I3 Energy (I3E) has allocated £1.16 million for its planned dividend payout in 1Q21 while the company informs investors that its Canadian production assets ‘continue to perform well’. 

The dual-listed independent oil and gas company, which holds assets in the UK and Canada, said it could only pay a dividend out of distributable profits but said it has ‘retained losses.’

The company informed investors that it is expecting ‘shortly’ to effect a reduction of share capital to create distributable reserves to offset the losses and create surplus profits. 

“Although our balance sheet restructuring has taken longer than anticipated, we are delighted that we are close to entering the final stages of the process to allow the declaration and payment of our maiden dividend,” commented Majid Shafiq, Chief Executive of i3 Energy.

This will also enable i3 to commence delivery on its promise to distribute at least 20% of its free cash flow annually to our shareholders as dividends, subject to necessary consents. 

Separately, i3 said its tie-in project in Noel in Northeast British Columbia ("BC") progresses ‘on time and on budget’. Prior to this, i3 had completed a successful flow-test on a horizontal gas well into the prolific Falher formation at its acreage in BC back in December 2020. 

I3 said regulatory approvals and first nation consultations are ongoing while construction is anticipated to commence once surface access conditions allow, following a recent operational lull where snowmelt and frost-release had created soft and muddy ground conditions.  The horizontal gas well is expected to be brought on at approximately 500 boe/d, i3 highlighted.

Commenting on its assets, Shafiq stated, “Our Canadian production assets continue to perform well, and we are actively advancing projects to maintain and grow production from our current portfolio and are evaluating a number of production acquisition opportunities.”

Meanwhile, the company noted that in the UK, negotiations with several counterparties for the potential farm-out of Serenity appraisal drilling in the North Sea “continue to be advanced.”

Shares in I3 have nearly doubled in value from 5.5p since the beginning of 2021. The stock dipped 7.34% lower during late morning trading to 10.1p following the announcement. 

i3 Energy’s strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure. 

Positive Drilling Results 

i3 Energy has several positive re-rating catalysts from near-term drilling results from the existing asset portfolio. 

Transitioning to Production with Dividend 

Recently moved into production with low-risk growth opportunities in production at low marginal cost. 

i3 previously stated that it expects to begin paying a dividend of between 20% and 30% of free cash flow annually prior to the end of 1Q21, and then up to 40% as its Canadian business expands. 

Platform for Organic and Acquisitive Growth 

Established a platform to transform the business over the next 12 months through organic production growth and complementary acquisitions. 

Majid Shafiq, CEO of I3E said i3’s entry into the WCSB is “to provide a platform to execute on a strategy for the rapid growth of a Canadian onshore production portfolio via M&A.” 

Alongside its acquisition of Toscana, i3 has continued to expand its Canadian assets, with CEO, Majid Shafiq, and in particular, has viewed 2020 as “a transformational year.” 

In September 2020, the company told investors that it completed its acquisition of all the petroleum and infrastructure assets of Gain Energy for CAD$80m after raising around £29m in August in order to complete its proposed acquisition of the Gain Energy assets in Canada.  

Meanwhile, i3 Energy also agreed to sell Gain's Saskatchewan portfolio to Harvard Resources Inc. for CAD$45m, around US$33m, immediately following the completion of its acquisition of Gain. 

i3 believes the diversification of its portfolio will add ‘a quality production base to provide internal free cash flow to grow the enlarged group and provide a near-term return to its shareholders.’ 

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