INFA.L Regulatory News (INFA)

5 February 2014 For immediate release

InfraStrata plc

("InfraStrata" or the "Company")

Placing and Subscription of 52,500,000 New Ordinary Shares at 4 pence per share to raise £2.1m

InfraStrata plc (AIM.INFA), the independent petroleum exploration and gas storage company, is pleased to announce: (1) a proposed placing of 46,025,000 Ordinary Shares at 4 pence per Ordinary Share with institutional and other investors; and (2) a subscription of 6,475,000 Ordinary Shares at 4 pence per Ordinary Share with certain Directors and associated parties, to raise approximately £2.1m (before expenses). As the allotment and issue of the Placing Shares and Subscription Shares will exceed the existing authorities which the Directors have to allot new Ordinary Shares for cash on a non pre-emptive basis, a general meeting of Shareholders is being convened to seek approval to grant new authorities to enable the Directors to, inter alia, complete the Placing and Subscription.

The Placing Shares and Subscription Shares to be issued pursuant to the Placing and Subscription respectively are to be admitted to trading on AIM, which is expected to take place at 8.00 a.m. on 24 February 2015. Arden Partners and VSA acted as joint brokers on the Placing with Ragnar Capital acting as placing agent.

The Placing and Subscription are conditional upon, inter alia, the approval by Shareholders of Resolutions which will be sought at the General Meeting which is to be held at 11.30 a.m. on 23 February 2015. If Shareholder approval of these resolutions is not given at the General Meeting, the Placing and Subscription as currently envisaged will not proceed.

Background to and reasons for the Placing and Subscription

In the Annual Report and Financial Statements for the year ended 31 July 2014 which were issued on 17 December 2014, the Chairman outlined the recent developments at the Company:

Islandmagee

In addition to the Company's exploration activities, the Company has also made significant progress in the development of the Islandmagee Gas Storage project in County Antrim, Northern Ireland. This project, held through the Company's subsidiary, Islandmagee Storage Limited, had been identified by the European Commission as a Project of Common Interest and was then prequalified for UK Governmental debt support. Further to an application made in August 2014, the Company has been successful in securing European Commission grant funding, subject to conclusion of a formal grant agreement, for 50 per cent. of the cost of a well to obtain a salt core sample and subsequent testing and engineering work. This is a significant boost for the project and the Company's task is to ensure it delivers the other 50 per cent. (€2.5 million or £1.9 million) of the funding through corporate funding, new financial partners or a combination of both. The Board's intention is to realise value for Shareholders from the Company's interest in this project as soon as practicable. With the well site already constructed, the Board's aim is to raise sufficient funds to drill this well in May 2015.

On 30 January 2015, the Company announced that it had concluded a data release agreement in respect of proprietary seismic data in Northern Ireland for which its subsidiary Islandmagee Storage Limited will receive £400,000 in cash. This £400,000 will be applied towards the £1.9 million needed for the Islandmagee project.

PL1/10

In County Antrim, the Company has introduced a new partner, Larne Oil and Gas Limited, and despite recent uncertainties over the extent of their financial commitment, the Board anticipates that the Woodburn Forest well will be fully funded. The well is planned to commence in 2015 subject to receiving approval from the Northern Ireland Department of Enterprise, Trade and Investment in response to the Company's Application for Consent to Drill. This well is expected to target a play estimated at 40 million barrels of oil equivalent (mmboe) - net InfraStrata 11mmboe at 27.5 per cent. - and seek to de-risk over 450mmboe of further potential upside.

PL1918

In Dorset, the Company has introduced a new partner, Southwestern Resources Limited, who will carry the Company through a significant seismic programme in early 2015 and then consider their option to assume a greater licence interest in exchange for the funding of an exploration well later in the year. Prospective resources on the licence have been estimated at over 100mmboe by the joint venture partners.

It is the Board's belief that these two exploratory wells will be drilled without recourse for funding to the Company.

In addition to the Group's principal exploration interests, the Group also has non-operated interests in exploration licences in Hampshire, Dorset and the East Midlands through associated companies, Corfe Energy Limited and Brigantes Energy Limited. More recently, the Group was successful in the UK 28th Seaward Licensing Round where, together with its partner, Carstone Exploration Limited, the Company has been awarded block 3/11a in the East Shetland Basin. Also, through an asset exchange agreement the Company has acquired an interest in block 11/24b in the Moray Firth.

