I3 Energy: What is transpiring a continuous surge in stock prices?

Summary

• AIM-listed independent energy company I3 Energy’s shares have spiked over 33 per cent in the last one month and over 107 per cent on a year-to-date basis.
• The company’s recently released data highlighted improved Q2 production, 2021 projections, strategic acquisitions and announcement of its maiden dividend.

AIM/TSX-listed independent oil and gas company I3 Energy PLC’s (LON: I3E) (TSX: ITE) shares have risen sharply by around 34 per cent in the last one month, from GBX 8.70 on 14 June to GBX 11.63 on 12 July. The shares have risen by a huge 107.74 per cent on a year-to-date basis.

Strategic Acquisition of Production Assets from Cenovus Energy Inc

The company’s share prices were buoyed by recent favourable operational updates, 2021 projections and other factors. I3 Energy’s strong and focused approach to growth through acquisitions has increased its next twelve months (NTM) net operating income (NOI) by a huge 123 per cent to US$ 75.3 million from the previous guidance of  US$44 million, with US$31 million of this increase due to the recently announced acquisition of assets in Central Alberta from Cenovus Energy Inc for a consideration of US$53.7 million, which will add 8418 boepd to the company’s current production of 10,052 boepd (both company projections for the next twelve months).

The acquisition is likely to complete in Q3 2021. The assets acquired are located in and around i3’s existing core asset location in Central Alberta and will therefore result in multiple synergies, which will allow incremental value to be created from streamlining operations, removing redundancies and optimizing the use of infrastructure. The acquisition has been done on very good metrics of only 1.73x NTM NOI and US$0.68/boe (of proven and probable reserves) and is highly accretive on all metrics.

Favourable operational updates

The company recently announced an improved Q2 2021 production average of 9,142 barrels of oil equivalent per day (boepd), up from 8,856 boepd in the previous quarter.

The company also reported the successful drilling of its first two Marten Hills wells, 01-12-075-26W4 and 02-12-075-26W4. Production from both wells is expected to start before the end of July.

The FTSE AIM All-Share constituent I3 Energy has netted shareholders a whopping return of 84.82 per cent on an annual basis.  (Image Source: Refinitiv)

2021 Corporate strategy progress

Some of the factors which have helped I3 Energy’s stock prices to rise in the last month include the company’s progress on its 2021 corporate strategy goals, such as the payment of a special dividend in early August and then commencement of half-yearly dividend payouts of up to 30 per cent of its annual free cash flows, expanding its business in Canada, acquisitions and more.

In its recent corporate strategy presentation, the company also announced that execution of incremental drilling, workover and small acquisitions on and around its current portfolio is expected to increase its NTM NOI by 42 per cent to US$ 44 million, a significant upgrade to its previous guidance of US$33mm.

Maiden special dividend declaration

I3 Energy recently announced its maiden special dividend of 0.16 pence per share after getting approval from the court for the cancellation of the company’s share premium account.  The ex-dividend date is 15 July, while the payment date is 6 August.

Also Read: D-Day: I3 Energy announces maiden dividend and successful corporate strategy execution

Oil prices soar

Crude oil prices touched new multi-year highs after talks fell through among the world’s major oil producers at the Organization of the Petroleum Exporting Countries and allies’ group (OPEC+), which helped boost oil and gas companies in the broader sector.

Brent oil’s September 2021 futures recently touched a multi-year high of US$ 77.66 on 2 July, which was last seen in October 2018. 

Brent oil futures were off last week’s highs but maintained a positive uptick due to tight supply and expected further draw in crude inventories in the US and globally.

Also Read: I3 Energy’s Canadian acquisition to enhance production, strengthen financials

Overall, I3 Energy is currently at a very exciting and positive stage as the company continues to effectively execute its corporate strategy, thereby making significant progress on its 2021 goals.