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WH Ireland upbeat on I3 Energy’s “perfectly timed” Canadian move

“i3 Energy absolutely nailed the timing," analyst Brendan Long said of the Canadian deals.

i3 Energy PLC - WH Ireland upbeat on I3 Energy’s “perfectly timed” Canadian move

I3 Energy Plc’s (LON:I3E) soon-to-be-acquired Canadian assets are worth 17.7p per share, according to house broker WH Ireland’s preliminary fair value estimate.

Earlier this week, the company secured up to £30mln in funding to support the acquisition of assets owned by Gain Energy.

This is one of two acquisitions being advanced as the company builds a production base in Canada.

READ: i3 Energy raises up to £30mln

Analyst Brendan Long described the move to acquire production in Canada as “perfectly timed”.

“i3 Energy absolutely nailed the 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,” Long said in a note.

“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.”

Long meanwhile described the I3E management team as “exceptionally good deal makers” and highlighted the opportunities presently being created in the currently volatile market.

“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,” the analyst said.

“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.”

Whilst the Canadian move is making headlines at the moment, the WH Ireland analyst reckons a drill programme is on the way in the North Sea.

Long said this intuition is based on the stockbroker’s view on recovering oil prices, the company’s increased financial flexibility and the potential that it could negotiate “something close to free” exploration or appraisal drilling.

I3 shares presently trade at around 6.39p, giving it a market value of around £6.88mln.

The share placing is to take place alongside the Canadian transactions, which constitute a reverse takeover. New shares issued in the share placing - some 568.4mln of them - are priced at 5p.

Quick facts: i3 Energy PLC

Price: 4.06 GBX

AIM:I3E
Market: AIM
Market Cap: £28.24 m
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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...

on 11/8/20

2 min read