In addition to the funding need of £1.9 million (of which the Company has already secured £400,000 through the data release agreement signed on 29 January 2015) for the Islandmagee project, the Board reported in the Company's preliminary announcement on 2 December 2014 that the management and administration costs, after making cost savings and taking into account anticipated operator overhead recoveries, were then estimated to be just over £1 million. At that time the Directors estimated that the Group's cash needs until the end of 2015 would be approximately £600,000. As a result of recent reductions in costs the additional funds required have been reduced to £500,000 and the Directors are pursuing further reductions to central overheads as well as considering other measures to generate additional cash resources.

Details of the Placing and the Placing Agreement

The Placing

Arden and VSA have conditionally raised approximately £1.84 million (before expenses) for the Company by way of a conditional placing of 46,025,000 Ordinary Shares at 4 pence per Ordinary Share with institutional and other investors. The Placing is conditional, inter alia, upon:

(a) the passing of Resolutions numbered 1 and 2 at the General Meeting;

(b) the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

(c) admission of the Placing Shares to trading on AIM becoming effective by not later than 8.00 a.m. on 24 February 2015 (or such later time and/or date as Arden and the Company may agree but in any event no later than 6 March 2015).

Accordingly, if such conditions are not satisfied, or, if applicable, waived, the Placing will not proceed.

The Placing will result in the issue of 46,025,000 Ordinary Shares representing, in aggregate, approximately 30.28 per cent. of the Enlarged Share Capital.

The Placing and the Subscription will result in the issue of 52,500,000 Ordinary Shares representing, in aggregate, approximately 34.5 per cent. of the Enlarged Share Capital.

The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and including the right to all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares. No temporary documents of title will be issued.

Dealings in the Placing Shares on AIM are expected to commence on 24 February 2015. It is expected that CREST accounts will be credited on the day of Admission as regards the Placing Shares in uncertificated form and that certificates for Placing Shares to be issued in certificated form will be dispatched by first class post by 4 March 2015.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Arden and VSA, as agents for the Company have each agreed conditionally to use their reasonable endeavours to procure placees for the Placing Shares at the Issue Price. The Placing is not underwritten.

The obligations of Arden and VSA under the Placing Agreement are conditional, inter alia, upon: (i) the passing of Resolutions numbered 1 and 2 at the General Meeting; and (ii) Admission becoming effective by not later than 8.00 a.m. on 24 February 2015 (or such later time and/or date as Arden and the Company may agree but in any event no later than 6 March 2015).

The Placing Agreement contains certain warranties and indemnities given by the Company in favour of Arden and VSA as to certain matters relating to the Company and its business. The obligations of Arden and VSA under the Placing Agreement may be terminated in certain circumstances if there occurs either a material breach of any of the warranties or if a force majeure event occurs. Such rights exist in the event that such circumstances arise prior to Admission. If the conditions in the Placing Agreement are not fulfilled on or before the relevant date in the Placing Agreement then the subscription monies will be returned to placees without interest.

The Placing Agreement also provides for the Company to pay Arden a corporate finance fee, commissions and certain other costs and expenses incidental to the Placing and Admission of which a proportion of the commissions will be paid to VSA and Ragnar Capital.

Details of the Subscription

The Company has conditionally raised approximately £0.26 million (before expenses) by way of a conditional subscription of 6,475,000 Ordinary Shares at 4 pence per Ordinary Share with certain Directors and associated parties.

The Subscription is conditional on:

(a) the passing of Resolutions numbered 1 and 2 at the General Meeting

(b) the Subscription Shares being allotted and issued by 27 February 2015.

Accordingly, if these conditions are not satisfied, the Subscription will not proceed.

The Subscription will result in the issue of 6,475,000 Ordinary Shares representing, in aggregate, approximately 4.26 per cent. of the Enlarged Share Capital.

Andrew Hindle (Chief Executive Officer), Ken Ratcliff (Non-executive Chairman), Stewart McGarrity (Finance Director), Maurice Hazzard (Non-executive Director) and Alan Booth (Non-Executive Director) have each participated in the Placing and/or Subscription as follows:

(1) Excluding interests in options

Use of proceeds and Group strategy

The net proceeds of the Placing and Subscription (after commissions and expenses of the Placing), which will be £2.05 million, will be used as follows:

· £1.9 million (net of £400,000 which has already been secured through the data release agreement signed on 29 January 2015) to match the European Commission grant and allow InfraStrata to drill the Islandmagee-1 gas storage well;

· underwriting project costs to maintain the Group's drilling programme; and

· providing resources to cover the Group's short-term management and administrative costs.

The Board's focus in the short to medium term will be on the control of costs and once the fundraising is completed, the Board expects to give further consideration to the appropriate non-Executive and Executive composition given the Company's strategy and position. The outcome of this process will, in part, depend on the success of the drilling programme and particularly Islandmagee. To the extent this review results in any changes to the Board, an appropriate announcement will be made.

