i3 Energy PLC (LON:I3E) has awarded Baker Hughes GE, one of the world’s largest oilfield services companies, contracts worth £3mln to carry out drilling at its Liberator and Serenity assets in the North Sea.
BHGE will supply oilfield services and equipment for i3’s summer drilling programme for its Liberator and Serenity prospects in the outer Moray Firth.
It has also been appointed to carry out the Phase I development of Liberator in 2020.
BHGE's scope will include directional drilling, drilling fluids, mudlogging, formation evaluation operations and wellheads.
The cost of the contracts is £3mln, but BHGE has agreed to defer payment until i3 has received its first sales revenues from Liberator Phase I.
As part of the deal, Aberdeenshire-based i3 is to issue BHGE with warrants up to a notional value of £3mln at an exercise price of 56.85p – some 15% above the current share price.
BHGE can exercise the warrants via cash settlement or in exchange for payments due under the equipment and service contracts. Junior Noteholders will also be offered participation in warrants on these same terms.
BHGE’s deferral shows ‘confidence’ in i3
“We are very pleased to announce that we will be awarding these multi-million-dollar oilfield service and equipment contracts to BHGE,” said chief executive 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.”
i3 shares were down 0.4% to 47.6p in morning trading on Tuesday.