TIDMI3E
RNS Number : 8551D
i3 Energy PLC
02 November 2020
2 November 2020
i3 Energy plc
("i3", "i3 Energy", or the "Company")
Operational Update
i3 Energy plc, an independent oil and gas company with assets
and operations in the UK and Canada is pleased to announce the
following operational update.
HIGHLIGHTS
-- Group production from the Gain Energy Ltd. ("Gain") and
Toscana Energy Income Corporation ("Toscana") assets during October
averaged 9,407 boepd (61% gas, 39% liquids), with both portfolios
performing to management expectations
-- First dividend expected to be declared and paid in Q1 2021(1)
-- Toscana acquisition approved by shareholders of both Toscana and i3 Energy
-- Toscana's tax losses of CAD$128mm (US$94mm) will support tax
efficient income for several years from i3's production
portfolio
-- Trading of i3 shares on the Toronto Stock Exchange ("TSX")
expected to commence on 6(th) November with ticker ITE
-- Integration of Gain assets and staff completed
Majid Shafiq, CEO of i3 Energy plc, commented:
"We are delighted to announce the closing of the Toscana
acquisition and with it the imminent listing of i3 on the TSX. 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 with current AECO(2)
strip pricing in excess of CAD$3.0/MMBtu(3) 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."
Toscana
i3 is pleased to announce that the i3 completed the acquisition
of Toscana on 30(th) October 2020.
Toscana was the first Canadian deal i3 announced earlier this
year as the Company's entry into the Canadian oil and gas sector
and forms the basis of our Canadian operating platform. All Toscana
corporate staff will now become employees of i3 Energy.
Toscana had 2P Reserves of 3.98 MMboe (46 per cent. gas, 54 per
cent. oil) as of 30 June 2020 with a reserve life index of 16.3
years. Average production in 2019 was 1,065 boepd which generated
CAD$5.5 million (c.US$4mm) in Field Netback (revenue minus
royalties minus opex) from 12 low-decline, long-life conventional
oil and gas fields. Toscana operates 62% of its 196 wells with an
average working interest of 67% and an average break-even price of
CAD$30.43/boe (c.US$22.38/boe). Production from Toscana's
properties averaged 689 boepd (42% gas, 58% liquids) in October,
with several wells shut-in for economic reasons since the drop in
oil prices in Q1 of this year. Operating margins are constantly
monitored and some wells have been brought back online in the last
several weeks. Toscana has accumulated tax pools of c.CAD$128
million (US$94 million), which will allow cash flows from the
Company's Canadian production portfolio to remain tax efficient for
the next several years. The Toscana portfolio contains a number of
production optimisation and opex reduction opportunities which the
Company will actively review, implementing those that pass our
economic hurdles. Additionally, Toscana has a very large acreage
position in the Clearwater play, providing significant growth
potential in a moderately higher oil price environment from
relatively low cost but highly productive wells.
TSX Listing
i3 Energy has received conditional approval from the TSX to list
all its outstanding share capital on the TSX, subject to i3 Energy
satisfying the listing requirements set out in the conditional
approval letter issued by the TSX. The first day of trading on the
TSX is expected to occur on 6(th) November 2020.
Gain Integration
On completion of the Gain acquisition on 3(rd) September,
twenty-two staff from Gain joined i3 Energy and all contracts for
field operating personnel were novated to the Company, delivering
to i3 multiple years of knowledge of the acquired assets and
related commercial and business relationships. The integration of
the Gain assets and business into i3 Energy has proceeded very
smoothly and without any operational issues. Toscana has been
managing the assets we acquired from Gain since the completion of
that acquisition in September under a management and administrative
services agreement, thus allowing the assimilation of the Toscana
assets and operations to occur immediately in a seamless fashion,
with preparation for integration of business systems well
advanced.
Production Update
Production from the Gain assets over the period from 1(st) May
(transaction effective date) to 31(st) August averaged 8,935 boepd
(63% gas, 37% liquids). There were scheduled maintenance shutdowns
at two non-operated facilities in September, resulting in several
wells being shut-in during the month, reducing average production
in September to 6,483 boepd (59% gas, 41% liquids). All wells shut
in for maintenance operations were back on-line by mid-October.
Production during the month of October averaged 8,718 boepd (62%
gas, 38 % liquids).
Dividend Timing
The Company envisages the declaration and payment of its first
dividend in the first quarter of 2021. As previously disclosed the
Company aims to pay out up to 30% of free cashflow as a dividend to
shareholders. Based on the current share price, the Company expects
the dividend yield to be in excess of 10% on an annual basis.
Serenity Appraisal Drilling Farm-out
The company is in discussions with a counterparty regarding a
potential farm-in to the Serenity discovery. Terms are being
negotiated and the market will be updated if and when an agreement
is reached.
Footnotes:
1. The Company can only pay a dividend out of distributable
profits and the Company has retained losses. The Company is
expecting to effect a reduction of share capital to create
distributable reserves to offset the losses and create surplus
profits. A reduction of share capital will require the approval of
the shareholders and the UK Courts and it is estimated the process
will take approximately two months.
2. AECO is the Canadian benchmark for natural gas pricing.
3. MMBtu is one million British thermal units, a measure of the heat content of gas.
END
Qualified Person's Statement
In accordance with the AIM Note for Mining and Oil and Gas
Companies, i3 discloses that Majid Shafiq is the qualified person
who has reviewed the technical information contained in this
document. He graduated with a Master's Degree in Petroleum
Engineering from Heriot-Watt University in 1988. Majid Shafiq
consents to the inclusion of the information in the form and
context in which it appears.
Enquiries:
i3 Energy plc
Majid Shafiq (CEO) / Graham Heath c/o Camarco
(CFO) Tel: +44 (0) 203 781 8331
WH Ireland Limited (Nomad and Joint
Broker)
James Joyce, James Sinclair-Ford Tel: +44 (0) 207 220 1666
Canaccord Genuity Limited (Joint
Broker)
Henry Fitzgerald- O'Connor, James Tel: +44 (0) 207 523 8000
Asensio
Mirabaud Securities Limited (Joint Tel: +44 (0) 203 167 7221
Broker)
Peter Krens
Camarco
Georgia Edmonds, James Crothers, Tel: +44 (0) 203 781 8331
Violet Wilson
Notes to Editors:
i3 Energy is an oil and gas Company with a low cost,
diversified, growing production base in Canada's most prolific
hydrocarbon region, the Western Canadian Sedimentary Basin and
appraisal assets in the North Sea with significant upside.
The Company is well positioned to deliver future growth through
the optimisation of its existing 100% owned asset base and the
acquisition of long life, low decline conventional production
assets.
i3 Energy is listed on the AIM market of the London Stock
Exchange. For further information on i3 Energy please visit
https://i3.energy/
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
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END
UPDUAVURRKUARUA
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