i3 Energy Receives Court Approval for the acquisition of Toscana

Francesca Morgan
RNS Newswire
12:00, 28th October 2020

i3 Energy (AIM:I3E FOLLOW) said Toscana Energy Income Corporation (TSX:TEI) has obtained a final order from the Court of Queen's Bench of Alberta approving its sale.

Yesterday, Toscana held its annual and special meeting shareholders in Calgary, Alberta, during which the Arrangement was approved by the shareholders. 

i3 Energy, which previously said it would purchase Toscana ‘at a fraction’ of market-based valuations for Western Canada Sedimentary Basin (“WCSB”) oil and gas transactions, said back in June 2020 that it intended to buy Toscana’s debt and equity for around £2.27 million.

Majid Shafiq, CEO of I3E said the group’s entry into the WCSB “was to provide a platform to execute on a strategy for the rapid growth of a Canadian onshore production portfolio via M&A.”

Shares in i3 Energy have increased by over 25% since the beginning of the month to open 8.00% lower to 4.6p following this morning’s announcement.

I3E price chart

Upon i3's exercise of the option, Toscana shareholders will receive 4.4m i3 shares for its entire share capital, representing dilution of around 4% to the group’s current shareholders.

Toscana had reserves of 4.65m barrels of oil equivalent at the end of 2019 with production of 1,065 boe per day and a reserve life index of 14.7 years.

Its assets are described as 13 ‘low-decline, long-life, light oil and gas fields’ and include low-cost opportunities to enhance production from existing producing fields.

Closing of the arrangement is conditional on the approval by i3's shareholders of the acquisition of all the issued and outstanding common stock of Toscana with such approval being sought at the i3 general meeting to be held at 10:00 am on 29 October 2020.

3 Reasons to Follow i3 Energy

i3 Energy’s strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure:
1.    i3 Energy have several positive re-rating catalysts from near-term drilling results from the existing asset portfolio
2.    Recently moved into production with low-risk growth opportunities in production at low marginal cost
3.    Established a platform to transform the business over the next 12 months through organic production growth and complementary acquisitions

The Canadian transactions are expected to create a solid foundation to aggressively build upon, and we are very much looking forward to integrating our UK and Canadian teams,” added Shafiq who said the transactions hold tremendous potential to deliver great returns.

Recent News on i3 Energy

Alongside its acquisition of Toscana, the Company has continued to expand its Canadian assets, with CEO, Majid Shafiq, describing 2020 as a transformational year.

Last month, the company unveiled to 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. The group previously entered into a binding purchase and sale agreement to acquire the Canadian energy firm which holds operations in the Western Canadian Sedimentary Basin.

Meanwhile, i3 Energy also agreed to sell Gain's Saskatchewan portfolio to Harvard Resources Inc. for CAD$45m, around US$33m, immediately following the completion of its acquisition of Gain. The Company also confirmed the completion of this sale last month.

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.’

Prior to the end of Q1 2021, i3 anticipates that it will begin paying a dividend of between 20% and 30% of free cash flow annually, and then up to 40% as its Canadian business expands.

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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.

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