i3 Energy targets acreage off UK in bid to broaden portfolio
i3 Energy has applied for acreage made available within the UK’s 30th Offshore Licensing Round and entered into an agreement to provide financial backing to advance its bid commitments and work program.
As reported earlier on Wednesday by Offshore Energy Today, the UK’s 30th Licensing Round closed on Tuesday, November 21, attracting 96 applications covering 239 blocks in the main oil and gas producing areas of the UK Continental Shelf.
Applications were received from 68 companies ranging from multinationals to new country entrants. The Oil and Gas Authority (OGA) intends to offer awards to successful applicants during 2Q 2018.
i3 Energy said later on Wednesday it has applied for the acreage on a 100% basis and targeted and extensively evaluated seismic and well data on a highly attractive region of acreage.
In addition, the company has entered into a binding agreement with an existing loan note investor to provide financial backing in the form of an investment and net revenue sharing agreement. Under the terms of the agreement, the company can draw $13 million to advance its 30th Round bid commitments and work program.
The UK licensing round offers an exciting opportunity, if successfully awarded, to add a lower risk development growth opportunity that lies near infrastructure and yet bears further significant upside potential into an established prospective trend.
In consideration of those funds being made available and utilized, the investor will become entitled to share in certain of the after-tax revenues (ATR) generated from the acreage after first oil.
Firstly, the after-tax revenues generated will be shared on the basis that an amount equal to 200% of the Investor’s invested funds will be paid to the Investor, and an amount equal to 200% of the company’s pre first oil capital expenditure will be retained by the company.
Secondly, the ATR generated after payback will be retained by the company until the total amount of ATR reaches an amount equal to all of the company’s remaining (non capex) pre first oil costs; all of the company’s post first oil costs (non capex) and 200% of the company’s post first oil capex.
Lastly, ATR generated thereafter will be shared on the basis that 33% will be paid to the investor and 67% will be retained by the company.
The availability of the funding is subject to the company being awarded the targeted acreage, OGA consenting to the terms of the agreement, and certain production targets from existing assets of the company being met.
Neill Carson, i3’s CEO, commented: “We have made significant progress in moving forward the Liberator Development with regard to reserves, development readiness, and the most recently announced indicative proposal and confirmed support for a $25 million credit facility that will, upon completion of final due diligence and loan documentation, assist our development funding.”
Carson added: “In order to broaden our portfolio, the UK licensing round offers an exciting opportunity, if successfully awarded, to add a lower risk development growth opportunity that lies near infrastructure and yet bears further significant upside potential into an established prospective trend. We are also very pleased by the endorsement of the quality of the application opportunity through the financial backing of an additional $13 million to support our bid by an existing investor.”