TIDMI3E
RNS Number : 7657S
i3 Energy PLC
08 November 2023
8 November 2023
i3 Energy plc
("i3", "i3 Energy", or the "Company")
Q3 2023 Operational and Financial Update
i3 Energy plc (AIM:I3E) (TSX:ITE), an independent oil and gas
company with assets and operations in the UK and Canada, announces
the following Q3 2023 operational and financial update.
Q3 Highlights:
-- Av erage Q3 2023 production of approximately 21,156 barrels
of oil equivalent per day ("boepd"), representing a 14% increase
over the prior quarter and a 3% increase from Q3 2022.
-- Net operating income for the quarter reflecting restored
production and strengthening commodity prices was USD 25.97 million
(as compared to USD 17.66 million in Q2), representing a 47%
increase quarter-over-quarter.
-- i3 remained focused on repayment of its new credit facility,
with the original drawn amount of CAD 75 million reduced to CAD
66.67 million (USD 49.39 million) and net debt as at 30 September
2023 of approximately USD 27.56 million, down from USD 38.98
million as at 30 June 2023.
-- As part of i3's commitment to its total shareholder return
model, dividends of GBP3.08 million (USD 3.91 million) were
declared in Q3 and paid in October 2023.
-- Post quarter-end the board of directors approved a USD 6
million capital program, for the balance of 2023, centred on the
Company's Glauconite and Leduc oil fairways in Central Alberta.
Majid Shafiq, CEO of i3 Energy plc, commented :
"Following the major scheduled maintenance activities and
disruptions due to wildfires in Q2 we are very pleased with the
recovery of production levels in Q3, and we remain on track to meet
our previously stated guidance for 2023 production and net
operating income. We will also shortly commence a three well
drilling programme, focussed on oil development in Central
Alberta."
Production Update
Production in Q3 2023 averaged 21,156 boepd, comprised of 68.7
million standard cubic feet of natural gas per day ("mmcf/d"),
4,887 barrels per day ("bbl/d") of natural gas liquids ("NGLs"),
4,485 bbl/d of oil & condensate and 342 boepd of royalty
interest production. The strong quarterly production represents an
increase of greater than 14% from Q2 2023 and approximately 3% over
Q3 2022, despite a 21-day curtailment in Central Alberta associated
with a meter station outage. The meter station outage impacted i3's
calendar-day volumes by 1,120 boepd in August or 377 boepd for Q3
2023. The performance of the assets in Q3 2023, post Q2 2023
turnarounds and disruptions, and in light of the downtime
experienced in Q3 2023, reflects both the deliverability of the
underlying reservoirs and their predictable low-decline nature, and
supports the quality of the Company's large inventory of
development drilling locations.
Period Average Production Comparison:
Last Five Quarters
-------------------- ------------------------------------------------
Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022
Production (boepd) 21,156 18,529 22,773 22,757 20,571
Oil & Condensate
(bbl/d) 4,485 4,247 5,238 5,119 4,396
NGLs (bbl/d) 4,887 4,057 5,569 5,106 5,038
Gas (mcf/d) 68,653 58,965 69,555 72,442 64,180
Royalty Interest
(boepd) 342 398 373 458 440
Hedging Programme
i3's risk management strategy currently protects USD 50.65
million (CAD 67.87 million) and USD 28.32 million (CAD 37.95
million) of net operating income for 2023 and 2024, respectively
with current hedges in place to cover 29%, 33%, 12%, 11% and 2% of
the Company's projected Q4 2023 & Q1, Q2, Q3 and Q4 of its 2024
production volumes, respectively . i3's hedges are as follows:
Swaps Basis Swaps
GAS Volume Price Volume Price ($US/mmbtu)
(GJ) (C$/GJ) (mmbtu)
Q4 2023 1,835,000 2.99 327,067 (1.46)
Q1 2024 2,275,000 3.04 nil nil
Costless Collars
OIL Volume Price Volume Avg Floor Avg Ceiling
(bbl) (C$/bbl) (bbl) Price (C$/bbl) Price (C$/bbl)
Q4 2023 184,000 99.16 nil nil nil
Q1 2024 182,000 95.68 22,750 100.00 121.32
Q2 2024 159,250 98.20 22,750 100.00 107.00
Q3 2024 38,500 101.63 122,500 100.00 111.11
Q4 2024 nil nil 23,250 100.67 111.90
---------- ---------- --------- ------------------ ----------------
Q3 2023 Operations
The Company experienced a strong Q3 2023 after a challenging Q2
2023 period in which corporate production averaged 18,529 boepd,
with approximately 3,100 boepd offline for the quarter, due to
restrictions resulting from the Alberta wildfires, unanticipated
apportionment issues associated with the Pembina Peace Pipeline
liquids line, critical downtime related to debottlenecking projects
and i3 turnaround initiatives (both operated & non-operated).
