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DXI Capital, armed with cash, looks to rebuild anew after divesting from oil

Snapshot

The Vancouver-based company sold its energy assets in the summer of 2020, including its 99%-Woodrush production facility in British Columbia and its Kokopelli gas project in Colorado

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Quick facts: DXI Energy

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TSX:DXI
Market: TSX
Market Cap: -
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  • Former petroleum company looking for new venture
  • C$50M Capital/NOL tax loss to play with
  • Executives bring decades of experience in tech, life sciences

What DXI Capital does:

DXI Capital Corp (TSE:DXI) (OCTQB:DXIEF), formerly DXI Energy, has a useable capital/NOL tax loss worth roughly C$50 million Capital/NOL tax loss at its disposal, and the former junior oiler is currently pursuing new “positive tailwind business interests.”

The Vancouver-based company sold its energy assets in the summer of 2020, including its 99%-Woodrush production facility in British Columbia and its Kokopelli gas project in Colorado.

DXI told shareholders that the decision stemmed from “current affairs beyond the company’s control,” namely, the coronavirus pandemic and its impact on oil prices. In early April, when DXI first put its assets up for sale, the US Energy Information Administration lowered its 2020 forecast for West Texas Intermediate and Brent Crude Oil prices by 23% to US$29.34 a barrel and 24% to $33.04, respectively.

With petroleum in the rearview mirror, DXI Energy became DXI Capital, and CEO Robert Hodgkinson, returning to his position at the helm after stepping down in December 2018, began to forge a new path.

How it is doing:

To help the company find its way, DXI hired high-tech and life sciences industry veteran Sean Hodgins (not to be confused with Hodgkinson) as its chief operating officer and CFO in December 2020.

The company also said had it engaged Tandem Innovation Group (TIG) to “assist in the search for a suitable business transaction.” Hodgins is co-founder of the TIG, a professional advisory services firm with a network of over 175 part-time CFO advisors and business consultants across North America.

At its annual general and special meeting of shareholders in August, voters approved a 1:100 share consolidation and the aforementioned name change. The share consolidation allowed the company to relist on the Toronto Stock Exchange after voluntarily delisting in July and a brief stint on the NEX, a trading forum for companies that fall below TSX standards.

The company settled its roughly C$4.3 million worth of debt by issuing more than 9 million shares at a price of C$0.475 in a pair of tranches in October and November. A remaining balance of 355,894 shares will be issued upon confirmation that one of the company’s former officers has made the required tax remittances on the salary debt being settled, the company said at the time. 

Inflection points:

  • Finding a ‘positive tailwind business’
  • Wielding its capital to get a new venture off the ground
  • Leveraging its executives’ experience in tech and life sciences

Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com

Follow him on Twitter @andrew_kessel

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