International Oil and Gas Tech Ltd Trading Update (8888G)

TIDMOGT

RNS Number : 8888G

International Oil and Gas Tech Ltd

09 March 2015

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, JAPANOR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

9 March 2015

INTERNATIONAL OIL AND GAS TECHNOLOGY LIMITED

TRADING UPDATE

International Oil and Gas Technology Limited (the "Company") today provides a trading update.

Company Updates

The Company has agreed an out-of-court settlement in respect of the recovery of costs incurred between 2011 and 2014 in defending the litigation against the Company which was dismissed by the Court in May 2014. Under the settlement the Company is expected to receive an additional GBP450,000 in full and final settlement of the costs proceedings, supplementing the GBP500,000 interim payment already made on account as disclosed in the Company's interim results. Adjusting for this settlement, the Company's unaudited net accrued liabilities (excluding investments) were approximately US$2.3m as at 28 February 2015.

Given the ongoing processes for portfolio realisations and cost recovery, the Company has entered into contractual arrangements with its directors (the "Directors"), Linton Capital LLP ("Linton") and certain of the Company's advisers. These formalise the deferral of certain fees payable by the Company, grant security to the lead creditor and establish parameters between the parties, which are subject to certain milestones.

As previously announced, due to the Company's financial position and the then-anticipated timing of the disposal of the Company's investment in Strata Energy Services Inc ("Strata"), the Company has served notice on its investment management and administration agreement with Linton; this notice period will expire on 30 April 2015. The Directors have assumed responsibility for the Company's operational activities, including full responsibility for the day-to-day management, strategy and exit plan in respect of Strata. Additionally two of the Directors have taken seats on the Strata board in place of representatives of Linton. Linton continues to manage and advise on the disposal of the Company's investment in Crest Energy Services Inc ("Crest") and is finalising matters following the disposal of the principal assets of SR2020 Inc ("SR2020").

The Company is required to publish its annual financial report by no later than 30 April 2015.

Portfolio Updates

Strata

Strata has reported to the Company provisional, unaudited revenues of C$31.75m and earnings from operations of C$4.90m during its financial year ending 30 November 2014 (2013: C$24.29m and C$1.95m). This positive trend was driven principally by reduced down-time in Canada during the annual spring thaw and generally full equipment utilisation in all operating areas until the end of 2014, at which time activity in Kurdistan began to be curtailed due to political and security issues.

The very significant decline in oil price has so far had only a modest negative impact on US and Canadian revenues as Strata replaces customers forced to reduce capital budgets. In Kurdistan, management is currently waiting out the political situation in order to retain key pending contracts. Strata's consolidated revenues and margins will be depressed as long as the Kurdistan interruptions continue, which result in bank loans being out of covenant with attendant increased cost of debt. Bank lenders appear sympathetic, given the suspended operations and are showing restraint, especially due to the process under way for IOGT to sell its stake in the company to a buyer able to inject cash into the business.

The Directors have determined it appropriate to pursue a disposal of the Company's investment in Strata through a specialist investment bank, whose terms of engagement involve payment by the Company of a monthly retainer and a percentage of the gross proceeds received from a sale. The formal marketing of the interest has recently commenced; the first stage being contact with a broad range of potential buyers. Despite Strata's operational issues discussed above, the Board anticipates that buyer interest will be robust due to Strata's position in the industry and the nature of MPD/UBD technology as safety and efficiency drivers, which makes Strata's services attractive in these times of lower E&P margins.

CREST

Crest has suffered from delays in the scheduling of pipeline work in Saudi Arabia which has been compounded by only having one large nitrogen unit available to tender for work. The larger of its two nitrogen units has been idle since August 2014, owing in part to a lack of working capital to bid on operational contracts, and as a result 2014 revenues will be materially lower than those in 2013. While Crest expects work using the larger unit to commence within the coming weeks, these delays have caused cash flow difficulties for Crest that the Company has had to meet with contributions to working capital. Ultimately, and as previously disclosed, an increase in the asset base is required to enable Crest to become financially stable, and the Company continues to look for an investor to take the business forward.

SR2020

As previously reported OptaSense Inc. of Houston, Texas has acquired the seismic processing and imaging assets of SR2020, which is now in the process of winding up any remaining assets and distributing any residual proceeds in accordance with its debt obligations.

For further information:

 
Investment Manager 
     Linton Capital LLP 
     David Sefton 
     [e-mail]       Tel: [phone] 
 
 
Corporate Broker 
     Numis Securities 
     Nathan Brown 
     [e-mail]       Tel: [phone] 
 

Notes to editors:

International Oil and Gas Technology Limited is an authorised closed-ended investment company incorporated in Guernsey. 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

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