Gran Tierra Energy to expand North American footprint with i3 Energy acquisition

Gran Tierra Energy Inc. has announced its intention to acquire the entire issued and to be issued share capital of i3 Energy Plc in a transaction valued at approximately £174.1 million (US$225.4 million). This acquisition, which will be executed through a court-sanctioned scheme of arrangement under Part 26 of the Companies Act, is set to create a more diversified and robust energy company with a significant presence across the Americas, particularly in Canada, Colombia, and Ecuador.

Strategic Significance and Financial Terms

Traditionally focused on South American energy assets, Gran Tierra’s acquisition of i3 Energy—a UK-based company with substantial assets in the Western Canadian Sedimentary Basin (WCSB)—marks a strategic expansion into the North American market. The combined entity will control approximately 1.4 million net acres in Colombia, 138 thousand net acres in Ecuador, and 584 thousand net acres in Canada, offering enhanced geographic and product diversity. This move is expected to increase production capacity, bolster reserves, and improve overall financial stability.

Under the terms of the acquisition, i3 Energy shareholders will receive one new Gran Tierra share for every 207 i3 Energy shares held, along with a cash payment of 10.43 pence per share. Additionally, a dividend of 0.2565 pence per share will be provided in lieu of the ordinary dividend for the period ending 30 September 2024. This offer represents a substantial premium to i3 Energy’s recent share prices, including a 49% premium over the closing price on 16 August 2024​.

Gran Tierra to acquire i3 Energy in a $225 million deal in a move to expand its asset base across the Americas. The acquisition boosts production capacity and enhances geographic diversity.

Market Reaction and Long-Term Prospects

The market reacted positively to the announcement, with i3 Energy shares surging by 27% following the news. Analysts have highlighted the acquisition as a strategic move that enhances Gran Tierra’s scale and relevance in the global energy sector. The combined company is expected to offer multiple benefits, including optimized capital allocation, enhanced trading liquidity, and greater investor access. Upon completion, i3 Energy shareholders will own up to 16.5% of the enlarged Gran Tierra group​.

Gran Tierra’s management emphasized that this acquisition aligns with the company’s long-term strategic vision of sustainable and profitable growth. By integrating i3 Energy’s high-quality assets and experienced team, Gran Tierra aims to accelerate production growth and deliver consistent value to shareholders​.

Next Steps

The acquisition is anticipated to be finalized in the fourth quarter of 2024, pending court approval and other conditions. Following the completion of the deal, i3 Energy’s shares will be delisted from the AIM market of the London Stock Exchange and the Toronto Stock Exchange, further solidifying Gran Tierra’s position as a leading independent energy company in the Americas.

This acquisition is poised to reshape the energy landscape across the Americas, creating a more resilient and scalable business model for Gran Tierra while offering significant value and growth opportunities for shareholders of both companies.