i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce the following update.
2020 planning and farm-out process underway
Following i3's 2019 drilling campaign at Serenity and Liberator, the Company is now preparing for a mid-2020 appraisal programme to delineate the fields which the Company believes could contain more than 600 MMbbls P50 STOIIP.
Well and fluid data from the Serenity 13/23c-10 discovery well encountered sweet, 31.5° API crude in 11 feet of upper Captain oil-bearing sands. The measured oil column on structure, observed through pressure data, was 604 feet true vertical depth (TVD). If the Serenity and neighbouring Tain oil field are in communication as i3 expects, then this infers an oil column height of 1124 feet TVD. On the basis of information recovered from the discovery well, the Company retains its pre-drill estimate of 197 mmbbls P50 STOIIP for Serenity. The Company expects the thickness of the upper Captain sands package to increase, potentially substantially, moving westward along structure, based upon a measured sand thickness of 115 ft true vertical thickness (TVT) immediately west of the Serenity accumulation in the 13/23a-7A well. The 13/23c-10 well has confirmed the strong commercial potential of the Serenity area, and reservoir model simulations demonstrate potential recovery factors above 60%.
Though Liberator wells 13/23c-9 and 13/23c-11 did not meet i3's expectations, the latter confirmed a migration path for hydrocarbons to move westward towards the "Minos High" where the upper Captain sands package is estimated to have a thickness of circa 200 ft TVT above the oil-water contact. Post-drill mapping of the entire Liberator structure still shows potential in-place resources above 400 MMbbls.
With the highly successful Serenity discovery and remaining potential at Liberator, the Company has begun planning a mid-2020, multi-well appraisal programme and is simultaneously conducting a farm-down process of its licences to potentially fund the 2020 drilling campaign. The Company will continue working with its senior lenders on a development facility for its assets. Future drilling remains subject to funding and i3 will update the market on these endeavours in due course as material progress is made.
GE UK warrants for services rendered
As part of an agreement announced 2 July 2019, i3 Energy has issued a further 2,816,739 warrants to subscribe for Ordinary Shares at an exercise price of 56.85 pence per Ordinary Share to GE Oil & Gas UK Limited ("GE UK"), in addition to the 2,204,574 issued to GE UK and as announced on 29 October 2019. As previously referenced in the Company's July announcement, these warrants relate to deferred payments for Oilfield Service ("OFS") contracts entered into between i3 and Baker Hughes. To 30 November 2019, Baker Hughes had performed and invoiced i3 Energy for £3,000,000 worth of oilfield services. GE UK can exercise the warrants via cash settlement or in exchange for payments due to Baker Hughes under OFS contracts with the Company. Junior Noteholders will be offered participation in warrants on the same terms as GE UK, pro-rata to their ownership of i3 Energy on a fully-diluted basis, and also pro-rata to the proportion of warrants issued to GE UK under this arrangement. Any warrants subscribed to by Junior Noteholders, in addition to 255,732 warrants remaining due to GE UK for OFS rendered by Baker Hughes, will be subject to shareholder approval at a General Meeting of the Company expected to occur before mid-February.
In accordance with the provisions of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the Company confirms its issued ordinary share capital comprises 107,719,400 Ordinary Shares of £0.0001 each. All of the Ordinary Shares have equal voting rights and none of the Ordinary Shares are held in Treasury. The above figure may be used by shareholders as the denominator for the calculations to determine if they are required to notify their interests in, or change to their interest in, the Company.
With the above issuance of warrants to GE UK, the Company now has 9,503,798 warrants exercisable at 40p/share, notional £8 million warrants exercisable at 40.7p/share, notional £8 million warrants exercisable at 48.1p/share, notional £8 million warrants exercisable at 55.5p/share, and 5,021,313 warrants exercisable at 56.85p/share which, when fully exercised in aggregate, would convert into 65,227,561 Ordinary Shares of £0.0001 each in the Company.
Majid Shafiq, CEO of i3 Energy commented:
"The discovery of the Serenity oil field was a transformational event in i3's history. We are very excited about the further drilling operations we expect to conduct in 2020 and see this as the lowest risk path to unlocking substantial shareholder value. We believe our acreage, together with the data retrieved from our 2019 drilling campaign, will be very attractive to potential farminees looking to add material barrels and near-term production to their portfolios."