I3 Energy aims for maiden dividend payout next month
(I3E ) said its maiden dividend could be paid next month following the cancellation of its share premium account which is likely to be confirmed by the end of this month.
Having strategically acquired a large production package at the bottom of the market in 2020, the Company noted that its assets have outperformed the directors' expectations.
As a result, I3 is reclassifying its previous dividend of $2m as a "special dividend" which will be paid if the court proceedings to cancel its share premium account are successful.
The independent oil and gas company with assets and operations in the UK and Canada said a final confirmation to effect i3's cancellation of its share premium account will be held on 29 June 2021 where it expects the High Court will confirm that the cancellation can proceed.
If approved, this will clear the way for i3 to make dividend distributions whereby it will set the special dividend's ex-dividend date for 8 July 2021, with the payment being made in late July.
"On our intention to become a dividend payer, the necessary share capital reduction is nearly behind us and we expect to commence returning value to our shareholders by way of a special dividend, with scheduled half-yearly dividend payments thereafter alongside our Interim and Annual Reports,” commented Majid Shafiq, Chief Executive of i3 Energy.
Operationally, i3 has elected to drill two high-return wells in its producing Wapiti area in July at a net cost of $2.1m, around 1.3x next twelve months ("NTM") forecasted net operating income. It said operations are anticipated to conclude in early 3Q21.
An executed Letter of Intent, which is expected to be completed in 2Q21, has been issued for a synergistic Cardium and Dunvegan focused production acquisition at Wapiti, it said.
Currently, Wapiti is producing 230 boepd and if completed, it could deliver NTM production of c.310 boepd after i3 performs six reactivations at a total acquisition and capital cost of approximately USD 410k, resulting in an effective acquisition multiple of 0.6x NTM NOI. The company told investors that this production acquisition is expected to complete in 2Q21.
Meanwhile, the string of canadian acquisitions and drilling initiatives announced in 1H20 are estimated to increase i3's NTM NOI to approximately USD 44mm, a 42% increase over the previous guidance which excluded these, and grow production towards 10,000 boe/d.
Commenting on its operations, Shafiq stated that i3 is continuing to deliver on its stated strategy of economics-driven buying or building, dependent on attainable metrics.
“To date in 2021, i3's WCSB initiatives are expected to materially increase both production and free cash flow, which is expected to directly translate into healthier cash distributions and a stronger balance sheet to pursue opportunities as they arise,” Shafiq highlighted.
Meanwhile, in a separate statement, i3 has announced the 2020 year-end reserves for its subsidiary, i3 Energy Canada, in an independent reserve report curated by GLJ Ltd.
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Earlier this month, i3 took operatorship of, and doubled its position in, the South Simonette oil property area, a light oil asset in the Lower Montney in British Columbia.
The work which is to be undertaken at these two currently suspended wells at South Simonette in July 2021 is estimated to result in an incremental increase to i3's corporate production and net operating income (NOI) of 720 barrels of oil equivalent per day (boepd).
This latest investment brings i3 ownership at its North and South Simonette properties to almost 100% allowing it to control investment and development timing in these assets.
Majid Shafiq, CEO of i3 Energy, has described the acquisition as “a very accretive addition” and “highly strategic” in reference to the company’s production portfolio across Canada.
Overall, total revenue from the company’s Canadian assets amounted to £13m for 2020. Meanwhile, profit after tax for the final year ended 31 December 2020 came to £11.7m.
Looking ahead, i3 highlighted that negotiations continue with multiple potential farm-in partners in regard to the Serenity field appraisal drilling programme in the North Sea.
I3’s focus for 2021 will include growing the Canadian business, ensuring the farmout of its UK licences and distributing dividends to shareholders with up to 30% of free cash flow.
Shares in i3 have risen by over 70% since the start of 2021. The stock was trading 7.69% higher at 9.8p today after the firm updated investors on its maiden dividend payment.
Reasons to I3E
i3E’s is focused on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.
Majid Shafiq, CEO of I3E said i3’s entry into the WCSB is “to provide a platform to execute on a strategy for the rapid growth of a Canadian onshore production portfolio via M&A.”
Alongside its acquisition of Toscana, i3 has continued to expand its Canadian assets, with CEO, Majid Shafiq, and in particular, has viewed 2020 as “a transformational year.”
In September 2020, the company told investors that it completed its acquisition of all the petroleum and infrastructure assets of Gain Energy for CAD$80m after raising around £29m in August in order to complete its proposed acquisition of the Gain Energy assets in Canada.
i3 Energy also agreed to sell Gain's Saskatchewan portfolio to Harvard Resources Inc. for CAD$45m, c.US$33m, immediately following the completion of its acquisition of Gain.
i3 believes the diversification of its portfolio will add ‘a quality production base to provide internal free cash flow to grow the enlarged group and provide a near-term return to its shareholders.’
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