UK's i3 Snaps up Canadian Junior

London-listed junior i3 Energy announced on March 30 that it had acquired Canadian explorer Toscana Energy Income Corp in a cash and shares deal worth C$3.95mn ($2.82mn).

Toscana has 4.65mn barrels of oil equivalent in proven and probable reserves, of which 53% is oil and 47% is gas, i3 said. Its production averaged 1,065 boe/d last year, generating C$5.5mn in field netback. This output comes from 13 low-decline, long-life conventional fields in the Western Canadian sedimentary basin with an average breakeven price of C$30.43/boe.

i3, which is developing oil in the North Sea, said it was acquiring Toscana at a fraction of its value. Under an option agreement, it has acquired Toscana's C$24.8mn senior debt facility for C$3.0mn and its C$3.2mn junior facility for C$0.4mn. It will pay half of the cash upfront and half at the end of the year.

In exchange for equity in Toscana, i3 will also offer the Canadian firm around 4% of its share capital, which had a market value of C$0.55mn on March 27. The company plans to list on the Toronto stock exchange after the deal is closed.

"This is a highly significant acquisition opportunity for i3 which adds material, low cost per barrel, low-decline production as well as a new growth business with a strong management team and strategy in the Western Canadian Sedimentary Basin," i3 CEO Majid Shafiq said in a statement. "In addition to diversifying our portfolio, this transaction will help to stabilise our business with a steady revenue stream while adding considerable upside potential from within Toscana's Clearwater acreage - an opportunity which is comparable to the growth potential of our Serenity discovery."

i3 struck oil at its Serenity prospect in the North Sea in October last year, with the find living up to its pre-drill estimate of 197mn barrels in place. It described the discovery as "transformational" for the company.