logo-loader
viewi3 Energy PLC

i3 Energy PLC - Gain Energy Ltd. Production Acquisition

RNS Number : 0592S
i3 Energy PLC
06 July 2020
 

6 July 2020

 

i3 Energy plc

("i3" or the "Company")

 

Gain Energy Ltd. Production Acquisition

 

i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce the following update.

 

In reference to the Company's announcement of 23 June 2019 regarding the Letter of Intent to acquire production assets, i3 has now entered into a binding purchase and sale agreement ("PSA")(the "Transaction") for all the petroleum and infrastructure assets (the "Assets") of Gain Energy Ltd. ("Gain"), a private Canadian company with operations in the Western Canadian Sedimentary Basin ("WCSB").

 

Highlights:

 

·      During 2019, the Assets produced at 11,020 boepd and generated ~US$34 million in field EBITDA (revenues minus royalties, opex and transportation) from 365 net wells across multiple low-decline, long-life, light oil and gas fields

·      The Assets would add 26.4 MMboe PDP and 69.4 MMboe 2P reserves to i3's portfolio

·      The consideration to be paid for the Assets is C$80 million (~US$58.8m), subject to adjustments (outlined below), representing acquisition metrics of approximately 1.7x 2019 field EBITDA, US$5,526/boepd, and US$0.85/boe of 2P reserves

·      The Transaction is a reverse takeover under the AIM Rules for Companies and is subject to i3 shareholder approval. The Company's shares are currently suspended from trading on AIM until it either publishes a "Readmission Document" detailing the Transaction or provides confirmation that the Transaction will not complete.

 

Transaction and Readmission

On 3 July 2020 (the "PSA Date"), i3 entered a binding purchase and sale agreement with Gain to acquire 100% of its producing and non-producing petroleum assets in the Canadian provinces of Alberta and Saskatchewan. In Q4 of 2019, the Assets produced on average 10,645 boepd (47% liquids) to which Gain's independent reserve evaluator had attributed PDP reserves of 26.4 MMboe with a before-tax NPV10 of ~US$177 million, and 2P reserves of 69.4 MMboe with a before-tax NPV10 of ~US$397 million. In 2019, the Gain Assets produced ~US$34 million in field EBITDA (revenues minus royalties, opex and transportation) from 242 Gain-operated wells at an average working interest of 78% and 1,633 non-operated wells at an average working interest of 11%, and include 174k net developed acres and 186k net undeveloped acres of land. As part of i3's readmission process, the Company has commissioned GLJ Ltd. to update the reserves associated with the Assets. These details will become part of i3's Readmission Document when published.

Under the PSA, i3 will be acquiring the Assets free of all encumbrances (apart from industry standard or acceptable permitted encumbrances) for cash consideration of C$80 million (~US$58.8 million) (the "Consideration"). In addition to normal interim period adjustments between the transaction effective date of 1 May 2020 and completion, the Consideration will be adjusted by an amount of interest accruing at Canadian Prime + 2% (totalling approximately 4.45%), and from 29 June 2020 until completion, the Consideration will be adjusted by C$500k (~US$368k) per calendar month accruing to compensate Gain for its management of the Assets.

The Company is closely following the global energy transition towards carbon neutral energy sources, and i3 intends to be a proactive participant in this critical endeavour. A major attraction of the Transaction is Gain's interest in the oil-producing Weyburn unit, the fourth largest carbon capture, utilization and storage ("CCUS") project in the world. For Gain's interest, the amount of CO2 annually sequestered is estimated to offset approximately 17,760 boepd of scope 1 greenhouse gas emissions. This figure is at present more than sufficient to cover the 10,645 boepd produced by the Gain Assets in Q4 2019 and will further offset additional production as it is added to i3's portfolio in the future.

 

The required details of the Transaction will become part of a Readmission Document. As the Transaction is classified as a reverse takeover in accordance with the AIM Rules for Companies, at the request of the Company, its shares were suspended on 23 June 2020 from trading on AIM and will remain so until either the publication of the Readmission Document setting out, inter alia, details of the Transaction, or until i3's confirmation that the Transaction will not complete.

 

Completion of the Transaction remains subject to i) financing to raise the cash consideration and working capital, ii) industry standard conditions precedent, and iii) i3 shareholder approval. The Company is in discussions with its investors and brokers and is seeking funding for the Consideration and general corporate purposes.

 

ENDS

 

Qualified Person's Statement

In accordance with the AIM Note for Mining and Oil and Gas Companies, i3 discloses that Mihai Butuc, i3's New Ventures Manager, is the qualified person who has reviewed the technical information contained in this document.  He graduated as a Diplomat Engineer, Geology and Geophysics from the University of Bucharest in 1985 and is a member of the Society of Petroleum EngineersMihai Butuc consents to the inclusion of the information in the form and context in which it appears.

 

CONTACT DETAILS:

i3 Energy plc

 

Majid Shafiq (CEO) / Graham Heath (CFO)

c/o Camarco

Tel: +44 (0) 203 781 8331

 

WH Ireland Limited (Nomad and Joint Broker)

 

James Joyce, James Sinclair-Ford

Tel: +44 (0) 207 220 1666

 

 

Canaccord Genuity Limited (Joint Broker)

Henry Fitzgerald- O'Connor, James Asensio

 

Tel: +44 (0) 207 523 8000

 

Mirabaud Securities Limited (Joint Broker)

Peter Krens

 

Tel: +44 (0) 203 167 7221

 

Camarco

Georgia Edmonds, James Crothers, Violet Wilson

 

Tel: +44 (0) 203 781 8331

 

 

 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

 

Glossary of oil and gas terms, in accordance with standards contained in the Canadian Oil and Gas Evaluation (COGE) Handbook:

 

Proved Reserves

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

 

Probable Reserves

 

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

 

Proved Developed Producing (PDP) Reserves

Those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

 

2P Reserves

Total Proved Reserves plus Total Probable Reserves

 

STOIIP

Stock Tank Oil Initially In Place

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
ACQKKPBDBBKBCOK

Quick facts: i3 Energy PLC

Price: 6.65

Market: AIM
Market Cap: £7.16 m
Follow

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

i3 Energy team detail £30mln fundraise and Canada growth strategy

i3 Energy PLC's (LON:I3E) Majid Shafiq and Graham Heath speak to Proactive's Andrew Scott soon after confirming they've raised at least £29mln, with a further £1mln subject to regulatory approval. The company last week struck a deal to concurrently sell a package of the Gain assets to a third...

3 days, 13 hours ago