TIDMOGT
RNS Number : 6754T
International Oil and Gas Tech Ltd
21 November 2013
The following amendment has been made to the 'Interim Management
Statement' announcement released on 19 November 2013 at 17:54 under
RNS No. 4577T.
The number of shares the Company has in issue after the tap
issue was incorrectly stated as 7,999,367. This has been amended to
"The Company now has 7,999,594 participating redeemable preference
shares of the Company in issue."
All other details remain unchanged.
The full amended text is shown below.
Not for release, publication or distribution in, or into, the
United States, Canada, Australia or Japan
International Oil and Gas Technology Limited
("the Company")
Interim Management Statement
19 November 2013
Introduction
International Oil and Gas Technology Limited (LSE: OGT) today
provides its Interim Management Statement for the period since 31
August 2013 in accordance with Rule 4.3 of the Disclosure and
Transparency Rules of the UK Listing Authority.
The primary goal of the Company remains to deliver returns to
shareholders by investing in, developing and then exiting
successful portfolio companies. On 19 September 2013, the Company
announced its intention to complete orderly exits from all three
remaining portfolio investments within the next 24 months and
return proceeds to shareholders.
PORTFOLIO UPDATE
Strata Energy Services Inc. ("Strata")
Strata provides specialised underbalanced and managed-pressure
drilling ("UBD" and "MPD") services. The company has its
headquarters in Alberta, Canada. It operates proprietary drilling
equipment that is considered among the best in the industry and
Strata has an excellent reputation for customer service.
Strata has experienced encouraging sales levels, with high
levels of utilisation of its equipment and services in all three
operating regions. Average monthly revenues for the three months to
31 October were approximately C$2.7 million, generating EBITDA of
C$1.8 million in that period. As previously noted, Strata expects
full-year revenues to be similar to FY12 and below the original
FY13 budget. Strata continues in negotiations with its primary
lender to resolve the covenant issues that arose as a result of its
trailing twelve-month performance.
In Canada, activity continues to recover from the 2012 slump.
Although UBD activity has been lower than forecast, this has been
more than compensated by the growth in MPD services. In Kurdistan,
a major new UBD contract is set to raise the long-term UBD contract
count to three. The US is contributing increasing levels of
revenue, with Strata's market share growing in an expanding MPD
market.
Strata anticipates that the US will be the main growth area in
2014. It plans to redeploy equipment to the US from Canada during
the 2014 spring-thaw slow-down in April/May to avoid the
significant dip in revenues experienced in FY12 and FY13.
The Company owns 43 per cent of the fully diluted share capital
of Strata and holds a US$2 million loan note.
Crest Energy Services Limited ("Crest")
Crest uses the most advanced equipment available to provide
in-situ nitrogen generation services to various segments of the
oil, gas and energy industries in Saudi Arabia.
The market for nitrogen services in Saudi Arabia is large,
encompassing various activities from pipeline purging to well
intervention. Crest has thus far only addressed two segments of
this market: power-infrastructure purging and gas-pipeline purging.
The value of Crest has been enhanced by its entry into the Saudi
Arabian market where barriers to entry are very high.
Crest achieved sales of US$1.9 million for the ten months to 31
October 2013 (compared to just over US$1 million for FY12) and
expects to exceed its revenue forecast of US$2 million for the full
year.
As previously highlighted, Crest has created significant demand
for its services but, without further capital investment to acquire
more equipment, it cannot take advantage of that demand. As
equipment is fully utilised, tendering for new work is difficult
because Crest cannot be sure when existing contracts will finish.
Until there is further investment in new equipment, Crest will
experience void periods between contracts, which will have a
negative impact on Crest's revenue and cash position.
The Company currently owns 100 per cent of the shares of Crest.
An employee share-option scheme, once implemented, may dilute this
holding by up to 25 per cent.
SR2020 Inc. ("SR2020")
SR2020 provides technically advanced and proprietary
borehole-seismic services, including 3D-vertical seismic surveys,
to a large number of operators in the US oil and gas industry.
