IOG, i3 Energy, RockRose
Independent Oil & Gas
IOG announced yesterday afternoon that it had completed its farm-out with CalEnergy Resources and taken the FID on Phase 1 of its Core Project. This is a substantial portfolio of assets containing 410 BCF of 2P +2C reserves and resources across six discovered UK SNS gas fields.
The completion has triggered a number of key milestones in the progress of this long-awaited project not least the farm-out to CER thus bringing in £40m of cash to IOG but also starts the £60m carry of IOG’s Phase 1 development costs.
Perhaps more importantly for some it also kickstarts the initial repayment of debt to LOG by some £17.1m of non-convertible and they have in turn converted £10.9m of debt into 135m new shares in the company, these shares are subject to orderly market restrictions for 12 months. Th e remainder which is the 2018 19p convertible plus accrued interest has been restructured into long-term, unsecured, non-interest bearing loan notes convertible at 19p into a short 61m shares.
With the €100m bond raise IOG is now fully funded and partnered up to deliver shareholder value which is forecast to deliver over £0.5bn in pre-tax cash flow net to IOG. Still to sort out is CER’s option to acquire 50% of the Harvey licences, a decision has yet to be made whilst the well results are still being analysed.
So, the Core Project gets underway with only the OGA hurdle to pass now which should be a formality. This has been a long time in the making with at times some mountains that needed to be climbed but one way or another it has reached base camp, fully funded and ready to go, who’d have thought eh? Onwards and upwards for IOG, now the hard work really starts, but shareholders can be satisfied that it should be a rewarding journey.
A brief word on i3 which I don’t formally look at after since the recent shenanigans but I like the management and am pleased that this well has come in. This oil discovery is ‘consistent ‘ with management pre-drill estimate of 197 MMbbls STOIIP for the entire Serenity closure within the company’s licence area.
The company will now mobilise the rig to the Liberator field for further drilling although funding options are somewhat uncertain but include deferral of payments for the semi-submersible into 2020. They are also negotiating an RBL of up to $100m ‘pending successful Liberator results’.
Whilst the outlook is as good as it has been for some time the opportunity to spread the good news this morning appeared to be spurned as both the CEO and the CFO were no-shows at a packed 121 oil conference at which they were slated to speak. Quite what might have been more important is difficult to tell but I understand that it would have been a busy day and Graham Heath is as hard working as it comes. Nevertheless opportunities like this are hard to come by and there were a number of questions that they probably would have enjoyed answering.
Following on from the i3 announcement in which they state that Serenity is important and….’which we believe is connected to the undeveloped Tain oilfield’.
Indeed RockRose has also put out an RNS alluding to the announcement so clearly RRE are looking at this and I would guess that it’s the deeper oil/water contact that they are looking to understand.
I would suggest that RRE is potentially an equally big winner here as this, without lifting a finger, increases Tain substantially and makes the company even cheaper…