INFA.L Regulatory News (INFA)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

09 July 2019

InfraStrata plc

("InfraStrata" or the "Company")

EXCLUSIVITY AGREEMENT FOR A FLOATING STORAGE AND REGASIFICATION UNIT OFFSHORE BARROW-IN-FURNESS IN THE UNITED KINGDOM

InfraStrata plc (AIM: INFA), the UK quoted company focused on the development of natural gas storage capacity, is pleased to announce that it has entered into an Exclusivity Agreement ("Agreement") with Meridian Holdings Co. ("Promoter"), a Cayman Islands company, to facilitate the development and an acquisition of the Promoter's Floating Storage Regasification and Reloading Unit Project ("FSRU Project") in the United Kingdom.

Background

The FSRU Project involves developing a floating LNG (liquified natural gas) receiving port offshore Barrow-in-Furness ("Port"), Cumbria in northwest England, and is designed to deliver re-gasified volumes of natural gas directly into the UK market via its own National Transmission System ("NTS") interconnection at Barrow-in-Furness.

With approximately 30% of the UK's gas supply expected to come from LNG in the future, the directors of InfraStrata believe the gas markets are providing a strong economic signal to pursue the development of facilities such as this FSRU Project. The FSRU Project is currently understood to be the first of its kind in the UK. At a projected capacity of approximately 5 million tonnes per annum, the FSRU Project will not only add to the UK's security of gas supply but will also help balance the gas network on peak demand days.

The FSRU Project currently has planning permission and consenting issued by the Borough of Barrow-in-Furness for its offshore segment, a detailed review of which the Company is currently undertaking. Additionally, land parcels and easements required for the project's onshore above ground installations ("AGIs") and pipelines have been duly acquired or are subject to the exercise of option agreements held by the Promoter.

Details of the proposal and the Agreement

A typical FSRU project such as this would entail a CAPEX investment of approximately £250 million to £400 million with a construction period of approximately 3 to 4 years. Accordingly, subject to satisfactory due diligence and final contract, InfraStrata, through its wholly owned subsidiary InfraStrata Energy UK Ltd, will be seeking investors to provide the necessary project and investment finance to enable an acquisition of the FSRU Project that would include all of the above assets of the FSRU Project, in addition to all the engineering data that the Promoter has accumulated to date. It is envisaged that the third-party project investors being sought would take equity stakes in InfraStrata Energy UK Ltd, reducing InfraStrata to a minority stake, prior to acquisition of the FSRU Project by InfraStrata Energy UK Ltd. Similar to the Islandmagee Gas Storage Project, InfraStrata will seek an ongoing project management role along with a minority equity interest in the FSRU Project.

Under the terms of the Agreement, the Company will have exclusivity for a minimum of three months (with extensions possible) in order to undertake the necessary technical, commercial and regulatory due diligence required to determine the FSRU Project's feasibility. After satisfactory completion of due diligence, the Company will proceed to structure a formal acquisition of the FSRU Project by InfraStrata UK Energy Ltd with the backing of consortium investors and/or project financiers. The Agreement shall terminate after 12 months, unless terminated earlier pursuant to its terms and there is no guarantee at this stage that any investment in or acquisition of the FSRU Project will ultimately proceed.

Under the terms of the Agreement, if the parties agree to proceed to a formal contractual agreement following the due diligence phase, staged consideration payments have been agreed as follows:

1) the issue to the Promoter of 25 million new ordinary shares in the Company upon the agreement of a term sheet to proceed with further exclusivity and to negotiate a formal Sale and Purchase Agreement;

2) the issue to the Promoter of a further 75 million new ordinary shares in the Company at Final Investment Decision ("FID") (FID being when third party project investors commit to funding the development and construction of the FSRU Project to achieve commercial operations) and the decision to proceed to FID is at the sole discretion of the Company; and

3) a cash consideration payable upon completion of the acquisition (not expected prior to FID and therefore not prior to the necessary funding being received by InfraStrata Energy UK Ltd) equal to the value of the FSRU Project determined by the parties which exceeds the value of the 100 million new ordinary shares in the Company to be issued to the Promoter as per 1) and 2) above.

The 100 million new shares in the Company to be issued to the Promoter on the terms above would be issued at the volume weighted average market price prevailing for the seven trading days prior to FID.

As announced in its strategy update on 04 July 2019, the Company intends on progressing with multiple projects at various stages in a project's life cycle. The FSRU Project not only provides the Company's prospective clients with direct exposure to the UK gas market but also complements the Company's currently on-going Islandmagee Gas Storage Project.

John Wood, Chief Executive Officer commented: "We are very pleased to enter into this Exclusivity Agreement with Meridian Holdings. The UK gas market is witnessing a significant shift in its supply stack and LNG is set to form an important part. As an energy infrastructure company, we are looking at not only building a diverse portfolio of assets but also creating the ability for each asset to complement the others. Such a strategy adds significant trading value to our prospective clients who themselves have a portfolio of energy contracts to monetise."

Further updates will be provided as soon as possible as discussions and the project progress.

For further information, please contact:

-ENDS-

Notes to editors:

InfraStrata is an independent gas storage company focused on the UK and Ireland. Further information is available on the Company's website: www.infrastrataplc.com 

Background on the Islandmagee Storage Project

The Islandmagee gas storage project is a proposed salt cavern gas storage facility located on Islandmagee in County Antrim, Northern Ireland. The Board of InfraStrata believes that the proposed 500 million cubic metres natural gas cavern storage facility will provide over 25% of the UK's natural gas storage once constructed. The facility will be situated adjacent to the Scotland Northern Ireland (gas) Pipeline (SNIP) and the Moyle 500-megawatt electricity interconnector. Work commenced in 2007 with the acquisition of 3D seismic data to image the Permian salt in the Larne Lough area. During 2012, planning permission was granted for the project and a gas storage licence was issued by the Utility Regulator. In 2015 a well was drilled to core the salt and confirm the technical feasibility of the project, supported in part by the European Commission. The Front-End Engineering and Design (FEED) element of the Project was completed in November 2018 and the FEED report was submitted to the European Union in December 2018 in accordance with the Company's grant conditions. To date approximately £14.5m has been invested in the project.

Further information is available on the company's website:www.infrastrataplc.com 

The Front-End Engineering & Design (FEED) and Insitu Downhole Testing programme for the Islandmagee gas storage project is co-financed by the European Union's Connecting Europe Facility.

Disclaimer releasing the European Union from any liability in terms of the content of the dissemination materials:

"The sole responsibility of this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein."