Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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This is a masterful thinking by management!!!
Senior and Junior Debt Purchase
As a result of accessing debt to acquire assets in a much stronger commodity environment, TEIC has struggled for some years and was in default under the terms of its debt facility agreements. i3 has purchased the rights and interests in Toscana's C$24.8 million senior and C$3.2 million junior debt facilities using current cash resources of C$3.0 million and C$0.4 million, respectively, with the cash consideration being paid 50% up front and 50% at year-end. The aggregate consideration being paid by i3 for TEIC's debt and equity totals approximately C$3.95 million (US$ 2.82mm) and, in light of TEIC's 2019 production and reserves, represents approximately 0.72x Toscana's 2019 field netback of C$5.5 million (US$ 3.9mm), C$3710/boepd (US$2650/boepd), or C$0.85/boe (US$0.61/boe), and is a fraction of going market-based valuations for WCSB oil and gas transactions.
Secondary Listing
At such time as i3 exercises its Option and on conclusion of the Arrangement Agreement, i3 intends that its enlarged share capital will also be listed on the TSX, satisfying the Company's obligation under its existing Loan Notes to seek a secondary listing for its shares.
Strategic Rationale for the Transaction
i3 Energy believes it is necessary to diversify its asset portfolio in order to spread and mitigate risk. Ideally this would diversify multiple aspects of our business, including geological, project life cycle, project capital intensity and capital market risks, whilst also being both accretive to shareholders and financeable based on our current balance sheet. We also believe it is critical to add production to our asset portfolio to provide internal free cash flow to grow the company and provide a near-term return to our shareholders. Having considered a number of global oil and gas basins and specific opportunities, including in the UK sector of the North Sea in the context of our acquisition criteria, we have concluded that the WCSB provides a unique, time-limited opportunity to build a portfolio of production assets on superior metrics not achievable elsewhere. A short to medium term lack of infrastructure to transport Canadian oil and gas to international markets in combination with depressed gas prices in North America due to the growth in gas supply from shale gas drilling has led to many small and mid-cap oil and gas producers, particularly those with overleveraged balance sheets and heavily gas-weighted portfolios, to become financially distressed and to have limited access to the North American capital markets to fund maintenance opex or growth capex. Many of these companies contain excellent, long-life, low-decline production assets, with solid growth potential that may be acquirable at attractive metrics.
Though world oil markets are highly volatile at present, TEIC provides revenue from its long-life portfolio of assets which contain a number of low
i3 Energy PLC - Strategic Production Acquisition & TSX Listing
[30-March-2020]
Strategic Production Acquisition & TSX Listing
i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce the following update.
Highlights:
· i3 has entered into an Option agreement to acquire all issued and outstanding common shares of Toscana Energy Income Corporation ("Toscana" or "TEIC"), a TSX listed company
· TEIC had 2019 year-end 2P Reserves of 4.65 MMboe (53% oil, 47% gas) with a reserve life index of 14.7 years
· Toscana's 2019 production averaged 1,065 boepd and generated C$5.5 million (US$3.9mm) in field netback from 13 low-decline, long-life conventional fields producing at an average breakeven price of C$30.43/boe (US$21.74/boe)
· TEIC operates 69% of the producing wells in its portfolio at an average net working interest of 67%
· i3 is purchasing Toscana at a fraction of going market-based valuations for WCSB oil and gas transactions; the total aggregate consideration being paid by i3 for TEIC's debt and equity totals approximately C$3.95 million (US$2.82mm) representing roughly 0.72x Toscana's 2019 field netback, C$3710/boepd (US$2650/boepd), and C$0.85/boe (US$0.61/boe)
o On March 27th, i3 used current cash resources to purchase the rights and interests in Toscana's senior and junior debt facilities (which were in default). i3 has acquired Toscana's C$24.8 million senior facility for C$3.0 million and its C$3.2 million junior facility for C$0.4 million, with cash consideration for each being paid 50