RNS Releases
16 November 2015 - Divestment of exploration assets PDF Print E-mail

InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, announces today that it has re-organised its business and agreed to sell exploration based assets to focus on its strategic gas storage project in Northern Ireland. This will involve several steps through which if they all complete will result in the Company divesting itself of most of its exploration assets in exchange for £540,000 cash and retained interests in each of the assets without obligations for future investment in respect of those assets.

Background to and reasons for the divestment

Confirmation from Larne Oil & Gas Limited in August 2015 that they were unable to meet their funding obligations on the PL1/10 and P2123 licences in Northern Ireland, including the repayment of costs already incurred, has negatively impacted InfraStrata’s cash position in a challenging market environment. With upcoming expenditure commitments in 2016 across the portfolio of exploration assets, the Board determined that the transfer of substantially all future commitments associated with the exploration assets in exchange for cash consideration and a retained interest in the assets represented the best outcome for the Company and shareholders. This transaction will avoid dilution for shareholders through equity fundraising for the purposes of exploration and enable the Company to focus on the development and monetisation of its gas storage project in 2016.

Terms of the transactions

InfraStrata has signed Sale & Purchase Agreements (“S&P Agreements”) with Corallian Energy Limited (“Corallian”) and Osmington Holdings Limited (“Osmington”), a wholly owned subsidiary of Corallian. Corallian and Osmington are recently incorporated UK companies. Under the S&P Agreements, InfraStrata will transfer its entire interests in UK offshore licences P1918, P2222 and P2235 to Corallian, and its 40% shareholdings in Brigantes Energy Limited (“Brigantes”) and Corfe Energy Limited (“Corfe”) (which between them hold interests in UK licences P1918, P2123, PL1/10, PEDL201, PEDL 237, PL090 and PEDL070) to Osmington. The effective date for these transfers is 1 October 2015.

The transfer of licence P2235 involves an amendment of the Asset Exchange Agreement with Fyrd Energy Limited (“Fyrd”) announced on 16 December 2014 (the “Fyrd Agreement”) under which InfraStrata acquired a 25% interest in licence P2235. Under the revised Fyrd Agreement, Fyrd will transfer its remaining 75% interest in licence P2235 to InfraStrata and in exchange, InfraStrata will transfer its 22.5% retained interest in the rights and intellectual property in its former Portland project (which are held directly by InfraStrata rather than via a new project company as originally contemplated in the Fyrd Agreement), excluding the gas pipeline rights and associated intellectual property, to Fyrd. The entire P2235 interest to be held by InfraStrata will then be transferred under the S&P Agreements to Corallian. In addition, the Portland gas pipeline rights and associated intellectual property will be transferred by InfraStrata to Osmington as part of the S&P Agreements.

The total consideration payable immediately under the S&P Agreements is £240,000 plus a net profits interest (“NPI”) instrument in each of P1918, P2222 and P2235 of 4% of Corallian’s anticipated interest in the licence at the time of drilling the first well on the licences (0.5%, 0.5% and 1% respectively of the gross) plus a 4% share of any future profits derived by Osmington from its shareholdings in Brigantes and Corfe, again in the form of NPI instruments.

The NPIs will entitle InfraStrata to that share of any future profits from the licences or from Brigantes and Corfe without making any further investment. The NPI instruments may be traded and sold by InfraStrata.

In addition to the above, Corallian has also agreed to acquire from InfraStrata a fully carried 10% interest in both the PL1/10 licence and offshore licence P2123 in Northern Ireland, for a cash consideration of £300,000 (the “NI Agreement”). The NI Agreement is subject to conditions precedent, notably a successful outcome of the ongoing farm-out process, on terms currently being negotiated with interested parties, for the Woodburn Forest-1 well in Northern Ireland licence PL1/10 (further details of which are below). InfraStrata and Corallian are looking to conclude the NI Agreement by February 2016.

