I3 Energy Regulatory News (I3E)

GENERAL TEXT AMENDMENT

The following amendments have been made to the '£24 Million Junior Loan Notes Facility' announcement released on 25/02/2019 at 07:00 under RNS No 9380Q.

The third and fourth paragraphs within the 'Key Terms of Junior Facility' section of the RNS have been amended to the following:

Noteholders will be granted one warrant in the notional amount ("Notional Amount") of £1 for each £1 of Loan Notes issued, with the Warrants being issued proportionately across three series (defined below). Based on the full £24 million of Loan Notes, there will be 8 million Series 1 Warrants, 8 million Series 2 Warrants and 8 million Series 3 Warrants.

The Warrants will vest on the Issue Date and expire 4 years thereafter and can be exercised through either/or a combination of a cash payment and/or surrender of Loan Notes plus accrued interest equal to the aggregate notional amount of the warrants being exercised. Each warrant gives the holder the right to convert the Notional Amount into such number of shares as is derived by dividing the Notional Amount by the exercise price, through either/or a combination of a cash payment and/or surrender of Loan Notes plus accrued interest equal to the aggregate notional amount of the warrants being exercised. In effect, the exercise of all Warrants, which in total have a notional value of £24 million, offsets the entire principal value of the Loan Notes owed to Noteholders by the Company.

All other details remain unchanged.

The full amended text is shown below.

i3 Energy plc

("i3" or the "Company")

£24 Million Junior Loan Notes Facility

i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce that it has entered into a term sheet which sets out the terms and conditions of a £24mm junior secured loan note facility with warrants ("Junior Facility" or "Loan Notes"). A European Investment Manager with assets under management in excess of £1 billion has agreed to subscribe for £12 million of the Loan Notes and, based on offers received, the remainder of the Loan Notes are expected to be issued to one or more syndicate members and/or offtake providers who are also potential lenders in i3's senior debt facility which is under negotiation to provide USD100 million (the "Senior Facility") towards the Company's Liberator oil development.

The Junior Facility will be subject to Loan Note holders' investment committee approvals of final legally binding documentation which will include certain conditions precedent that the Company and the participants expect to be met during April 2019.

Once drawn, the proceeds of the Junior Facility will be made available to, amongst other things, partially fund the Company's planned 2019 appraisal and development drilling programme, expected to cost c.£32 million, at its 100% owned and operated Liberator oil field and Serenity prospect, which i3 estimates have STOIIPs of 314 and 197 million barrels respectively.

As one of the conditions precedent to drawing on the Junior Facility, i3 will be required to commit a minimum of £16 million of equity which the Company can contribute through either the issue of new ordinary shares to investors or through the proceeds of its previously announced JV farmout process. The aggregate of the Junior Facility plus the contribution of £16 million from i3 is anticipated to be sufficient to allow i3 to fund its working capital requirements through to first oil and to draw on the proposed Senior Facility to fund the remainder of its currently envisaged 2019/20 capital expenditure plan. As previously announced, the Company intends to conduct a three-well development and appraisal campaign in 2019 followed by additional 2020 development drilling and delivery of first oil from Liberator at approximately 20,000 bopd by mid year.

Key Terms of Junior Facility

The Junior Facility will have a 4-year term with a coupon of 8% per annum payable quarterly (or 11% Payment in Kind at i3's election) and is expected to be drawable from April 2019. The Senior Facility will have first lien status against certain asset collateral that is customary and appropriate for facilities of this type (the "Security"). The Junior Facility will have first lien rights against the Security until such time as the Senior Facility is drawn, after which it will retain second lien status. i3 will have the right to redeem the Notes at 1.16 times the principal amount during the first 2 years and at par value thereafter. The Notes will not be listed.

The Loan Notes will have an associated warrants package and i3 will enter into three separate warrant instruments ("Warrants") with each holder of the Loan Notes (a "Noteholder") on the date the Junior Facility is drawn (the "Issue Date"). The exercise price of the Warrants will be based upon the average issue price across the next £16 million of equity raised by the Company (the "Base Exercise Price").

Noteholders will be granted one warrant in the notional amount ("Notional Amount") of £1 for each £1 of Loan Notes issued, with the Warrants being issued proportionately across three series (defined below). Based on the full £24 million of Loan Notes, there will be 8 million Series 1 Warrants, 8 million Series 2 Warrants and 8 million Series 3 Warrants.

The Warrants will vest on the Issue Date and expire 4 years thereafter and can be exercised through either/or a combination of a cash payment and/or surrender of Loan Notes plus accrued interest equal to the aggregate notional amount of the warrants being exercised. Each warrant gives the holder the right to convert the Notional Amount into such number of shares as is derived by dividing the Notional Amount by the exercise price, through either/or a combination of a cash payment and/or surrender of Loan Notes plus accrued interest equal to the aggregate notional amount of the warrants being exercised. In effect, the exercise of all Warrants, which in total have a notional value of £24 million, offsets the entire principal value of the Loan Notes owed to Noteholders by the Company.

Series 1 Warrants will have an exercise price which is the lower of:

i. the higher of 65p/share or a 7.5% discount to i3's closing price on 22 February 2019; or

ii. 110% of the Base Exercise Price; or

iii. in case Brent closing prices in the period between i3's next equity fundraise and the Issue Date trade on average below USD50 per barrel, 110% of the 30-day VWAP at the Issue Date.

Series 2 Warrants will have an exercise price equal to 130% of the Base Exercise Price.

Series 3 Warrants will have an exercise price equal to 150% of the Base Exercise Price.

If at any time i3's share price exceeds 125% of the exercise price of any series of Warrants for 90 consecutive days, i3 can require that all Noteholders exercise the relevant Warrants in full.

Key Deliverables on Track

The Company announced on 10 January 2019 that, subject to securing further funding, it remained on track to conduct a three-well drilling campaign beginning in June 2019 and to deliver Liberator Phase I production in mid 2020. Good progress has been made in finalising offtake terms with RSRUK for the Bleo Holm FPSO, the drilling contract with Dolphin Drilling and the Senior Facility.

Entering into the term sheet for the Junior Facility is a key development required in i3's financing plans. It will continue to focus on raising the additional funds required under the terms of the Junior Facility in order to meet its asset development and working capital requirements in advance of the Company's anticipated 2020 first oil date.

Also as previously announced, the Company is concurrently running a joint venture farmout process alongside the securing of junior and senior debt facilities to fund a portion of its 2019/2020 capital programme. The Company had intended to set a bid date in February but has decided to extend this process to accommodate a number of additional parties who have requested data room access. The Company will optimise the bid date to ensure all bona fide counterparties are allowed to complete their due diligence within an expedited time frame.

Majid Shafiq, CEO of i3 Energy commented:

"Organising the £24 million junior loan note facility is a key deliverable for the Company and entering into the term sheet is a sign of the strong progress we are making as we continue to focus on bringing the Liberator field into production in mid 2020. The facility would be used to partially fund i3's exciting consecutive multi-well drilling programme over the summer, targeting a combined STOIIP of 500 million barrels across the Liberator field and Serenity prospect and converting resources into reserves."

"Our JV discussions continue to advance alongside securing senior debt facilities, as we seek to deliver the best funding package for shareholders. We are pleased by the level and type of interest shown to date, leading us to extend the bid date to accommodate all parties. We look forward to keeping shareholders updated on our progress."

ENDS

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