i3 Energy (AIM:I3E ) has announced the closing of its acquisition of the assets of Toscana Energy Income Corporation in turn completing the first phase of its Canadian business plan.
Toscana was the first Canadian i3 deal announced earlier this year as the Company's entry into the Canadian oil and gas sector and forms the basis of its Canadian operating platform.
The independent oil and gas company with assets and operations in the UK and Canada said production of Toscana’s assets alongside assets acquired from Gain Energy in September averages a combined 9,407 barrels oil equivalent per day (61% gas, 39% liquids) for October.
I3 reported that Toscana’s assets come with tax losses of CAD$128m (US$94m) which it believes will ‘support tax efficient income for several years’ from its production portfolio.
A first dividend is expected to be declared and paid in the first quarter of 2021. Meanwhile, i3 shares will commence trading on the Toronto Stock Exchange under ‘ITE’ later this week.
“This and the acquisition of the Gain assets in September completes the first phase of our Canadian business plan. We will now look to fully integrate and optimise our operations to maximise margins in a strengthening Canadian gas price environment.”
“Current AECO2 strip pricing in excess of CAD$3.0/MMBtu3 out to June 2021 (a price last seen in 2016), whilst continuing with our plan to build on the platform with synergistic and accretive M&A activity,” commented Majid Shafiq, CEO of i3 Energy on the acquisition.
Shares in i3 Energy have increased over 10% since the beginning of last month to open 6.17% higher at 4.3p following this morning’s announcement.
3 Reasons to Follow i3 Energy
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 have 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.
Prior to the end of Q1 2021, i3 anticipates that it will begin paying a dividend of between 20% and 30% of free cash flow annually, 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, the Company has continued to expand its Canadian assets, with CEO, Majid Shafiq, describing 2020 as “a transformational year.”
In September, the company unveiled to 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.’
Follow News & Updates from i3 Energy here: