i3 Energy plc, an independent oil and gas company with assets and operations in the UK, has provided an operational and financial update.
Operational - Gardline contracted to conduct a site survey
i3 has contracted Gardline Limited to conduct a site survey for its 2019 and 2020 drilling program plus the pipeline route for its Liberator Phase I development. Works have begun and are expected to complete during the month of March and are being conducted by the Ocean Observer survey vessel.
The survey will cover the locations of Liberator's Phase I production drill centre and associated development wells, in addition to the planned export pipeline route. Also being surveyed are the Liberator A3 and Serenity S1 appraisal well locations.
The survey will enable the Company to complete its Environmental Statement and provide the necessary engineering and environmental data to finalise its planning for its expected 2019 three-well drilling campaign and for inclusion in the Liberator Field Development Plan ("FDP").
Convertible Loan Notes
The Company also announces that all outstanding convertible loan notes totalling approximately £433,153 in principal will be repaid with interest in accordance with its terms on the maturity date of 31st March 2019.
Purchase of Shares
In addition to the previously announced purchase of 678,645 shares by i3's directors in the Placing announced March 12th, i3's management and board will be purchasing a further 2,131,538 ordinary shares in the Company at a price of 37 pence, totalling £788,669, alongside the Open Offer and conditional upon the completion of the Placing. Of this £788,669 figure, Neill Carson (Non-Executive Director), Graham Heath (Chief Financial Officer) and John Woods (Chief Operating Officer) will be purchasing £57,200, £116,999 and £120,969 worth of shares, respectively.
In relation to this transaction, Majid Shafiq (CEO), David Knox (Non-Executive Chairman) and Richard Ames (Non-Executive Director) are considered to be 'independent' for the purposes of AIM Rule 13 in consideration of the purchase of shares by Graham Heath and Neill Carson. Having consulted with WH Ireland Limited, the Company's Nominated Advisor ("Nomad"), the independent directors Majid Shafiq, David Knox and Richard Ames consider that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.
Following this purchase of shares, and assuming the completion of the Placing, Graham Heath will hold 6,816,213 shares representing 7.89% of the issued share capital on the Company. Likewise, Neill Carson will hold 6,712,133 shares representing 7.77% of the issued share capital of the Company.
Grant of Options
The Company also announces that it has issued a total of 5,920,000 share options ("Options"), granted conditionally upon the completion of the Placing as announced on March 12th, to directors and key management in accordance with the rules of the Company's Share Option Plan. The issue of Options to directors is a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies.
The exercise price of the new Options will be £0.395 per share, the closing price of the Company's ordinary shares as at 19th March 2019. The Options are for ten years and will vest as follows:
One-third upon spud of the first well in i3's upcoming drilling campaign;
One-third upon securing funding for the Liberator Phase I development; and
One-third on increasing gross reserves to 50 MMbbls or achieving first oil from the Company's licences.
Regardless of the above, 100% of the options will vest at first oil from the Company's licences or if there is a change of control of the Company.
Number of Options issued to directors: Majid Shafiq 1,200,000; Graham Heath 1,000,000; Richard Ames 100,000; Neill Carson 100,000.
In relation to this transaction, David Knox is considered to be 'independent' for the purposes of AIM Rule 13 in consideration of the issue of the Options. Having consulted with WH Ireland Limited, the Company's Nominated Advisor ("Nomad"), the independent director David Knox considers that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.
Following this announcement, the Company has in issue 52,022,965 ordinary shares of £0.0001 each, 5,000 deferred shares of £10.00 each, 3,082,052 share options with an exercise price of £0.55, 2,917,037 share options with an exercise price of £0.635 and 5,920,000 conditional share options with an exercise price of £0.395.
Majid Shafiq, CEO of i3 Energy commented:
'With our recent fundraise, we are delighted to now be driving operational progress for i3's operated three-well drilling campaign in the Greater Liberator Area in Summer 2019. The Directors and management team see massive opportunity in the Company and look forward to unlocking Liberator's potential through the drill bit.'