Heads up – I3 Energy

The following note was issued exclusively to ShareHUB subscribers on June 4th 2019. Now available to all ShareHUB readers.

I3E 2 year Chart

I3 Energy PLC is a newcomer to AIM having listed just under 2 years ago. Its taken them that long to get a summer drill funded and organised on their Liberator Field. On June 3rd 2019, the company closed the deal on a transformational Junior Loan Facility of £22mln. These funds together with the previously successful £16mln share placing (12th March 2019 at 37p a share), means the Company is now ready and loaded for an exciting Summer 2019 drilling programme.

Drilling operations on the Liberator Field are expected to commence as early as mid-July 2019, using the Borgland Dolphin semi-submersible drilling rig. The Company has also made good progress in its negotiations with RSRUK to finalise offtake terms for the Bleo Holm FPSO and continues to progress documentation with the OGA for the Liberator field development plan.

The Company has also executed a crude oil offtake and marketing agreement with BP Oil International Limited to market its crude production from the Liberator field. First oil from the Liberator field remains 2020 with flows expected at approximately 20,000 bopd, from two development wells.

I3 Energy Said:

“We are very pleased to announce the closing of this £24mm funding package. The Company is now funded for its upcoming 94-day, 3-well drilling campaign this summer on its 100% owned Liberator field and Serenity prospect, which is targeting a combined STOIIP of over 500 MMbbls. The Company is now fully focused on delivering a successful 2019 drilling programme and execution of the Liberator development to deliver first oil in 2020.”

Lombard Odier Asset Management (Europe) Limited have been a key shareholder and recently took on an extra £2m equity placing at 37p which looks to have sealed the deal in terms of the Funding package.

With a market cap just shy of £39m, i3E clearly has plenty of upside should they deliver success with the drill bit. The junior facility is expected to give way to a more significant £50m to £100m loan facility upon a successful summer campaign which will be required to see the company through FDP and 20,000 barrels of oil. The company has just under 95million shares in issue so it would be fair to say that shares in issue will rise as the project progresses. But should they succeed, it might be worth noting Hurricane Energy as an example of a explorer that has now turned producer with their EPS set to produce 17,000 to 20,000bopd albeit with sizable resources under their belt but as yet, limited proven commercial delivery… to date. Hurricane Energy’s market cap is £1.1bln.

A long way to go for I3E, but with the funding package sorted and the drill bit set to start spinning in just over 4 weeks time, the stock should be in high demand in a very tight market with just under 100m shares in issue (many of which are in Lombard’s hands).

Not without sizable risk, so please conduct your own full diligence/research and read all risk warnings (see side bar of website).

ShareHUB target for 2019, 120p. Assumes a successful 2019 drill campaign.

Price at time of note: 44p
Current price: 48.25p.