i3 Energy PLC Announces Interim Report and Operational Update for H1 2023
Interim Report and Operational Update for the Six Months Ended 30 June 2023 EASTLEIGH, ENGLAND / ACCESSWIRE / August 31, 2023 / i3 Energy plc (AIM:I3E)(TSX:ITE), an independent oil and gas company with assets and operations in the UK and Canada, is pleased to announce the unaudited results for its period ended 30 June 2023. A copy of the Company's unaudited interim financial statements will be available shortly on the Company's website at https://i3.energy/investor-relations/regulatory-news. Highlights And Outlook Highlights Financial Highlights (1) Non-IFRS measure. Refer to Appendix B Dividends Operational Highlights Outlook A summary of key events which occurred after the reporting period are presented in note 19 to the financial statements. The Group's focus for the remainder of 2023 will be on three key areas: The Group continuously evaluates opportunities to strengthen its balance sheet while maintaining tight control of its costs and working capital position. Majid Shafiq, CEO of i3 Energy plc, commented: "H1 2023 was another very active period for i3. We completed our planned Q1 capital program, drilling 8 gross (5.5 net) wells in our Central Alberta, Wapiti and Clearwater acreage, re-financed our outstanding loan notes which were due in May with a new CAD 100 million loan facility and successfully conducted 20 planned operated facility turnarounds, whilst safely managing our operations during the recent extended period of wildfires in Alberta. Our asset base continues to perform well, having averaged 20,640 boepd in H1, 9% higher than the same period last year and exiting H1 at greater than 22,000 boepd, and with 2P reserves of 182 mmboe provides a solid platform for growth. Commodity price weakness in the first half of the year meant the Company revised its 2023 capital and dividend programme in June having declared £10.215 million in dividends to our shareholders in H1. Improvement in commodity prices in July and August and future pricing, has resulted in an increase of around 20% in our forecast for full year net operating income to USD 90 to 95 million. Price volatility has also resulted in potential opportunities for growth via M&A and we continue to monitor the market to ensure our capital allocation for the remainder of the year is optimised. We are confident that our business model, allied with our asset base and the skills and dedication of our staff, will continue to create and extract value through the commodity price cycle." 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: 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 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 quoted 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/. The Company advises that it has obtained an exemption pursuant to Section 602.1 of the TSX Company Manual (the Manual), in respect of certain shareholder approval requirements that would otherwise be applicable to the Company's Employee Stock Option Plan and Non-Employee Stock Option Plan (together, the Plans), namely those set forth in Section 613 of the Manual (the Exemption). As such, the Company is exempt from complying with the requirements of Section 613 in respect of the Plans. Pursuant to the Manual, the Exemption will be valid for a period of three years from the date hereof, expiring on July 17, 2026. The Company follows AIM Rules for Companies and has received shareholder approval for its Employee Stock Option Plan and Non-Employee Stock Option Plan. This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. Chairman's and Chief Executive's Statement Overview of the year to date i3 has had an active first half of 2023 navigating a challenging period in the energy sector and the broader capital markets. The first half of 2023 was marked by commencement of the Company's capital programme in Wapiti, Central Alberta and in the Clearwater, the establishment of a new long-term debt facility and the operational challenges associated with the Alberta wildfires and multiple planned and unplanned production disruptions. With these hurdles behind it, the Company is well positioned to deliver continued value to shareholders through its total return model. During the first half of 2023, the Company settled its outstanding £22 million Senior Secured Guaranteed Loan Notes (the "Loan Notes"), which were due for repayment at the end of May. The Loan Notes were settled from the proceeds of a new CAD 100 million loan facility (the "Facility") established with Trafigura Canada Ltd., a subsidiary of Trafigura Pte Ltd. The Facility consists of a CAD 75 million facility, used to repay the loan notes and for general corporate purposes, and a CAD 25 million accordion. We are very pleased to have established a relationship with Trafigura, a sophisticated oil and gas trader and a potential partner for future production focussed growth. Operationally, i3 commenced 2023 following an active and very successful USD 71 million drilling campaign in 2022, which allowed the Company to average 20,317 boepd for the year with peak production exceeding 24,000 boepd. Although commodity prices had softened through 2022, the forecast at year end remained strong as the Company set a 2023 capital programme of USD 64 million based upon