InfraStrata, together with Brigantes, are farming out a combined 60% interest in the PL1/10 licence in order to complete the funding for the Woodburn Forest-1 well. The Company is pleased to report that it has now signed an agreement, together with Brigantes, with Ermine Resources Limited (“Ermine”) whereby Ermine will acquire a 15% interest (paying 20% of the Woodburn Forest-1 well costs) in the PL1/10 licence, subject to the full well funding being completed. InfraStrata and Brigantes are in discussions with a number of other parties with regard to completing the farm-out process for the remaining 45% so that the well can be drilled this coming winter.

Following satisfactory completion of all the transactions above and in addition to the retained NPI instruments, InfraStrata’s business will comprise its 65% interest in the Islandmagee gas storage project in Northern Ireland and a 10% interest in onshore licence PL1/10, fully carried through the Woodburn Forest-1 well. InfraStrata will remain as operator on PL1/10 and will be compensated accordingly. The cash proceeds from the transactions will be applied to the ongoing work programme on the Islandmagee gas storage project in preparation for monetisation during 2016.

The Company is in the final stages of completing its 2015 work programme following the drilling of the Islandmagee-1 well for its gas storage project and is also in discussions with a number of interested parties in relation to monetisation of its interest in the asset. A further update on the gas storage project will be provided later in November as previously stated.

The historic net cash investment in the assets being disposed of by the Group was £281,477. The Board determined the total consideration payable by Corallian and Osmington under the S&P Agreements and the NI Agreement based on a cash equivalent for farm-in terms being negotiated with other parties for a 10% interest in the Northern Ireland licences and a typical industry 4% NPI on the other exploration assets. However, the payment under the S&P Agreements is not conditional upon the NI Agreement being concluded. Transfer of the licence interests will be subject to regulatory authority approvals.

Andrew Hindle is a Director of InfraStrata and has made an investment in Corallian, but holds less than 20 per cent. of its issued share capital. Andrew Hindle has not taken part in the InfraStrata Board’s consideration and approval of the transactions with Corallian and Osmington.

Commenting on today’s announcement, Ken Ratcliff, Chairman of InfraStrata said:

“ Market sentiment towards investment in oil and gas exploration has continued to be negative during 2015, none more so than for AIM listed companies, and this is reflected in share prices and the challenges associated with raising new capital to invest in exploration. The disposal of most of our exploration interests to Corallian enables us to secure future participation in these assets through a company that can focus upon attracting the necessary financial investment required to take the assets forward in 2016.

At the same time the transactions provide absolute clarity regarding the Company’s long stated strategy of not using its own cash resources to fund major exploration expenditure whilst in the process of monetising the gas storage project. No further investment is expected to be required by InfraStrata in the assets sold, but the Company retains an upside in the event of any successful exploration through the retained NPI instruments and a retained operated interest in licence PL1/10, subject to a successful completion of ongoing farm-out negotiations with third parties.

The cash consideration from the Corallian transactions will provide short term capital for our immediate working capital needs and allow InfraStrata to sustain and add value to the Islandmagee gas storage work programme into 2016, as the Company seeks to optimise the timing and nature in which value can be secured from the project for shareholders.”

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10 November 2015 - Board Change PDF Print E-mail

InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, has today been informed that Alan Booth has resigned from the Board as a Non-Executive Director, with effect from today.

The Board would like to thank Alan for his contribution to the Company and wish him well for the future.

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04 September 2015 - Update on the post Islandmagee-1 well programme of works PDF Print E-mail

InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, is pleased to provide an update on the programme of works on the Islandmagee gas storage project in Northern Ireland following completion of the drilling of the Islandmagee-1 well in June 2015. InfraStrata is a 65% shareholder of the gas storage project developer, Islandmagee Storage Limited.

The £3.8 million programme of work commenced with the drilling of the well and has been designed to confirm the feasibility of the development of an underground gas storage facility in salt caverns, by obtaining wireline data and core samples of the Permian salt to undertake laboratory analyses, including rock mechanical tests, to further define the design parameters and cost estimate for the project. All the end of well reports have been finalised and the initial results from the laboratory in Germany on the cores are encouraging and the parameters are now being used by the surface engineering team to provide an update on the facility design and cost estimates.