After such significant downtime experienced in Q2 2023, the Company
is pleased to report that production returned rapidly to
pre-restricted levels and continued to outpace anticipated declines
throughout Q3, achieving Quarterly production of 21,156 boepd.
Capital activities in Q3 2023 were limited to USD 1.73 million
(CAD 2.23 million), with the Company focussing on reestablishing
and optimizing productive capacity post turnarounds and disruptions
experienced in the prior quarter. Of the total Q3 2023 capital
expenditure programme, i3 invested USD 0.41 million (CAD 0.55
million), focused primarily in the Lodgepole area of Central
Alberta, on pipeline infrastructure to consolidate and optimize
volumes at its operated 13-35-047-10W5 gas plant.
Similar gathering system improvements in the Wapiti area,
completed in Q2 2023 by a third-party operator, have alleviated
line pressure constraints and allowed the Company to optimize
production in the quarter from its 3-well Cardium pad that was
drilled and brought on production earlier this year. Post
debottlenecking, the 3 Cardium wells have performed above GLJ's
Proved Plus Probable type curve expectations, with unrestricted
rates having exceeded peak rate predictions.
The strong volumes associated with the Wapiti programme have
occurred despite unanticipated apportionment issues associated with
the Pembina Peace Pipeline liquids line, resulting in reduced
liquids yields realized by area operators. i3 expects the
apportionment issues to be resolved over the coming months as local
operators work diligently to optimize throughput efficiencies for
all relevant parties. This was evidenced by September's production,
which averaged 21,380 boepd, comprised of 67.6 mmcf/d, 5,200 bbl/d
of NGLs, 4,480 bbl/d of oil & condensate and 433 boepd of
royalty interest production.
Environmental, Social and Governance ("ESG")
i3 is committed to conducting its operations responsibly and in
accordance with industry best practices. The Company's commitment
to high ESG standards is central to maintaining our social licence
to operate, creating value for all stakeholders, and ensuring
long-term commercial success.
In Q3 2023, i3 invested USD 0.8 million net, before any
government grants, to abandon 5 wells, decommission 7 sites and
abandon 11 pipelines, while further advancing site reclamations
across its portfolio. Incorporating activity from H1 2023 brings
the Company's year-to-date abandonment and decommissioning totals
to 25 wells, 13 sites, 16 pipelines, with a further 13 sites having
been reclaimed. i3 will continue its 2023 abandonment and
reclamation programme, with approximately USD 3.91 million being
directed to pipeline / wellbore abandonments, pipeline / facility
decommissioning and well site reclamation.
Serenity
The base case development for Serenity assumed a joint
development with the Tain field. Following the relinquishment of
the Tain Licence by the licence holders, i3 and its partner Europa
Oil and Gas are now considering other options for development and
will update the market as and when necessary.
Q4 2023 Capital Programme
The Company has prepared an oil focused Q4 2023 drilling
programme to capitalize on the continued relative strength in oil
prices. The programme previously contemplated follow-up drilling at
Dawson to further develop and delineate the Company's initial
successful Clearwater oil discovery from Q1 2023 . However, access
constraints have delayed Clearwater development until 2024. Given
the Company's extensive portfolio of development opportunities and
flexible operating model, the Q4 2023 programme has refocused to
Central Alberta and will now include the drilling, completion and
tie-in of 2 gross (2.0 net) horizontal Glauconite oil locations and
1 gross (0.53 net) vertical Leduc oil well. The wells are expected
to spud in early-to-mid Q4, with tie-in occurring ahead of
year-end. Despite the operational shift and delayed on stream date,
corporate production is expected to meet i3's previously stated
2023 guidance. Additionally, the results of the 2 Glauconitic oil
wells and Leduc drill are expected to position the Company for a
strong start to 2024.
Reiteration of 2023 Guidance & Return of Capital
i3's 2023 guidance remains unchanged at 20,000 to 21,000 boepd,
delivering net operating income of USD 90 million - 95 million for
the year (with 25.9 million realized in Q3). With Board approval
for the Company's USD 6 million Q4 2023 capital program, i3's
full-year 2023 exploration and development expenditures are in line
with previously announced guidance. Strong operational performance
of the Company's predictable low-decline production base has
allowed i3 to achieve the previously stated corporate guidance
despite the unplanned disruptions the Company has navigated
throughout 2023.
