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i3Energy deal adds Canadian production to North Sea promise

Snapshot

  • Deal to acquire Canadian assets
  • North Sea junior with two discoveries
  • Multi-well campaign planned
  • Funding efforts continue
i3 Energy PLC -

Quick facts: i3 Energy PLC

Price: 6.1 GBX

AIM:I3E
Market: AIM
Market Cap: £6.57 m
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"The discovery of the Serenity oil field was a transformational event in i3's history”

Majid Shaffiq, i3 Energy chief executive.

What the company owns

I3 Energy PLC (LON:I3E) owns undeveloped discoveries in the North Sea, plus exploration acreage, and in June 2020 agreed to acquire Toscana Energy Income Corporation (TEIC) – which owns interests in thirteen “low-decline, long-life, light oil and gas fields” in Canada.

The to-be-acquired assets comprise over 25mln barrels of proved developed producing (PDP) reserves, plus over 65mln barrels of proved and probable (2P) reserves.

They produced an average of 1,065 barrels of oil equivalent per day (hoped) net to generate C$5.5mln of field net back. In 2019, the assets had an average break-even price of C$30.43 per boe.

The assets will also benefit from TEIC's accumulated tax pools, amounting to US$89mln.

In all, the transaction is seen to be an opportunistic and value-adding acquisition of distressed assets.

In the North Sea, it owns the Serenity and Liberator development projects.

The former is estimated to host 197mln barrels and whilst 2019’s appraisal of the latter disappointed it is still though to have up to 400mln barrels of resource upside.

Both are 100% owned by i3 and will need to be advanced by further field appraisal and pre-development work. Farm-out transactions and partnering are among the possible option being pursued to take the projects forward.

 

How it’s doing

Serenity

The company in November completed a three-well drill programme which delivered a major success at Serenity which was described as potentially “a very large oil field”.

Importantly, the programme validated the regional geological model which has predicted large resource volumes of hydrocarbons at Serenity and Liberator.

It set up a new programme of appraisal wells planned for 2020, albeit coronavirus and crude market volatility tempered those plans. This phase of work remains subject to funding, which is yet to be secured.

Once underway, the plan will be to further appraise Serenity to assess how best to develop the discovery.

Liberator

In October, results from the latest well at the Liberator discovery disappointed though the core portion of the project remains intact and close to 400mln barrels of further untested upside is retained for future appraisal.

Subject to funding, the Phase 1 field development sees the company target 63mln barrels of oil in place. The drilling of up to four wells will tap envisaged recoverable reserves of up to 23mln barrels initially.

Future phases of work would then look at the additional 396mln barrels of upside.

 

What the boss says

"The discovery of the Serenity oil field was a transformational event in i3's history,” said Majid Shaffiq, i3 Energy chief executive.

“We are very excited about the further drilling operations we expect to conduct in 2020 and see this as the lowest risk path to unlocking substantial shareholder value.

“We believe our acreage, together with the data retrieved from our 2019 drilling campaign, will be very attractive to potential farminees looking to add material barrels and near-term production to their portfolios."

 

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Watch

i3 Energy team discuss acquisition of Toscana Energy and new growth business

i3 Energy Plc's (LON:i3E) Majid Shafiq and Graham Heath speak to Proactive London's Andrew Scott following the news this morning of a new strategic acquisition - picking up producing assets in Canada. i3E's secured terms to acquire Toronto listed Toscana Energy Income Corporation which owns...

on 30/3/20

3 min read