InfraStrata plc (AIM: INFA), the UK quoted company focused on the development of natural gas storage capacity, is pleased to provide an update and confirmation of its wider strategy to seek to become revenue generating during 2020 after taking Final Investment Decision for the Islandmagee Gas Storage Project.
In addition to continuing to progress the Islandmagee Gas Storage Project, in relation to which an update was announced on 03 July 2019, the Company is now involved with potential partners and asset owners to seek to deliver new projects meeting any of the following criteria:
- UK mainland gas storage projects to complement the Islandmagee Gas Storage Project;
- Floating Storage and Regasification Unit (“FSRU”) projects to facilitate the importation and regasification of Liquified Natural Gas (“LNG”) into the UK; and
- existing operational and revenue generating gas storage facilities within the EU.
Projects have been identified for all of the above and, whilst these are currently only in discussion and/or undergoing due diligence, the directors of InfraStrata plan for the Company to transform itself during 2019 and 2020 into an organisation that is no longer a sole project company, but rather a company with multiple projects across various project life cycles. This is in line with the Company’s intention of diversifying in the gas storage industry and energy infrastructure generally.
It is planned that income will be generated at the InfraStrata plc level from these new projects, as is similarly expected from the Islandmagee Gas Storage Project, from a number of sources after equity has been sold down to incoming investors at project level, including from:
- Construction Management;
- Operational Management; and
- Return on retained equity in projects.
The income streams from construction and operational management are planned to be achieved once equity at the project level has been sold down to incoming investors who then intend on retaining the Company’s management team to carry out construction and operation activities of these projects.
Two new companies have recently been incorporated by InfraStrata, which would be utilised as vehicles to facilitate transactions for these new projects. Further announcements will be made as appropriate as matters progress on each project.
The Company expects to fund the initial costs of technical and commercial due diligence on new projects through part utilisation of the grant monies of EUR1.6 million due to be received from the EU later this year and from a portion of the back costs on the Islandmagee Project that are expected to be reimbursed on completion of Final Investment Decision (“FID”) by incoming investors as part of a project equity deal for the Islandmagee Project .
John Wood, Chief Executive Officer commented: “We are pleased to confirm our future strategy to ensure that we continue to de-risk InfraStrata by considering additional projects in our niche market of long-term plays within the energy infrastructure sector. We have had very strong interest in the above-mentioned projects, and we believe that we are ideally placed to work with our partners to put these projects together. These projects will be a key strategic fit with our existing flagship Islandmagee Gas Storage Project which will continue to receive the attention it requires to ensure it is brought online and in keeping with the commitments that we have made in our recent offtake term sheet with Vitol.”