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

July 07, 2021 07:42 AM PDT | By Team Kalkine Media
Follow us on Google News:


  • Independent energy company I3 Energy announced the asset acquisition of Canadian energy company Cenovus Energy Inc to expand its production in central Alberta core are for CA$ 65 million.
  • I3 Energy raised at least £40 million via a share placing at an issue price of 11 pence per share to help fund the deal.
  • The deal will lead to stronger free cash flow, an enhanced reserve base, operational synergies and more.

AIM-listed energy company I3 Energy PLC (LON: I3E) (TSX: ITE) announced today its plan to acquire the assets of oil and gas company Cenovus Energy Inc. for CA$ 65 million through its wholly-owned Canadian subsidiary. The acquisition will expand its production in central Alberta, located in western Canada and is likely to result in huge operational synergies and anticipated low-decline production. It will also provide the company with a sizable reserve base coupled with development inventory for many years with a strong cash flow.

The company also announced that it has raised at least £40 million through share placement of new ordinary shares, with a face value of 0.01 pence per share, to retail shareholders to help fund the acquisition. The funds will be raised via the primary bid platform.

Also Read: After court clearance, i3 Energy plc all set to announce its maiden dividend

Here are the details of the acquired asset and how the acquisition will benefit I3 Energy.

Cenovus Energy deal

I3 Energy has said that acquiring the Canadian oil and gas producing company will create operational synergies, scale and lead to its next twelve months (NTM) estimated net operating income (NOI) of US$ 31 million due to a predictable low-decline production outline.

The deal will also offer a large reserve base, including two proved and probable developing reserves of 27.5 mmboe at an NPV 10 of US$ 90 million and 2P reserves of 79.5 mmboe at an NPV10 of US$ 193 million, for I3 Energy. NPV10 is the net present value of the future net revenues of any proved reserves, which are discounted at 10 per cent per annum.

The asset acquisition includes the buying of certain conventional petroleum and infrastructure assets in central Alberta core are of i3Energy and will translate into the production of about 8,400 barrels of oil equivalent per day (boepd), which includes 51 per cent of oil and natural gas liquids (NGLs), thus helping I3 Energy to consolidate its Alberta core area.

Additionally, the buyout is also expected to create a strong free cash flow for the company. It also expects to have net debt of only US$ 27 million upon closing the deal, translating into around 0.36x of current net debt to NTM-NOI ratio.

The deal is also expected to be immediately accretive to the company. I3 expects its forecast production to increase by 30 per cent, NOI to rise by 20 per cent and its reserves to increase by 76 per cent in the 12-month period following the completion of the acquisition.

Accelerated book building results

The company has also announced that it has raised £40 million as part of its accelerated book-building process to help fund the acquisition. It placed up to 363,700,000 placing shares at an issue price of 11 pence per placing share.

The placing shares were priced at a 3 per cent discount of its 15-day moving average closing price of 11.4 pence per share. It also included the primary bid offer to retail investors. The placing and primary bid offer is subject to shareholder approval, which will be proposed at the company’s general meeting tentatively around 26 July.

Benefits of acquisition

The acquisition of Cenovus Energy Inc is a part of i3Energy’s strategic plan to take advantage of the recent market conditions and harnessing its market and financial position to create a cash-generative, all-weather portfolio by proficiently accumulating underfunded assets, which are well within the company’s core operating areas.

The acquisition is likely to provide a further financial boost to the company in the form of increased cash flow, production as well as reserve base, which would also help in its planned return of capital to shareholders.


The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Incorporated (Kalkine Media), Business Number: 720744275BC0001 and is available for personal and non-commercial use only. The advice given by Kalkine Media through its Content is general information only and it does not take into account the user’s personal investment objectives, financial situation and specific needs. Users should make their own enquiries about any investment and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media is not registered as an investment adviser in Canada under either the provincial or territorial Securities Acts. Some of the Content on this website may be sponsored/non-sponsored, as applicable, however, on the date of publication of any such Content, none of the employees and/or associates of Kalkine Media hold positions in any of the stocks covered by Kalkine Media through its Content. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used in the Content are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used in the Content unless stated otherwise. The images/music that may be used in the Content are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.

Top TSX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK