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I3 Energy completes Central Alberta strategic asset acquisition

Highlights 

  • Independent energy firm I3 Energy has completed its strategic asset sale from Canadian energy firm Cenovus Energy.
  • This strategic asset sale is expected to add up to 8,400 boepd to I3 Energy’s production, boost free cash flow, add to its large reserve base and more.
  • The effective transaction date of the acquisition stands as of 1 April 2021, and the accrued income between the effective date and closing date will be an adjustment to the total consideration paid for the asset sale.

AIM-listed and independent oil and gas company I3 Energy PLC (LON: I3E) (TSX: ITE) has completed its strategic asset acquisition in the Central Alberta core area from Canadian senior oil and gas firm Cenovus Energy.

The acquisition deal was worth up to CA$ 65 million and was previously announced on 7 July. The strategic asset sale is expected to add up to 8,400 barrels of oil equivalent per day (boepd) to I3 Energy’s production output and help consolidate its central Alberta core area.

Deal completion details

In July, I3 Energy completed its gross proceeds capital raising activity of at least £40 million via a primary bid offer and share placing in order to raise funds for the strategic asset acquisition.

While the deal finally closed on Monday, the effective transaction date stands as of 1 April for the Cenovus Energy asset sale. Moreover, the company stated that the accrued income between the effective date and closing date would be adjusted to the total consideration paid for the asset sale. The company is expected to have a net debt of US$27 million, which equates to the current net debt to NTM NOI ratio of a multiple of about 0.36, following the deal closure.

Majid Shafiq, the company’s CEO made the following statement after announcing the asset sale deal closure:

Related Article: I3 Energy: Two wells at Martin Hills now in production; Wapiti acquisition completed 

Strategic asset sale deal highlights

  • In addition to aiding in I3 Energy’s core area consolidation, the energy company expects the asset sale to have several advantages, such as, it can offer significant operational synergies, which will aid in reducing its unit costs in the central Alberta core area and enable the company to expand its third-party tariff income.

(Image Source: Company website)

  • It is also expected to strengthen its free cash flow and its next twelve months estimated net operating income (NOI) of US$ 31 million.
  • Some other additional advantages also include adding to its predictable low incline production volumes.

It is also expected to offer a large reserve base with multi-year development upside opportunities. The energy company is expected to have a total proved plus probable developed producing reserves of 27.5 mmboe with an NPV10 of US$90 million. It will also offer 2P reserve base of 79.5 mmboe with an NPV10 of US$193 million.

I3 Energy’s forecasted production is expected to rise by 30 per cent following the transaction completion, whilst its NOI is estimated to increase by 20 per cent, and its reserves are expected to increase by 76 per cent.

Related Article: Market cheers I3 Energy’s move to increase net operating income guidance

Conclusion

The completion of this strategic asset sale will be thus better position I3 Energy to increase its production output and help continue to meet its 2021 targets. The company has been continuously looking to increase shareholders return, and all its acquisitions are strategically aimed at that, recently it paid its maiden special dividend of 0.16 pence per share on 6 August 2021.

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