i3 Energy doubles up at South Simonette project

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i3 Energy Plc (LON:I3E, TSX:ITE) is doubling up in Canada with a deal to acquire a further 49.5% interest in the South Simonette oil property, taking its stake to 99%.

It is acquiring the stake through a right of first refusal, and it will pay US$4.2mln along with US$580,000 to cover costs of reactivating two suspended wells, with work slated for July.

The deal is expected to add 720 barrels of oil equivalent per day of production, adding US$5.2mln of cashflow, following the July programme. It doubles the company’s working interest in more than 70 potential development well locations across the South Simonette property.

Net production at South Simonette currently measures around 825 boepd, i3 noted, meanwhile, to the north the company has modelled a possible 38-well development which could yield 10,000 boepd.

“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,” said Majid Shafiq, i3 chief executive.

“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.”

In a separate statement, the company gave its financial results for the twelve months ended December 31 – a period which is largely marked by the company’s transition to focus on production, in Canada.

i3 in the fourth quarter completed the GAIN acquisition (in September) and TOSCANA (in October), which together delivered 9,000 boepd of production, from 467 wells over a 497,000 acre leasehold.

Total revenue from Canada amounted to £13mln for 2020.

Group profit after tax amounted to £11.7mln, with diluted earnings per share marked at 3.46p.

The company highlighted its previously stated dividend policy, to pay out up to 30% of free cash flow from 2021 onwards.

It also noted that, in the UK North Sea, it continued to progress farm-down process for Serenity and Liberator projects.

Shafiq added: “We remain confident in the potential in the Liberator field and the Minos High prospect to the west, however we decided to focus our initial appraisal efforts on the Serenity field and commenced a farm-out process, which we hope to conclude in the near future and then commence planning for appraisal drilling to delineate the field.”

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