TIDMI3E
RNS Number : 0592S
i3 Energy PLC
06 July 2020
6 July 2020
i3 Energy plc
("i3" or the "Company")
Gain Energy Ltd. Production Acquisition
i3 Energy plc, an independent oil and gas company with assets
and operations in the UK, is pleased to announce the following
update.
In reference to the Company's announcement of 23 June 2019
regarding the Letter of Intent to acquire production assets, i3 has
now entered into a binding purchase and sale agreement ("PSA")(the
"Transaction") for all the petroleum and infrastructure assets (the
"Assets") of Gain Energy Ltd. ("Gain"), a private Canadian company
with operations in the Western Canadian Sedimentary Basin
("WCSB").
Highlights:
-- During 2019, the Assets produced at 11,020 boepd and
generated US$34 million in field EBITDA (revenues minus royalties,
opex and transportation) from 365 net wells across multiple
low-decline, long-life, light oil and gas fields
-- The Assets would add 26.4 MMboe PDP and 69.4 MMboe 2P reserves to i3's portfolio
-- The consideration to be paid for the Assets is C$80 million
(US$58.8m), subject to adjustments (outlined below), representing
acquisition metrics of approximately 1.7x 2019 field EBITDA,
US$5,526/boepd, and US$0.85/boe of 2P reserves
-- The Transaction is a reverse takeover under the AIM Rules for
Companies and is subject to i3 shareholder approval. The Company's
shares are currently suspended from trading on AIM until it either
publishes a "Readmission Document" detailing the Transaction or
provides confirmation that the Transaction will not complete.
Transaction and Readmission
On 3 July 2020 (the "PSA Date"), i3 entered a binding purchase
and sale agreement with Gain to acquire 100% of its producing and
non-producing petroleum assets in the Canadian provinces of Alberta
and Saskatchewan. In Q4 of 2019, the Assets produced on average
10,645 boepd (47% liquids) to which Gain's independent reserve
evaluator had attributed PDP reserves of 26.4 MMboe with a
before-tax NPV10 of US$177 million, and 2P reserves of 69.4 MMboe
with a before-tax NPV10 of US$397 million. In 2019, the Gain Assets
produced US$34 million in field EBITDA (revenues minus royalties,
opex and transportation) from 242 Gain-operated wells at an average
working interest of 78% and 1,633 non-operated wells at an average
working interest of 11%, and include 174k net developed acres and
186k net undeveloped acres of land. As part of i3's readmission
process, the Company has commissioned GLJ Ltd. to update the
reserves associated with the Assets. These details will become part
of i3's Readmission Document when published.
Under the PSA, i3 will be acquiring the Assets free of all
encumbrances (apart from industry standard or acceptable permitted
encumbrances) for cash consideration of C$80 million (US$58.8
million) (the "Consideration"). In addition to normal interim
period adjustments between the transaction effective date of 1 May
2020 and completion, the Consideration will be adjusted by an
amount of interest accruing at Canadian Prime + 2% (totalling
approximately 4.45%), and from 29 June 2020 until completion, the
Consideration will be adjusted by C$500k (US$368k) per calendar
month accruing to compensate Gain for its management of the
Assets.
The Company is closely following the global energy transition
towards carbon neutral energy sources, and i3 intends to be a
proactive participant in this critical endeavour. A major
attraction of the Transaction is Gain's interest in the
oil-producing Weyburn unit, the fourth largest carbon capture,
utilization and storage ("CCUS") project in the world. For Gain's
interest, the amount of CO2 annually sequestered is estimated to
offset approximately 17,760 boepd of scope 1 greenhouse gas
emissions. This figure is at present more than sufficient to cover
the 10,645 boepd produced by the Gain Assets in Q4 2019 and will
further offset additional production as it is added to i3's
portfolio in the future.
The required details of the Transaction will become part of a
Readmission Document. As the Transaction is classified as a reverse
takeover in accordance with the AIM Rules for Companies, at the
request of the Company, its shares were suspended on 23 June 2020
from trading on AIM and will remain so until either the publication
of the Readmission Document setting out, inter alia, details of the
Transaction, or until i3's confirmation that the Transaction will
not complete.
Completion of the Transaction remains subject to i) financing to
raise the cash consideration and working capital, ii) industry
standard conditions precedent, and iii) i3 shareholder approval.
The Company is in discussions with its investors and brokers and is
seeking funding for the Consideration and general corporate
purposes.
ENDS
Qualified Person's Statement
In accordance with the AIM Note for Mining and Oil and Gas
Companies, i3 discloses that Mihai Butuc, i3's New Ventures
Manager, is the qualified person who has reviewed the technical
information contained in this document. He graduated as a Diplomat
Engineer, Geology and Geophysics from the University of Bucharest
in 1985 and is a member of the Society of Petroleum Engineers.
Mihai Butuc consents to the inclusion of the information in the
form and context in which it appears.
CONTACT DETAILS:
i3 Energy plc
Majid Shafiq (CEO) / Graham Heath (CFO) c/o Camarco
Tel: +44 (0) 203 7 81 8331
WH Ireland Limited (Nomad and Joint Broker)
James Joyce, James Sinclair-Ford Tel: +44 (0) 207 220 1666
Canaccord Genuity Limited (Joint Broker) Tel: +44 (0) 207 523 8000
Henry Fitzgerald- O'Connor, James Asensio
Mirabaud Securities Limited (Joint Broker) Tel: +44 (0) 203 167 7221
Peter Krens
Camarco
Georgia Edmonds, James Crothers, Violet Wilson Tel: +44 (0) 203 7 81 8331
The information contained within this announcement is deemed
by the Company to constitute inside information under the
Market Abuse Regulation (EU) No. 596/2014.
Glossary of oil and gas terms, in accordance with standards
contained in the Canadian Oil and Gas Evaluation (COGE)
Handbook:
Proved Reserves Proved reserves are those reserves that can
be estimated with a high degree of certainty
to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the
estimated proved reserves.
Probable Reserves Probable reserves are those additional reserves
that are less certain to be recovered than proved
reserves. It is equally likely that the actual
remaining quantities recovered will be greater
or less than the sum of the estimated proved
plus probable reserves.
Proved Developed Those reserves that are expected to be recovered
Producing (PDP) from completion intervals open at the time of
Reserves the estimate. These reserves may be currently
producing or, if shut-in, they must have previously
been on production, and the date of resumption
of production must be known with reasonable
certainty.
2P Reserves Total Proved Reserves plus Total Probable Reserves
STOIIP Stock Tank Oil Initially In Place
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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