Corporate M&A

i3 Energy Acquires Toscana Energy Income Corp.

By Deepak Sharma
June 24, 2020
2 minutes read
Toscana Energy Assets

AIM-listed i3 Energy Plc has exercised an option to acquire TSX-listed Toscana Energy Income Corp. (TEIC), for aggregate consideration of approximately C$3.85 million (US$2.83 million), including the assumption of TEIC’s debt.

TEIC is an entity currently managed by Sprott Toscana through Toscana Energy Corp., and is focused on investing in medium to long-life oil & gas assets, unitized production, and royalties in Western Canada.

i3 Energy is a publicly quoted oil & gas development company based in Westhill, Scotland, and is listed on the AIM Market of the London Stock Exchange (LSE). The company is engaged in operations in the UK North Sea, with a primary focus on the development of the Liberator oil field.

Under the terms of the deal, the shareholders of TEIC will receive 0.03031261 shares of i3 Energy for each TEIC common share held. i3 Energy will issue approximately 4.39 million new shares, representing 2.4% of its shares on a fully-diluted basis.

TEIC currently owns a portfolio of interests across Alberta and Saskatchewan, including 175 net producing wells. Proved (1P) Reserves attributable to the company as of December 31st, 2019 were 4.5 million barrels of oil equivalent (MMboe), of which 55% was oil. The company’s production during 2019 averaged 1,065 boe per day (boe/d).

Previously, in March this year, i3 Energy had entered into an option agreement to acquire rights and interests in TEIC’s C$28 million senior and junior debt facilities (which were in default) for C$3.4 million, with 50% of the cash consideration paid upfront and 50% payable at year-end.

Concurrently, i3 Energy has also entered into a non-binding Letter of Intent (LoI) with an undisclosed seller to acquire a package of producing Canadian oil & gas assets, for a total proposed consideration of approximately US$55 million. The package includes over 250 net wells across multiple low-decline, long-life, light oil and natural gas fields, and proven (1P) reserves of 25 million barrels of oil equivalent (MMboe).

The transaction is subject to customary closing conditions, including the receipt of the approval of the Court of Queen’s Bench of Alberta, i3 Energy shareholder approvals, the passing of a shareholder resolution by at least ~66.67% of the votes cast at the general meeting of TEIC, and the preparation of a re-admission document for the admission of the enlarged company to the AIM. The deal is expected to close in Q3 2020.

Sayer Energy Advisors acted as financial advisor to TEIC.

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