Member Info for PiratePete

Inorganic growth opportunities: With the two acquisitions successfully bedded-in, i3 is now actively scoping fresh opportunities for growth alongside its organic growth strategy in the Clearwater play. We estimate that the company started the year with around US$8.5m of cash, and forecast a further c.US$9m of FY21 free cash flow (net of dividends) which can be used for acquisitions. With net debt/EBITDA at a forecasted 1.1x (FYE21), there is also the potential to use debt finance for new transactions, providing options other than just new equity to finance larger deals. Any transaction priced below 5x EBITDA will be incrementally accretive to cash flow and dividend yield per share (assuming like-for-like funding structure), illustrating the growth potential through M&A.
We initiate coverage on i3 with a DCF-derived (2P NAV, NPV10) target price of 16p/shr. Note that this does not include any value for the Serenity discovery in the North Sea, worth an additional 5p/shr risked on our numbers. Our target price currently offers some 93% upside, with additional upgrades likely in the event of success with the ongoing farm out process on Serenity, and further M&A activity in Canada. Accordingly, we carry a BUY recommendation.

i3 Energy has enjoyed a good start to life as a full-fledged producer. The company has successfully completed the integration of c.9,000 boepd of Canadian oil and gas production purchased over the course of 2020, and announced its maiden dividend in Q1 2021 as promised. Since taking ownership, the assets have outperformed CPR expectations by over 10%, and the company plans to bring a new well onstream before the end of this quarter with c.500 boepd of net production. Oil prices have also outperformed expectations – we forecasted 2021 Brent oil prices of just US$45/bbl at the time of the acquisition, versus our current forecast of US$60/bbl, vastly improving i3’s entry price (to just 1x FY21 field level cash flow). With the stock already offering a 7.7% running yield (c.2x covered by FCF), and further accretion possible on the back of organic and acquisitive growth, we initiate coverage with a BUY recommendation and a 16p/shr target price.

Dividend update: In March, i3 announced that it had allocated C$2m (c.£1.16m, or c.0.16p/shr) in relation to its maiden dividend payout. The company had committed to announcing a special dividend in Q1, before moving to a regular biannual policy, to be announced with the interim results in September. This regular dividend will be set at up to 30% of free cash flow, implying a payout of up to c.US$3.3m (0.34p/shr) with respect to H1 operations (paid in H2), and implying a 7.7% running yield going forwards.
Payment of the initial dividend has been delayed somewhat due to the requirement of balance sheet restructuring to create distributable reserves. This administrative process requires formal judicial and shareholder approval, and a court date and EGM are expected to be announced imminently, in time for payment most likely early next month. The dividend in relation to H1 2021 activities will be announced and paid in H2

New research note from Tennyson tinyurl.com/56dwp3v7

Moses - to be fair to “the doc”, he is still invested. Check out the ceo.ca board where he still posts on a daily basis.

Couldn’t have said it better myself Screenlearner - unlikely to be an RNS on this tomorrow. Seems like a positive for us nevertheless.

I am pretty sure that the end of May is the reporting deadline set by AIM.

.... at last! - hope Majid takes a happy pill before his next outing though!!

See Kane’s link below - Vox Markets daily podcast

Thanks for this Kane - I noticed that Serenity only gets a passing mention right at the end. For other readers the bit on I3e starts at about 19 minutes in and ends at 33 minutes in.

RG has been there for yonks.

Love Brew Dog Punk IPA!

Fast food and Kane - I’ll have a pint of whatever you are on right now!

Nanny - They are to be admitted in the week commencing 17 May.

Frostbar - I would love that this is headed towards settlement but given Samsung’s history of fighting to the end I’m not getting my hopes up!

I don’t think we will hear anything until 6 May (being the date new “management option shares” are admitted).

He’s on the CEO.CA board at the moment.

Very interesting Nanonano. Let’s hope it’s our dots ST are using!

Amerloque - is there anything that substantiates this rumour re Apple and quantum dots?

It has - shortly after jury selection on 4 October.