In order to facilitate the access of its customers to more
industry-standard acquisition services, SR2020 undertook a major
restructuring. It closed its Houston-based acquisition facility,
which will allow SR2020 to partner with an acquisition company that
provides mainstream acquisition equipment rather than SR2020's
proprietary tubing-conveyed system. The customer response to date
has been positive. However, time is needed to rebuild the sales
base.
FY13 revenues are projected at approximately US$2 million,
disappointingly below both budget and FY12 levels. As the Company's
valuation of SR2020 is a function of its sales performance, the
valuation of SR2020 has been reduced from US$14 million to US$8
million.
With the impending launch of extremely promising new processing
and interpretation, including a proprietary micro-imaging
technique, the Company is investigating options to refinance SR2020
in order to provide the growth capital that SR2020 needs to achieve
its potential.
The Company owns 70 per cent of the share capital of SR2020. An
employee share-option scheme, once fully vested, will own the
balance of 30 per cent.
Tap issue
The Company raised the gross amount of US$2.1 million by issuing
707,228 preferred ordinary shares at US$3.00 per share in October.
The Company now has 7,999,594 participating redeemable preference
shares of the Company in issue.
Quorum Funding Corporation ("Quorum")
The claim by Quorum against the Company is proceeding through
the Commercial Division of the High Court in London. The case has
been set for trial in late March/early April 2014.
The Company took advice at the relevant time, and continues to
take advice, from Norton Rose and leading counsel. The Board
reiterates that it acted properly at all times in terminating the
original investment management agreement
As announced on 22 October 2013, Quorum has served amended
pleadings to withdraw the head of damages claimed that related to
the future potential value of management share options. This
element of the claim amounted to approximately US$9.2 million of
the original amount claimed (approximately US$15.2 million, a
figure subsequently increased to over US$17 million). As noted in
the interim accounts, the Board was advised that, as a matter of
English law, Quorum would fail to recover this head of damages.
Since then, witness statements have been exchanged. A review of
the statements from QOGT has confirmed the view of the Board and
its advisers that the claim by Quorum is entirely without merit.
The Board continues to be advised that the calculation of a
significant remaining part of the damages is speculative and
far-fetched. The Company intends vigorously to defend itself
through to trial.
Net Asset Value
At 30 September 2013, the Company estimates that the unaudited
Net Asset Value per participating redeemable preference share was
US$6.91 (30 June 2013: US$7.98). The Company held cash of US$1.3
million on that date.
The valuations of the Company's holdings in portfolio companies
as at 30 September and 30 June 2013 are set out in the table
below:
30 September 2013 30 June 2013
-------------------------- ----------------------- -----------------------
Company Valuation % of Valuation % of
(US$m) portfolio (US$m) portfolio
-------------------------- ---------- ----------- ---------- -----------
Strata Energy Services
Inc 36.9 75.5 36.9 67.2
Crest Energy Services
Ltd (+) 4.0 8.2 4.0 7.3
SR2020 Inc (+) 8.0 16.3 14.0 25.5
-------------------------- ---------- ----------- ---------- -----------
Investment portfolio
total 48.9 100% 54.9 100%
-------------------------- ---------- ----------- ---------- -----------
(+) Valuations take account of full potential
dilution.
For further information:
Investment Manager
Linton Capital LLP
David Sefton
dsefton@linton-capital.com Tel: +44 20 3384 8090
Corporate broker
Numis Securities
Nathan Brown
n.brown@numis.com Tel: +44 20 7260 1426
Notes to editors:
International Oil and Gas Technology Limited
International Oil and Gas Technology Limited is an authorised
closed-ended investment company incorporated in Guernsey that
invests expansion capital into companies that provide technologies,
services and/or processes to the upstream oil and gas industry. The
Company was admitted to the Official List of the UK Listing
Authority and to trading on the London Stock Exchange on 7 January
2008. Its stock market EPIC is OGT.L.
Further information can be found at
www.international-ogt.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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