since January.The AIM-traded firm said the work stream had now been completed after review of all aspects of the project, adding that the project also had a "similar degree of scrutiny" applied to it in the third and fourth quarter of 2018 by another potential equity partner.It said its current discussions were now focussed on those two "highly interested", but unidentified, parties.In relation to its offtake negotiations, InfraStrata said it had narrowed the field down to three potential offtake partners from six, who the company and its potential equity partners apparently believed would be good long-term matches for the project."Our negotiations and analyses were assisted by our recently commissioned report from market leading consultants to provide more detailed analyses on our revenue model, as detailed in our announcement on 7 March," the board said in its statement."This report assessed actual income - assuming our planned facility was in operation - for the past 10 years, and our forward projections for the next 10 years."These results have exceeded our expectations and have also been shared with our potential partners."InfraStrata said the results "clearly" demonstrated increasing volatility in the UK gas market since the closure of Centrica's Rough gas storage facility, and indicated that storage revenues could achieve highs of between 50 and 60 pence per therm during the course of the next decade.Current discussions were said to be "well underway" between the potential equity and offtake partners to reach an agreement on an acceptable contract length and structure of the offtake agreement, which would facilitate formal agreements being entered into.The company said it was keen to conclude those discussions as soon as it could, while ensuring that it achieved the best deal possible.Additionally, the board said it had received the results from both its construction engineering, procurement and construction (EPC) and owner's engineer tenders.While it still had more evaluation works to complete, InfraStrata said those bids appeared to be consistent with the FEED P90 estimates produced by Costain, which indicated the likely construction costs of the facility."We will continue to evaluate the results and intend entering into formal negotiations in the coming weeks with the aim to negotiating a construction contract thereafter, which will be entered into ahead of our planned final investment decision at the end of the first half of 2019."As the firm had previously indicated, InfraStrata said it had made "good progress" on the debt front with indicative terms received from two banks.It explained that early indications showed that its potential equity partners could provide a portion or all the debt, in addition to the equity, which would be further evaluated after an offtake agreement was entered into.A combined debt and equity deal from a single provider would increase the speed at which final investment decision could be undertaken.As the company moved towards the construction phase of the project, it said it had started recruitment activities to build a "high performing team" that would deliver it, and facilitate the planned injection of first gas late in 2022."We have made good progress during 2019 and we now have a clear route to commercialisation of our project," said InfraStrata interim chairman and chief executive officer John Wood."We identified a clear scope of works that was required to be undertaken to facilitate progression."We have been working through these items in recent weeks and having completed those actions."Wood said the board was now "clearly focussed" on the offtake agreement terms that it hoped would bring one of its potential equity partners onboard."We remain committed to final investment decision by the end of the first half of 2019."We are pleased that the second detailed due diligence process by a potential equity partner has been completed."