The company continues to build and grow a material and diversified production business, highlighted chief executive Majid Shafiq.
As well as strong free cash flow, the deal is expected to deliver extensive operational synergies, predictable low-decline production, and a large reserve base with multi-year development inventory.
It is raising £40mln to support the transaction, via a share placing and a retail offer via the platform. After an accelerated bookbuild process, the company confirmed that it will issue 363.7mln new shares at a price of 11p per share, marking just a 3% discount to the 15-day average closing price.
“We continue to execute on our business plan which is to build and grow a material and diversified production business through the most efficient deployment of capital, whether that is through exploitation of opportunities within the company’s existing portfolio or through accretive acquisitions such as this one,” said chief executive Majid Shafiq.
Ryan Heath, president of the i3 Energy Canada subsidiary, added: “i3 Canada is extremely pleased to have entered into the acquisition from a top-tier veteran participant of the Western Canadian Sedimentary Basin.
“The inherent synergies of the transaction, being immediately evident and robust, will most certainly expand with time to further enhance field efficiencies and cash flow throughout our central Alberta core area, to the benefit of the company and its stakeholders.”
As part of the transaction i3 has entered an escrow agreement with Cenovus. It is paying C$65mln (US$53.7mln) in cash for the package of assets.
The acquired assets include production of around 8,400 boepd, of which 51% is oil and natural gas liquids (NGLs), and, 79.5mln barrels of proved and probable (2P) reserves valued at US$193mln. Along with an inventory that comprises 140 future drilling locations plus 80 potential well reactivation opportunities. Altogether the inventory spans some 212,000 acres.
Also included is some 1,140 kilometres of pipelines and key processing facilities.
In conjunction with the existing i3 portfolio in Canada it means that production is expected to grow by around 84%, to 18,470 boepd, which will see net operating income rise 70% to around US$75mln per year.
The placing will see new shares sold to institutional investors, with the process run by brokers Tennyson Securities, WH Ireland and . It is not underwritten.
At the same time retail investors will be able to buy new shares at the same level as the placing price, via .
I3 noted that the acquisition and the equity raising will be subject to shareholder approval, at a general meeting slated to take place on July 28.
Read More: i3 Energy Plc to expand Canadian production as it agrees asset acquisition