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Production + Growth Potential = Dividend + Upside
The Company expects to become a dividend payer as i3's Canadian business expands. Under current market conditions, residual free cash flow above the dividend will likely be redeployed to acquire additional developed producing reserves or to exploit the best production adding opportunities within the Canadian portfolio, in order to replace natural decline and increase production levels. At such time as markets improve and acquisition multiples become unattractive, i3 will focus on unlocking the material value held in its acquired proven undeveloped (PUD) and 2P inventory, which has the capacity to more than double current production levels into a strengthening commodity price environment. Fresh production will be hedged in these strengthening markets to secure future cash flow or, alternatively, the Company may monetize new production so that it returns additional value to shareholders.
The are selling half the new assets and bringing their costs down for the remaining part. They are buying the assets super cheap by the looks of it. Around 10k boepd (gain and Toscana assets) and hoping to be a dividend paying company going forward.
800m shares in issue at 5p will be a £40m mcap.
I suspect this will be oversubscribed at this price.
It 56m for the loan note warrants and 16m for management. 4 million of these are exercisable straight away so the 107+56+4 = 166m In issue with these converted
Another thought is this statement from the loan note rns:
- Execute an acquisition agreement for at least 2500 boepd of production net to i3.
I3e announced the gain asset for 11000 on the same day so why Put the statement “2500 boepd NET to i3e” ?
Is it possible they will be funding the gain transaction with another partner? So maybe will not be looking for the total £48m? Maybe they could be going 50 percent each with a partner on this new project?
Current shares in issue is 107m
Splitting the new entity into 3 parts would mean another 200-300m shares issued. (Depending on wether you include the warrants). A total of 300-450m shares in issue.
Depends on what price the new investors look to get their equity at and how much would be debt etc.
Current shares in issue is 107m
Splitting the new entity into 3 parts would mean another 200-300 shares issued. (Depending on wether you include the warrants). A total of 300-450m shares in issue.
Depends on what price the new investors look to get their equity at and how much would be debt etc.
So a total of between
An interesting part of the reply was that the new investors will look at the enterprise value of the business (market cap £6.5m + debt £24.5m - cash £2m = £29m) and not just the market capitalisation to see how much of the new post money entity they should own.
In my view investors putting in £60 million against the current company value (enterprise) will want 2 thirds of the new entity and shareholders will be left with a third. But the new entity will be very exciting and worth a lot with both the Canada and uk assets.
Closed 3rd July 2020 Viaro Energy secures GBP500.0 MM Bridge Term Facilities
I would suggest half of this for rockrose and would imagine a deal will be done with i3e/repsol/viaro in the next few months. They have got the £500m / $624 for more than just the rockrose
https://www.finbrook.com/
Look under global upstream data, then financing.
I3 Energy Energy (LON:I3E): Binding purchase and sale agreement for Gain Energy confirmed
Share price: 6.1p, Market Cap: £6.6m
In more M&A news today, i3 has now entered into a binding purchase and sale agreement all the petroleum and infrastructure assets of Gain Energy, a private Canadian company with operations in the Western Canadian Sedimentary Basin.
Last year, Gain produced at 11,020boepd and generated ~US$34m in field EBITDA (revenues minus royalties, opex and transportation) from 365 net wells across multiple low-decline, long-life, light oil and gas fields
On completion, the assets would add 26.4MMboe PDP and 69.4MMboe 2P reserves to i3's portfolio.
The consideration to be paid is C$80m (~US$58.8m), subject to adjustments representing acquisition metrics of approximately 1.7x 2019 field EBITDA, US$5,526/boepd, and US$0.85/boe of 2P reserves.
There are currently 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 to update the reserves associated with the assets.
Our take: Given the recent sector correction and subsequent strengthening in commodity pricing, we are coming into a strong period of Energy M&A in our view. The acquisition of Gain represents a significant shift in strategy of i3 from a sole focus on North Sea development to include Canadian Sedimentary production. This considerably reduces the Company’s risk profile and adds material cash flows to the business
My calculation was on the following:
Current Shares in issue = 107m
Issue 100m shares at 25p = £25m
Debt for £25m
( the above pays for new acquisition at £48m ($60m)
Shares in issue = 107m + 100m = 207m
Warrants = 70m shares + 207m = 277m
Debt would be (current £22m) + new debt £25m = £47m
This would be very manageable with the 10k boepd.
Mcap (add on the £47m for enterprise value) below on each SharePrice I have used 277m for the shares in issue including the warrants:-
25p = £69m mcap + £47m debt
35p = £97m mcap +£47m debt
50p = £138m mcap + £47m debt