RE:RE:RE:RE:Re: Acquisition voteI3e really want Toscana assets, it paids 3.4M$Can for all debts + 4,399,224 i3 shares (0.0281 I3e share for one TEI share, if we approved). Management keep their job.
With those parmeters, a fair deal is one (1) I3e share for one (1) TEI share.
It paids from its cash resources, i3 purchased all rights and interests in TEI’s C$24.8MM senior and C$3.2MM junior debt facilities for C$3.0MM and C$0.4MM, respectively, paid 50% up front and 50% at year-end
https://i3.energy/wp-content/uploads/2020/03/20200330-i3-Corporate-Update.pdf
i3 has purchased the junior and senior secured debt of Toscana Energy Income Corporation (TSX:TEI) from its cash resources and has executed an option agreement to acquire 100% of TEI’s shares for c.4.4 million i3e shares (total i3 dilution of up to 4%), purchasing 4.65 MMboe 2P and 1,065 boepd of production (55% oil) with potential upside of 100+ MMbbls recoverable, for a total consideration of C$3.95 million.
Integration of Toscana’s high-quality management team will enable rapid expansion into the opportunity-rich WCSB. i3 will remain focussed on proving Serenity and Liberator resources while low-cost Canadian production opportunities are captured to provide operational cash flow and near-term shareholder distributions.
i3 Option to Acquire Toscana Energy Income Corporation (TSX:TEI)
Capitalizing on Cash Flow Assets in the Opportunity Rich Western Canadian Sedimentary Basin
• i3 has acquired all debt of Toscana Energy Income Corporation (TSX:TEI) and executed an option agreement to acquire 100% of TEI
– From its cash resources, i3 purchased all rights and interests in TEI’s C$24.8MM senior and C$3.2MM junior debt facilities for C$3.0MM and C$0.4MM, respectively, paid 50% up front and 50% at year-end
– Upon exercise of its option, i3 will offer up to 4,399,224 i3 shares (valued at C$0.55MM on March 27th) for the entire share capital of Toscana, resulting in up to c.4% dilution to i3’s current shareholders
• Total cash and share consideration of C$3.95MM (US$2.8MM) buys:
– 2019 production of approximately 1065 boepd at C$3710/boepd (US$2650/boepd) or 0.72x TEI’s 2019 field netback (revenue minus royalties minus opex) of C$5.5MM (US$3.9MM) – 2P reserves of 4.65 MMboe for C$0.85/boe (US$0.61/boe) – Long-life reserves base from low-decline well stock with 2019 average field break-even of C$30.43/boe (US$21.74/boe) – TEI’s highly experienced team and operational organization – A secondary listing on the Toronto Stock Exchange • Optimization opportunities within current portfolio to increase production (boe/d) by 20% - 50% through low-cost workovers or capex • Potential company-making upside in Toscana’s Clearwater acreage, one of Canada’s top oil plays, with potential recoverable resources above 100 MMbbls net • Access to high-netback and/or distressed deal-flow provides opportunity to rapidly grow i3 into a business that generates significant free cash flow • i3 expects to execute its option to purchase Toscana after releasing its 2019 Annual Report
• i3 deems it critical to spread and mitigate its historical single-asset risk
• TEI’s low-decline production portfolio expected to provide stable long-term cash flow under attractive acquisition metrics making it a highly accretive transaction for i3’s shareholders that can be funded from cash
• Excellent acquisition metrics: 2019 WCSB M&A and A&D transaction averages place approximate acquisition value on TEI (55% oil) of over C$30 million on a flowing basis
• Optimization works identified within TEI’s current production portfolio to increase production by 20% to 50% during 2020
• Toscana’s 46 net sections of acreage atop the Clearwater formation could potentially provide many multiples of current portfolio value
• i3 is inheriting an experienced Calgary-based management team with proven M&A credentials, TSX listing and WCSB presence that will provide access to other low-cost, high-return opportunities
• The WCSB is currently out of favour due to egress issues, a lack of access to capital, and overleveraged but solid asset portfolios, providing what i3 believes to be a time-limited opportunity to grow a material production company on favourable terms
Toscana’s Clearwater Formation in Marten Hills & Nipisi A Premier Economic Play Type in Alberta