I3 Energy Plcs (LON:I3E) soon-to-be-acquired Canadian assets are worth 17.7p per share, according to house broker WH Irelands preliminary fair value estimate.
Earlier this week, the company secured up to £30mln in funding to support the acquisition of assets owned by Gain Energy.
This is one of two acquisitions being advanced as the company builds a production base in Canada.
Analyst Brendan Long described the move to acquire production in Canada as “perfectly timed”.
“i3 Energy absolutely nailed the timing; WTI dipped into negative trading around the time the company secured its acquisitions; the recovery in crude oil prices has been robust; we believe the commodity price outlook is compelling,” Long said in a note.
“Generally, i3 Energys assets are high-quality, conventional resources.
“We like the simplicity and low-declines of conventional resources vs unconventional shale-type resources.”
Long meanwhile described the I3E management team as “exceptionally good deal makers” and highlighted the opportunities presently being created in the currently volatile market.
“Herd mentality, in our opinion, is causing a rush to the exits for oil & gas assets, while seemingly ignoring that combustion fuels have historically been a driving force behind the prosperity of wealthy countries and an important contributor to rising standards of living in developing countries,” the analyst said.
“Who better to buy underappreciated, high-quality assets at discounted prices than i3 Energy? We believe i3 Energy is in a particularly enviable strategic position and that its corporate skillset is particularly advantageous in the current market.”