Application for Admission

Application will be made to the London Stock Exchange for the Placing Shares and Subscription Shares to be admitted to trading on AIM. It is expected that such admission will become effective and that dealings for normal settlement in the Placing Shares and Subscription Shares on AIM will commence at 8.00 a.m. on 24 February 2015.

General Meeting

A General Meeting of the Company is to be held at the offices of Buchanan Communications Limited, 107 Cheapside, London EC2V 6DN at 11.30 a.m. on 23 February 2015. At the General Meeting, the following Resolutions will be proposed:

1. an ordinary resolution to grant authority to the Directors to allot up to 52,500,000 Ordinary Shares pursuant to section 551 of the 2006 Act, being up to an aggregate nominal amount of £525,000. The Directors will limit this authority to the allotment of the Placing Shares and Subscription Shares pursuant to the Placing and Subscription respectively; and

2. a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the 2006 Act in respect of the allotment for cash of up to 52,500,000 Ordinary Shares with an aggregate nominal amount of up to £525,000. The Directors will again limit this authority to the allotment of Placing Shares and Subscription Shares pursuant to the Placing and Subscription Shares respectively.

Resolution 1 is to be proposed as an ordinary resolution and Resolution 2 is to be proposed as a special resolution.

Directors' Recommendation

The Directors consider the Placing and Subscription to be in the best interests of the Company and its Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings of 10,545,951 Existing Ordinary Shares, representing approximately 10.6 per cent. of the Existing Ordinary Shares.

Andrew Hindle, the CEO of InfraStrata plc said:

"We welcome the support of existing and new Institutional and private investors in the placing.

We announced at the end of November 2014 that we were delighted that the outstanding benefits of the Company's gas storage project at Islandmagee had been recognised by the European Union. This was by inclusion in a list of 34 projects with approval for grant funding for 50% of the €5 million cost for a data gathering well to obtain cores of the salt sequence and undertake further engineering design work to enable the project to progress during 2015 to the Final Investment Decision point. This demonstrated the contribution this project can make to energy security and system flexibility in Northern Ireland, Ireland, and in Great Britain. The proceeds of the Placing will underwrite the match funding of €2.5 million (c £1.9 million) to enable the project to finalise the grant agreement with the Connecting Europe Facility over the coming weeks and thereby complete the procurement of the Islandmagee-1 well planned for May 2015.

The balance of the Placing proceeds, together with existing funds, meet the Company's working capital requirements until the end of 2015. The Company is also in discussions with several parties with regard to direct investment in the Islandmagee project prior to the well being drilled. Such investment would provide additional working capital to InfraStrata."

For further information please contact:

InfraStrata plc

Andrew Hindle, Chief Executive Officer 020 8332 1200

Stewart McGarrity, Finance Director

Financial PR - Buchanan

Richard Darby/ Anna Michniewicz 020 7466 5000

Nominated Advisor and Joint Broker - Arden Partners plc

Chris Hardie/ Michael McNeilly 020 7614 5917

Joint Broker - VSA Capital Limited

Andrew Raca/ Richard Buckle 020 3005 5004

Notes to Editors:

Background on InfraStrata plc

InfraStrata is an independent petroleum exploration and gas storage company focused on the UK and Ireland.

Further information is available on the Company's website www.infrastrata.co.uk.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Circular posted to Shareholders 5 February 2015

Latest time and date for receipt of Form of Proxy 11.30 a.m. on 19 February 2015

General Meeting 11.30 a.m. on 23 February 2015

Admission of the Placing Shares to trading on AIM 8.00 a.m. on 24 February 2015

CREST member accounts expected to be credited for the 24 February 2015

Placing Shares in uncertificated form

Dispatch of definitive share certificates for the issued by 4 March 2015

Placing Shares in certificated form

Each of the dates in the above timetable is subject to change at the absolute discretion of the Company and Arden Partners.

FUNDRAISING STATISTICS

Issue Price 4 pence

Number of Existing Ordinary Shares in issue as at the 99,491,599

date of this document

Total number of Placing Shares 46,025,000

Total number of Subscription Shares 6,475,000

Enlarged Share Capital following the Placing and Subscription 151,991,599

Percentage of the Enlarged Share Capital comprised by the 34.5 per cent.

Placing Shares and Subscription Shares

Estimated gross proceeds of the Placing and Subscription £2,100,000

Estimated net proceeds of the Placing and Subscription £2,050,000