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i3Energy transformed by opportune Canadian deal

Snapshot

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

Quick facts: i3 Energy PLC

Price: 7.81 GBX

AIM:I3E
Market: AIM
Market Cap: £54.67 m
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What the company owns

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

The Canadian assets comprise over 25mln barrels of proved developed producing (PDP) reserves, plus over 65mln barrels of proved and probable (2P) reserves and accumulated tax pools amounting to US$89mln.

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

The former is estimated to host 197mln barrels and the latter 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 options being pursued to take the projects forward.

How it is doing

Production from the Toscana assets along with assets acquired from Gain Energy averaged a combined 9,407 barrels oil equivalent per day for the month of October.

i3 also confirmed that it expects to declare and pay its first dividend in the first quarter of 2021 now that it has a production business in place.

What the boss says: Majid Shaffiq, chief executive

“We are very excited about our entry into Western Canada and believe it holds tremendous potential to deliver substantial near-term and progressively greater returns to i3's shareholders.

"The Canadian transactions are expected to create a solid foundation to aggressively build upon.”

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What the broker says

“i3 Energy absolutely nailed the [Toscana] timing; WTI dipped into negative trading around the time the company secured its acquisitions; the recovery in crude oil prices has been robust; we believe the commodity price outlook is compelling,” said analysts at house broker WH Ireland.

“Generally, i3 Energy’s assets are high-quality, conventional resources... We like the simplicity and low-declines of conventional resources vs unconventional shale-type resources.”

“Herd mentality, in our opinion, is causing a rush to the exits for oil & gas assets, while seemingly ignoring that combustion fuels have historically been a driving force behind the prosperity of wealthy countries and an important contributor to rising standards of living in developing countries."

“Who better to buy underappreciated, high-quality assets at discounted prices than i3 Energy? We believe i3 Energy is in a particularly enviable strategic position and that its corporate skillset is particularly advantageous in the current market.”

 

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