The i3 Energy (LSE: I3E) share price has been in good form in recent times. Last trading at 9.8p per share on Thursday, the energy giant is 8% higher from last night’s close. It’s also up 31% since the beginning of June and 73% year-on-year.
i3 Energy’s share price even barged through the 10p per share barrier at some point today. At 10.3p it struck its most expensive since mid-April, propelled higher by news that it could shell out a maiden dividend as early as July.
Are dividends on the way?
In a fresh update today i3 Energy said that it expects the High Court to confirm the cancellation of its share premium account on June 29. The oil driller’s draft order to tear up its account was approved by the court last week.
A favourable decision later this month would clear “the way for i3 to make dividend distributions to its shareholders.”
i3 said that it was reclassifying the C$2m dividend as a special dividend instead of associating it with cash flow for the first quarter of 2021. The company plans to do this as “the company’s assets have outperformed the directors’ expectations”. This follows the acquisition of a large production package at the bottom of the market in 2020.
Should the High Court push the draft order through, i3 said that it will pay out the special dividend late next month.
Commenting on the company’s dividend plans, chief executive Majid Shafiq said that “the necessary share capital reduction is nearly behind us and we expect to commence returning value to our shareholders by way of a special dividend, with scheduled half-yearly dividend payments thereafter alongside our interim and annual reports.”
i3 expects to pay its first half-year dividend in September 2021. This payment will be worth up to 30% of free cash flow for the first half of the year.
i3 Energy to drill new wells, make acquisition
i3 Energy also announced plans today to drill two wells with a partner at the Wapiti Elmworth acreage in Canada. Operations are anticipated to begin shortly and conclude in the third quarter. They will incur a net cost of US$2.1m, the firm added.
“These oil-weighted wells are expected to initially increase i3’s production by circa 175 barrels of oil equivalent a day, and are estimated to return the full investment in 1.3 years based on current commodity strip pricing,” the UK energy share said.
i3 has also signed a letter of intent to acquire 230 barrels of oil equivalent per day of Wapiti production. After this, the energy business plans to conduct six reactivations. This should bring production to around 310 barrels a day inside the next 12 months. The production acquisition is expected to complete this quarter, and the total acquisition and capital cost is estimated at US$410,000.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.