i3 Energy plc has announced that it has awarded Baker Hughes, a GE company (BHGE), contracts for its 2019 summer drilling program on its Liberator and Serenity assets and its 2020 Phase I development of Liberator.
BHGE's scope will include directional drilling, drilling fluids, mud logging, formation evaluation operations and wellheads. In connection with the award, BHGE has agreed that £3mm of oilfield service (OFS) and oilfield equipment (OFE) contract payments will not become payable until such time as i3 has received its first sales revenues from Liberator Phase I.
"We are very pleased to announce that we will be awarding these multi-million dollar oilfield service and equipment contracts to BHGE,” said i3 CEO Majid Shafiq. “We appreciate the confidence BHGE has shown in the quality of the Liberator oilfield in agreeing to receive payments from first oil revenues.
“This transaction will enable us to maximize the allocation of capital resources and contingency towards our 2019 drilling activities, and we look forward to welcoming BHGE as a partner as we establish a mutually beneficial long-term relationship to unlock the value in our assets."
As part of this transaction, i3 will be issuing to BHGE warrants up to a notional value of £3mm at an exercise price of 56.85p per ordinary share, totaling up to 5,277,045 warrants if fully issued. BHGE can exercise the warrants via cash settlement or in exchange for payments due under OFS or OFE contracts with the Company.
Junior Noteholders will also be offered participation in warrants on these same terms, pro-rata to their ownership of i3 on a fully-diluted basis and also pro-rata to the proportion of warrants fully issued to BHGE, which could total up to 1,566,572 warrants if all 5,277,045 warrants are issued to BHGE.
This transaction remains subject to final execution between the parties of the relevant contracts.
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