On 31 May 2023 the Company refinanced its outstanding debt of
circa CAD 50 million with a new CAD 100 million facility; of which,
CAD 75 million was drawn for general working capital purposes and
to settle the Company's outstanding loan notes. To align with the
Company's conservative approach to debt management, the new
facility amortises on a straight-line monthly basis (unlike the
prior Senior Secured Guaranteed Loan Notes, which were
non-amortising). At the end of Q3 2023, the Company has repaid USD
6.22 million (CAD 8.33 million) of the new facility, exiting with
USD 49.39 million (CAD 66.67 million) remaining. This amortisation
schedule will repay the loan over its three-year term, beginning
with USD 15.97 million in amortisation (CAD 21.40 million),
interest commitments and associated set-up costs to be paid
throughout 2023.
As part of i3's total shareholder return model , dividends of
GBP3.08 million (USD 3.91 million) were declared in Q3 and paid in
October 2023. The Company remains committed to its total
shareholder return model, consisting of production growth through
drilling and accretive M&A activity, and shareholder cash
returns via dividends, whilst prudently maintaining capital
discipline. Subject to Board approval at the end of quarter, the
Company expects to pay the Q4 dividend of 0.2565 pence per share in
January 2024, with an announcement made in due course. Including
dividends declared thus far in 2023 and with the expected payment
for the Q4 2023 period, the forecasted aggregate 2023 dividends to
be paid to shareholders is GBP16.38 million, or 1.362 pence per
share, representing a yield of approximately 11.6% for 2023 and a
forward running yield of 8.7% based on the closing price of i3's
ordinary shares of 11.74 pence on 7 November 2023.
Note: Unless otherwise denoted, all figures are referenced in
USD ($) and assume a foreign exchange rate of 1.34 CAD:USD and 1.27
GBP:USD, which is the average rate for Q3 2023, or where
applicable, a 30 September 2023 period end foreign exchange rate of
1.35 CAD:USD and 1.22 GBP:USD.
Note: Net Operating Income (NOI) and Net Debt are non IFRS
measures. See Appendix B within the Interim Financial Statements
for definition and reconciliation to nearest equivalent statutory
IFRS measure.
END
Qualified Person's Statement
In accordance with the AIM Note for Mining and Oil and Gas
Companies, i3 discloses that Majid Shafiq is the qualified person
who has reviewed the technical information contained in this
document. He has a Master's Degree in Petroleum Engineering from
Heriot-Watt University and is a member of the Society of Petroleum
Engineers. Majid Shafiq consents to the inclusion of the
information in the form and context in which it appears.
Enquiries:
i3 Energy plc c/o Camarco
Majid Shafiq (CEO) Tel: +44 (0) 203 781 8331
WH Ireland Limited (Nomad and
Joint Broker) Tel: +44 (0) 207 220 1666
James Joyce, Darshan Patel
Tennyson Securities (Joint Broker)
Peter Krens Tel: +44 (0) 207 186 9030
Stifel Nicolaus Europe Limited
(Joint Broker) Tel: +44 (0) 20 7710 7600
Ashton Clanfield, Callum Stewart
Camarco
Andrew Turner, Violet Wilson, Tel: +44 (0) 203 757 4980
Sam Morris
Notes to Editors:
i3 Energy is an oil and gas Company with a low cost,
diversified, growing production base in Canada's most prolific
hydrocarbon region, the Western Canadian Sedimentary Basin and
appraisal assets in the North Sea with significant upside.
The Company is well positioned to deliver future growth through
the optimisation of its existing 100% owned asset base and the
acquisition of long life, low decline conventional production
assets.
i3 is dedicated to responsible corporate practices and the
environment, and places high value on adhering to strong
Environmental, Social and Governance (" ESG ") practices. i3 is
proud of its performance to date as a responsible steward of the
environment, people , and capital management. The Company is
committed to maintaining an ESG strategy, which has broader
implications to long-term value creation, as these benefits extend
beyond regulatory requirements.
i3 Energy is listed on the AIM market of the London Stock
Exchange under the symbol I3E and on the Toronto Stock Exchange
under the symbol ITE. For further information on i3 Energy please
visit https://i3.energy
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of Article 7 of the UK version of Regulation (EU) No 596/2014 which
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END
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