The programme is being supported by a €2.5 million grant from the European Commission under the Connecting Europe Facility. There are five stages to the programme agreed with the European Commission and three of those have now been successfully completed.

The completion of this work will conclude a nine year programme covering a wide variety of aspects required for a major infrastructure project, including technical, commercial, permitting, planning and land assembly. By the end of this year approximately £10 million will have been invested in the project.

The completion of the programme, expected to be in November 2015, will provide the key data to support the monetisation of the project and InfraStrata’s interest.

Commenting on the announcement, Andrew Hindle, CEO of InfraStrata said:

“We are very pleased that the programme of works is on schedule to be completed on time and we expect to provide a further update on completion of the work during November. Plans for commencing the monetisation process are also underway as anticipated.”

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27 August 2015 - Notification of Major Interest in Shares PDF Print E-mail
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25 August 2015 - Northern Ireland Exploration Update PDF Print E-mail

InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, is today providing an update on its activities on Petroleum Licence PL1/10 in Northern Ireland.

All the regulatory approvals and other permits, including the site lease, are now in place for drilling the Woodburn Forest-1 well this coming winter. The timing for the drilling is dependent upon securing a drilling slot for the rig and completing the funding. With regard to funding, it is disappointing to report that Larne Oil and Gas Limited (“Larne”), who exercised an option to acquire an interest in the project in September 2014, have run into funding difficulties and will no longer be participating in the project. The licence interest for InfraStrata will therefore revert to the prefarmout 45% level with a 15% working interest carried by existing partners Terrain Energy Limited and Brigantes Energy Limited. InfraStrata also holds a 50% beneficial interest in adjacent offshore licence P2123.

Whilst the terms of Larne’s exit are being resolved, the partners are currently in discussions with a number of parties to secure approximately £2.8 million to complete the funding of the well such that it can be drilled this winter.

The PL1/10 group has also entered into a Data Exchange Agreement with Islandmagee Storage Limited (“IMSL”), a company 65% owned by InfraStrata. Under the terms of the agreement the PL1/10 group has agreed to share the data from the 2D seismic survey it acquired in 2012, which includes data over the wider Islandmagee area, and future data from the proposed Woodburn Forest-1 well in return for access to the data from the Islandmagee-1 well drilled by IMSL. Of particular interest to the PL1/10 group are gas shows encountered in the Permian Magnesian Limestone below the Permian salt sequence in the Islandmagee-1 well. In addition, wireline data over the Triassic Sherwood Sandstone interval in the Islandmagee-1 well confirmed the good reservoir at this stratigraphic level over the area. The sharing of well engineering data will benefit both projects.

Commenting on the announcement, Andrew Hindle, CEO of InfraStrata said:

“Whilst we are disappointed that Larne will no longer be participating in the project, significant progress has been made in recent months towards drilling the first exploration well on the PL1/10 licence area in over 40 years. The lower costs of onshore operations mean that onshore projects are expected to remain profitable at lower oil prices if they were to persist. The Company remains fully committed to the Woodburn Forest-1 well, and is actively pursuing a number of options to secure alternate funding for it to be drilled as soon as is practicable.

The recent Islandmagee-1 well was successfully drilled by InfraStrata for Islandmagee Storage Limited and yielded useful additional data on the deep geology of the area. The post Islandmagee-1 well engineering programme remains on time and budget for a November 2015 completion.

The Woodburn Forest Prospect has three conventional sandstone reservoir targets in the Triassic, Permian and Carboniferous. Combined Prospective Resources for the Triassic and Permian reservoirs have been estimated by the joint venture at 40 million barrels of oil.

Should oil and gas exploration be successful it would be strategically important for energy security, infrastructure investment and the wider economy in Northern Ireland, whilst also providing wider benefits for the rest of the UK and Ireland. At present, 100% of Northern Ireland’s oil and gas is imported. In Northern Ireland oil and gas accounts for approximately 90% of total final energy consumption. Oil and gas production would have a positive impact on local and national industry, with local job creation and other economic benefits..”

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