Contract Restructuring with Baker Hughes

Source: www.gulfoilandgas.com 5/17/2021, Location: Europe

i3 Energy plc, an independent oil and gas company with assets and operations in the UK and Canada, is pleased to provide the following update.

In September 2017, i3 entered a 5.8 million contract with GE Oil & Gas UK Limited for subsea trees and wellheads (the "Equipment Contract") intended for the Company's eventual development of its Liberator field. In July 2019, i3 announced it had awarded Baker Hughes, a GE company (GE Oil & Gas UK Limited and Baker Hughes collectively referred to hereafter as "BHGE"), contracts for its H2 2019 drilling programme at its Liberator and Serenity assets. In connection with the July 2019 award, BHGE agreed that 3 million of oilfield service ("OFS") and oilfield equipment ("OFE") contract payments would not become payable until such time as i3 had received its first sales revenues from Liberator (the Deferred Payment Invoice Balance or "DPIB"). As part of this transaction, the Company issued to BHGE warrants up to a notional value of 3 million at an exercise price of 56.85p per ordinary share, totalling up to 5,277,045 warrants (the "Warrants"). BHGE could exercise the warrants via cash settlement or in exchange for payments due under OFS or OFE contracts with the Company. The warrants had a two-year term and would expire on 17th September 2021. The DPIB agreement and Warrants contained certain conditions, one of which prevented the Company from taking steps to reduce its share capital in order to make dividend distributions to its shareholders while the Warrants remained outstanding, and another that required repayment of the DPIB upon consideration at or above 3 million being received as part of a farm-down of i3's UK assets.

With i3's shift in focus to its Canadian assets and in the UK its Serenity asset, and with its desire to pay dividends to shareholders and to enter one or more farm-down agreements in the near-term, the Company and BHGE have agreed the following to mutually benefit both parties.

1. The remaining balance of the Equipment Contract will be cancelled without penalty. i3 and BHGE re-confirm their commitment to work together as the Company progresses its Serenity appraisal and, with success, field development thereafter.

2. BHGE has granted permission to i3 to restructure its balance sheet as required to make its intended dividend payments.

3. The Warrants will be converted to ordinary i3 shares (the "Warrant Shares") at an exercise price of 0.0001/share for a total consideration to i3 of 527.71 (the "Exercise Price").

4. For any dividend payments associated with i3's 2021 cash flow, the Company will pay 10% of the value of such dividend payments to BHGE to a maximum of 229,000 (the "Dividend Fee").

5. Prior to 30 September 2021, i3 will pay to BHGE a fee of 145,383 (the "Further Fee").

6. At such time as the Deferred Payment Invoice Balance is required to be settled in full by i3 (the "Payment Date", expected to be concurrent with consideration being received from potential partner(s) for the Company's Serenity farm-down), the DPIB will be reduced by:

o the Exercise Price received from BHGE;

o the Dividend Fee paid to BHGE;

o the Further Fee paid to BHGE;

o an amount equal to all i3 Energy dividend payments received by BHGE associated with its 5,277,045 Warrant Shares;

o an amount equal to the higher of: (i) the gross sales proceeds derived from the disposal of any Warrant Shares by BHGE prior to the Payment Date, and (ii) the 5-day volume weighted average value of one i3 share during the 5-day dealing period to 17th September 2021 multiplied by the number of Warrant Shares disposed of by BHGE prior to the Payment Date; and

o an amount equal to the aggregate value of any Warrant Shares held by BHGE on the Payment Date, with the value of one i3 share for these purposes being equal to the higher of: (i) the closing price of i3 shares on the Payment Date, and (ii) the 5-day volume weighted average value of one i3 share during the 5-day dealing period to 17th September 2021.

i3 is additionally pleased to announce that all other consents have been received from its relevant creditors, including its Majority Noteholders, to proceed with its intended reduction in share capital that it may pay its maiden dividend. The Company will be imminently disseminating a Notice of Extraordinary General Meeting to its shareholders to approve said reduction and to proceed with a submission to the UK Courts to effect the same.

An application for admission of the Warrant Shares to trading on AIM will be made and admission is expected on 21 May 2021. Upon Admission, the Company will have in issue 727,724,766 ordinary shares of 0.0001 each. Shareholders may use this figure of ordinary shares as the denominator by which they are required to notify their interest in, or change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.

Graham Heath, CFO of i3 Energy plc, commented:
"We are pleased to have reached this important milestone which enables us to proceed with our promised dividend strategy, and we want to reiterate our appreciation for the supportive and creative relationships we continue to foster with our partners and creditors as we evolve the Company."


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