Last checked at 22 Nov 2017 09:28
22nd November 2017
i3 Energy plc
("i3" or the "Company")
30th Licence Round Application - Fully Funded
i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce that it has applied for acreage, made available within the UK's 30th Offshore Licensing Round, on a 100% basis.
The Company has targeted and extensively evaluated seismic and well data on a highly attractive region of acreage that if awarded to i3 would add to the Company's portfolio, as announced on 3 November 2017, 2C Contingent Resources of 22 MMBO (with a 63% chance of commerciality1) and Mid case Prospective Resources of 47 MMBO (with a 51% chance of commerciality2), according to the opinion of AGR TRACS International Limited, the Company's Competent Person. Further details of the Company's portfolio and targeted opportunity can be found in the current Corporate Presentation on i3's website.
The Company is also pleased to confirm that a binding agreement has been entered into with an existing loan note investor to provide financial backing in the form of an investment and net revenue sharing agreement (the "NRSA"). Under the terms of the NRSA, the Company can draw US$13 million to advance its 30th Round bid commitments and work programme. In consideration of those funds being made available and utilised, the investor will become entitled to share in certain of the after-tax revenues ("ATR") generated from the acreage after first oil. The arrangements for sharing the ATR are as follows.
(a) Firstly, the ATR generated will be shared on the basis that an amount equal to 200% of the Investor's invested funds will be paid to the Investor, and an amount equal to 200% of the Company's pre first oil capital expenditure ("capex") will be retained by the Company (collectively "Payback").
(b) Secondly, the ATR generated after Payback will be retained by the Company until the total amount of ATR reaches an amount equal to (i) all of the Company's remaining (non capex) pre first oil costs; (ii) all of the Company's post first oil costs (non capex) and (iii) 200% of the Company's post first oil capex.
(c) Lastly, ATR generated thereafter will be shared on the basis that 33% will be paid to the investor and 67% will be retained by the Company.
The availability of the funding is subject to, amongst other things, the Company being awarded the targeted acreage, OGA consenting to the terms of the agreement, and certain production targets from existing assets of the Company being met. In addition, at any time prior to initial utilisation of the investor funding, the Company may cancel the agreement without any fee, cost or penalty being payable.
There can be no certainty that the abovementioned application will result in the successful award of the acreage under application and successful awards may not be announced until Q1 2018.
Neill Carson, i3's CEO, commented
"We have made significant progress in moving forward the Liberator Development with regard to reserves, development readiness, and the most recently announced indicative proposal and confirmed support for a $25 million credit facility that will, upon completion of final due diligence and loan documentation, assist our development funding."
In order to broaden our portfolio, the UK licensing round offers an exciting opportunity, if successfully awarded, to add a lower risk development growth opportunity that lies near infrastructure and yet bears further significant upside potential into an established prospective trend. We are also very pleased by the endorsement of the quality of the application opportunity through the financial backing of an additional $13 million to support our bid by an existing investor."
Ends
1) 70% chance of finding sufficiently large volume, 90% chance of commercial project reliant on obtaining licence
2) Geological chance of success of 56.25%, 90% chance of commercial project reliant on obtaining licence
Qualified Person's Statement:
In accordance with the AIM Note for Mining and Oil and Gas Companies, i3 discloses that Iain Campbell, i3's Reservoir Manager is the qualified person who has reviewed the technical information contained in this document. He has an MEng in Petroleum Engineering and has been a member of the Society of Petroleum Engineers since 1985. He has over 40 years' experience in the oil and gas industry. Iain Campbell consents to the inclusion of the information in the form and context in which it appears.
CONTACT DETAILS:
i3 Energy plc |
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Neill Carson (CEO) / Graham Heath (CFO) | c/o Camarco Tel: +44 (0) 203 757 4980 |
WH Ireland Limited (Nomad and Joint Broker) |
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James Joyce, James Sinclair-Ford | Tel: +44 (0) 207 220 1666
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Cantor Fitzgerald Europe (Joint Broker) |
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Sarah Wharry | Tel: +44 (0) 207 894 8896
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GMP FirstEnergy (Joint Broker) |
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Jonathan Wright, David van Erp | Tel: +44 (0) 207 448 0200
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Camarco Georgia Edmonds, Jane Glover, James Crothers |
Tel: +44 (0) 203 757 4980 |
Glossary
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"BCF" or "bscf" | billion (109) standard cubic feet;
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''Boe'' | barrels of oil equivalent. One barrel of oil is approximately the energy equivalent of 6,000 standard cubic feet of natural gas; |
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"boepd" | Barrels of oil equivalent per day; |
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"MMBO" | millions (106) of barrels of oil;
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"MMboe" | millions (106) of barrels of oil equivalent; |
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"MMcfd" or "MMscfd" | millions (106) of standard cubic feet per day; |
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"Net Present Value" or "NPV" | the discounted value of an investment's cash inflows minus the discounted value of its cash outflows; |
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"PRMS" | The SPE/WPC/AAPG/SPEE Petroleum Resources Management System for Reserves and Resources Classification;
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"standard cubic feet" or "scf" | standard cubic feet measured at 14.7 pounds per square inch and 60 degrees Fahrenheit;
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Stock Tank Oil Initially In Place or "STOIIP" | a method of estimating how much oil in a reservoir can be economically brought to the surface; |
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RESOURCES | |
"Contingent Resources" |
those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies;
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"Prospective Resources"
| those estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled; |
"P10 resource" "High case resource" |
reflects a volume estimate that, assuming the accumulation is developed, there is a 10% probability that the quantities actually recovered will equal or exceed the estimate. This is therefore a high estimate of resource;
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"P50 resource" "Mid case resource" | reflects a volume estimate that, assuming the accumulation is developed, there is a 50% probability that the quantities actually recovered will equal or exceed the estimate. This is therefore a median or best case estimate of resource;
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"P90 resource" "Low case resource" | reflects a volume estimate that, assuming the accumulation is developed, there is a 90% probability that the quantities actually recovered will equal or exceed the estimate. This is therefore a low estimate of resource; |
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RESERVES
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"Proved Reserves" | those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods and government regulations. Proved reserves can be categorised as developed or undeveloped. If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate; |
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"Probable Reserves" | those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable reserves;
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"Possible Reserves" | those additional reserves which analysis of geological and engineering data suggests are less likely to be recoverable than Probable Reserves. In this context, when probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the sum of estimated Proved plus Probable plus Possible reserves;
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"Reserves" | those quantities of hydrocarbons which are anticipated to be commercially recovered from known accumulations;
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"Justified for Development" | implementation of the development project is justified on the basis of reasonable forecast commercial conditions at the time of reporting, and there are reasonable expectations that all necessary approvals/contracts will be obtained; |
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"1P" | the Proved Reserves; |
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"2P" | the sum of Proved plus Probable Reserves; |
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"3P" | the sum of Proved plus Probable plus Possible Reserves.
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Notes to Editors:
i3 Energy is an oil and gas development company initially focused on the North Sea. The Company's core asset is the Liberator oil field discovered by well 13/23d-8 located in License P.1987, Block 13/23d in which it has a 100% operated interest.
The Company's strategy is to acquire high quality, low risk producing and development assets, to broaden its portfolio and grow its reserves and production.
i3 Energy has a strong management team with a track record of delivery and was founded by Neill Carson, previously founder and CEO of Ithaca Energy, where he built an asset portfolio including multiple developments.
The RR was prepared in accordance with standard geological and engineering methods generally accepted by the oil and gas industry, in particular the 2007 SPE Petroleum Resources Management System.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.