I3 Energy Plc on The Verge of Transformation

                                          

I3 Energy Plc

I3 Energy Plc (LON: I3E), is a Westhill, United Kingdom-headquartered, independent oil and gas exploration and development company with assets and operations in the United Kingdom. The company seeks to identify and acquire high quality, low-risk appraisal, development and production of Oil & gas assets. The group aims to be the leading North Sea domiciled Oil and gas production and exploration company with an international reach. The company is currently working towards bringing the Greater Liberator licence area into production in accordance with its Field Development Plan, with a focus on the development of discoveries located close to its existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.

The company has two principal assets, the Liberator prospect and the Serenity prospect. Both of these prospects have shown promising seismic data, with significant oil and gas reserves. The Serenity prospect is potentially a very large resource, which can transform the fortunes of the company. The company's primary prospect area, the Greater Liberator Area, is located in Blocks 13/23d and 13/23c, to which the company’s independent reserves auditor attributes 11 MMBO (million barrels of oil) of 2P Reserves, 22 MMBO (million barrels of oil)  of 2C Contingent Resources and 47 MMBO (million barrels of oil) of mid-case Prospective Resources. The Greater Liberator Area consists of the Liberator oil field discovered by well 13/23d-8 and the Liberator West extension, this along with the Company's Serenity Discovery located in the northern half of Block 13/23c and for which it carries a STOIIP (stock tank original oil-in-place) of 197 million barrels of oil in place before the commencement of production, are owned and operated by the company on a 100 per cent working interest basis, moreover, the company’s drilling exercise undertaken in 2019 estimates that the Serenity prospect could hold as much as 600 million barrels in oil STOIIP, increasing the resources size of the company by three times its original estimate for the Greater Liberator Area. The company is currently working to secure funding for the completion of its drilling programme so that early advantages of production from these wells can be achieved.

The shares of the company are listed for trading on the London Stock Exchange, at the Alternative Investment Market (AIM) trading segment. Here the shares are identified and traded with the ticker name I3E. The shares of the company also form part of the FTSE AIM All-share index.

Latest News Update

The company on 2 January 2020, came out with an update on the farm-out process that it is initiating for both of its prospects, its plans for the year 2020, and the warrants issued to GE UK in exchange of the services received from them.

• The company as part of its appraisal programme is simultaneously working with its senior lenders and on a farm down process for its licence in order to raise funding for its 2020 drilling operations.
• The company has issued 2,816,739 warrants to subscribe for Ordinary Shares to GE Oil & Gas UK Limited in lieu of the services received from it, at an exercise price of 56.85 pence per Ordinary Share. This is in addition to the 2,204,574 warrants already issued to them.

Interim Results Update

The company on 30 September 2019, released its interim results for the half-year ending on 30 June 2019.

• During the reported period, the company had completed equity placements, whereby they raised gross proceeds of approximately £19.15 million prior to expenses.
• It repaid all outstanding convertible loan notes amounting to a total of £433,153 in principal and interest as per the terms on the maturity of the notes dated 31 March 2019.

Source – Company website,

Stock Performance at The London Stock Exchange

Source – Thomson Reuters

At the time of writing of this report, at 10.34 AM GMT on 03 January 2020, the shares of the company were trading on the London Stock Exchange at GBX 13.00, the shares of the company during the past 52 weeks of trading at the London Stock Exchange have registered a 52-week high of GBX 65.555, while registering a 52-week low of GBX 9.20, the company has a market capitalisation of £14.39 million on the London Stock Exchange at the time of writing this report on 03 January 2020.

The stock's average traded volume for 5 days was 1,075,760.20; 30 days- 6,204,672.07 and 90 days – 4,858,062.66 and in last one month, the shares have generated a return of +3.92 % and a return of +8.16 % on year to date basis.

Company’s Shareholding Pattern

As on 30 November 2019, the below were the major shareholders of the company,

Source – Company website

Other than Neil Carson and Graham Heath, all other seven entities in the above list are institutional shareholders, holding a total of 41.80 per cent of the company’s shares, providing it with significant stability.

Business Outlook

The company’s discoveries in the Serenity prospect are significant and enhances the company’s valuations by several notches. The current fund-raising programme is focusing more on the equity route and less on debt route, in fact, the company has started to retire whatever debt it is having on its books in the year  gone by, accentuating the fact that it is nearing the value realisation phase for its prospects.

Banking on the high realisable value of its prospects, the company has now been able to enter into an agreement with its drill rig operator to defer some of its payments so that it can get an extra headroom to raise more capital to continue and successfully complete its drilling operations.

The company is aiming to raise funds for its current stage of activity. The company has also been careful to be debt-free at this stage, so that it may use this facility for expansion of business and acquisition of more exploration assets when it starts to rake in revenues. The likely time for the company to start production is the second half of 2020 or the first half of 2021.