i3 Energy, an independent oil and gas company with assets and operations in the UK and Canada, has announced the execution of a strategic acquisition in its core Simonette area, taking operatorship and doubling its position in a premium light oil asset in the Lower Montney.
Highlights:
- Acquired an additional 49.5% position plus operatorship in the Company’s South Simonette oil property, increasing i3’s interest to 99%.
- Cost to exercise the Right of First Refusal ('ROFR') of USD 4.2mm (CAD 5mm) plus planned capital investment of USD 0.58mm to reactivate two suspended wells in July results in effective acquisition at 1.49x next twelve months ('NTM') forecasted net operating income ('NOI' = revenue minus royalty, opex, transportation and processing costs) of USD 3.2mm.
- Operational control and direction of capital deployment to reactivate two currently suspended wells at South Simonette in July estimated to result in an incremental increase to i3’s corporate production and NOI of 720 boepd (41% oil, 4% NGLs, 55% gas) and USD 5.2mm, respectively, increasing i3’s overall exposure to oil by approximately 20% and increasing i3’s expected NTM NOI by over 16%.
- Additional estimated net production associated with the acquired 49.5% operated working interest of circa 430 boepd and USD 3.2mm in NTM NOI.
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- Estimated incremental production and NOI associated with i3’s current 49.5% interest of circa 290 boepd and USD 2.0mm.
- Proved plus Probable (2P) reserves addition of 4.9 mmboe with before-tax NPV10 of USD 30.9mm.
- Doubles i3’s working interest position in over 70 potential Lower Montney development well locations at South Simonette.
- Brings i3 ownership at its North and South Simonette properties to almost 100% (connected by i3’s Middle Montney acreage over which it has gross overriding royalty interest positions ranging between 5% and 15%) allowing the Company to control investment and development timing in these assets.
- Contributes a deemed asset value of approx. CAD 26.5mm and a correspondingly high Licensee Liability Rating ('LLR') ratio of 46.1 to i3’s asset portfolio.
Majid Shafiq, CEO of i3 Energy plc, commented:
'The acquisition of this operated working interest in South Simonette is not only a very accretive addition to our production portfolio, but also highly strategic for i3. Following completion, we will be close to a 100% owner and operator of our North and South Simonette properties, which are significant contributors to our current production base, and provide significant, incremental oil-focussed growth potential during a sustained period of higher oil prices. Together with recent acquisitions and advancement of development opportunities in our growing Clearwater position and other assets in our portfolio, this acquisition provides significant optionality in terms of where we choose to allocate our development capital.'
