Merger and acquisition activity continues apace within the oil and gas industry, with i3 Energy (TSX: ITE) disclosing late yesterday that it has continued discussions with Gran Tierra Energy (TSX: GTE) for a transaction.
The latest proposal between the two parties will see Gran Tierra acquire i3 in a transaction involving both cash and stock, with i3 shareholders set to receive one Gran Tierra share for every 207 shares of i3 held, along with 10.43 pence per share of i3. i3 shareholders will also be entitled to receive a cash dividend of 0.2565 pence per share held, in lieu of the ordinary dividend for the period ending September 30, 2024.
The transaction as a whole will result in i3 shareholders receiving 13.92 pence (C$0.246) per share held, based on Gran Tierra’s price as of market close on August 16. The deal values the company at £174.1 million, or C$309.1 million, a 49% premium to the closing price of i3 as of August 16, which is the last day before the offer period began.
Gran Tierra has stated that this will be the final offer for an acquisition of i3, and that it will not be increasing the valuation.
The acquisition, should it be successful, will see Gran Tierra add 2024 working interest production of between 18,000 to 19,000 BOEPD to its portfolio, a substantial increase to its current guidance of between 32,000 and 35,000 BOPD. The purchase of i3 will also add 1P reserves of 88 MBOE, 2P reserves of 175 MMBOE, and over 250 net booked drilling locations to Gran Tierra’s asset base, while expanding its international diversity. On a post transaction basis, 62% of Gran Tierra’s production is expected to be based in Colombia, 36% in Canada, and 3% in Ecuador.
“We believe that the Acquisition presents an exceptional opportunity for i3 Energy’s Shareholders. The Acquisition represents the culmination of a thorough process to realise the maximum value available for shareholders and offers significant upside potential; it expedites the realisation of fair value, with a cash premium and incremental upside through continued ownership in the Combined Group, without necessitating additional capital investment, time, or operational risk,” commented Majid Shafiq, CEO of i3, on the transaction.
The transaction remains subject to shareholder approval by i3 shareholders, as well as customary regulatory approvals. The transaction is currently slated to close in the fourth quarter of 2024.
i3 Energy last traded at $0.21 on the TSX.
Information for this briefing was found via Sedar and Gran Tierra Energy. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
