I3 Energy inks ‘highly significant’ Toscana acquisition
revealed in an update on Monday that it has entered into an option agreement to acquire TSX-listed Toscana Energy Income Corporation for just under C$4m, which will be satisfied through the issue of up to 4.3m i3 shares and existing cash resources.
The North Sea-focused energy firm said it is purchasing Toscana, which holds a reserve life index of 14.7 years, ‘at a fraction’ of going market-based valuations for Western Canada Sedimentary Basin (WCSB) oil and gas transactions.
i3 has acquired Toscana's $24.8m senior facility for $3m and its $3.2m junior facility for 0.4m, with cash consideration for each being paid 50% up front and 50% at year-end.
Upon i3's exercise of the option, Toscana shareholders will be offered up to 4.3m i3 shares for TEIC's entire share capital and i3 intends its enlarged share capital to also be listed on the TSX.
Shares in i3 Energy were trading flat at 7.2p on Monday morning.
“This is a highly significant acquisition opportunity for i3 which adds material, low cost per barrel, low-decline production as well as a new growth business with a strong management team and strategy in the WCSB,” said Majid Shafiq, CEO of i3 Energy.
In 2019, Toscana, which operates 69% of the producing wells in its portfolio, averaged 1,065 barrels of oil equivalent per day in production, generating $5.5m in field netback from 13 low-decline fields.
Shafiq said the transaction will stabilise the business “with a steady revenue stream” as well as considerable upside potential -- an opportunity he labels comparable to the growth potential of i3’s Serenity discovery.
Earlier in March, i3 entered into a drilling contract and a net revenue sharing agreement with Dolphin Drilling, to cover 22% of the cost of its drilling of 2020 Serenity drilling campaign which is valued at £28.5m.
Follow News & Updates from i3 Energy here:
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.