average annual price assumptions of USD 85/bbl for WTI and CAD 4.50/GJ for AECO gas (coinciding with the industry consensus). The initial portion of the 2023 capital programme, including 8 gross (5.5 net) wells, were successfully drilled and tied-in before the Spring break up period commenced. Initial production results from the 2023 programme were impacted by a weakening commodity price outlook and a series of other factors, including Alberta wildfires, unanticipated apportionment issues, as well as scheduled turnarounds and debottlenecking projects. These factors affected near-term production which, when combined with the continued softening commodity outlook, resulted in lower full year production and cashflow guidance and reduced capital and dividend programmes. Since issuing the Company's revised 2023 capital and dividend programme at the end of June 2023, i3's predictable low decline production has recovered following the Company's planned maintenance activities which involved shutdown of certain major operated facilities, which were completed successfully during June. Seasonal wildfires this year have been worse and more prolonged than normal, and although none of our facilities (operated or non-operated) were damaged, periodical shut down of certain facilities was required as a precautionary measure, which negatively impacted our production volumes during May and June by 1,650 boepd and 385 boepd, respectively. Despite this, our wells and facilities which were impacted by maintenance and unplanned shutdowns have since been brought back on-stream and are performing at pre-shutdown levels. With the return in corporate production, combined with the recovery in underlying commodity prices, particularly WTI, we are forecasting an approximate 20% increase to the Company's revised 2023 estimated Net Operating Income guidance, as issued at the end of Q2. As per i3's total return model, the Company continually evaluates the optimal way in which to deliver shareholder value. In addition to its distribution model, the Company weighs the expected return generated through organically drilling its extensive portfolio of development locations against potential acquisition opportunities and deploys capital accordingly to achieve the highest return on a risk adjusted basis. As is to be expected, the fall in commodity prices in H1 have resulted in lower asset transaction metrics in Canada. i3 continues to monitor the market and will participate in acquisitions should the Company find accretive opportunities that fit its strategy. In the UK, in conjunction with our joint venture partner, the Company continues to progress discussions with all stakeholders regarding the potential development of the Serenity field. The Company's YE 2022 reserves audit, which on a 2P basis, resulted in an increase in reserves of 18%, with a reserve life index of 22.5 years and a value of USD 1.161 billion. With more than 370 booked (gross) drilling locations, i3's reserves report exhibits a strong and diverse asset base which can support growth through the business and commodity cycles, and we look forward to advancing our growth initiatives throughout the remainder of 2023. We believe the mid-to-long-term supply/demand imbalance in oil and gas production is and will continue to support pricing; as we have seen both principal commodities strengthen in Q3 2023, positively impacting i3's forecast cashflows for the remainder of the year (as exhibited in the below 2023 Updated Guidance chart). i3 is committed to conducting its operations safely, responsibly and in accordance with industry best practices, and we continue to advance our health and safety policies and procedures as we integrate additional production assets. The Company's commitment to high ESG standards is central to maintaining its social licence to operate, creating value for all stakeholders, and ensuring long-term commercial success. Following the publication of our maiden annual sustainability report and establishing a baseline for our business we have continued efforts to reduce the carbon intensity of i3's operations through methane emission reductions and electrification projects, and these efforts will continue into the second half of the year. Please refer to the attached PDF document to view the full announcement: http://www.rns-pdf.londonstockexchange.com/rns/9307K_1-2023-8-31.pdf This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com. SOURCE: i3 Energy PLC
H1 2023 HIGHLIGHTS | |||
Average Production | 20,640 BOEPD (H1 2022: 18,950) | ||
2PDP and 2P Reserves | 65.7 & 181.5 MMBOE (At 1 January 2023) | ||
Revenue (net of royalties) | £75.5 MILLION (H1 2022: £101.6 MILLION) | ||
Net Operating Income ("NOI")(1) | £38.9 MILLION (H1 2022: £68.8 MILLION) | ||
Acquisitions & Capex(1) | £27.2 MILLION (H1 2022: £23.7 MILLION) | ||
FCF(1) | (£2.9) MILLION (H1 2022: £24.7 MILLION) | ||
Profit Before & After Tax | £14.5 & £10.9 MILLION (H1 2022: £20.5 & £14.7 MILLION) | ||
Adjusted EBITDA(1) | £38.6 MILLION (H1 2022: £38.8 MILLION) | ||
Basic and Diluted EPS | 0.91 and 0.90 PENCE (H1 2022: 1.30 & 1.20 PENCE) | ||
H1 2023 Dividends Declared | £10.2 MILLION (H1 2022: £6.9 MILLION) | ||
2023 Canadian Capital Programme | DRILLED 8 GROSS (5.5 NET) WELLS | ||
UK Assets | EVALUATING A ONE-WELL DEVELOPMENT OF SERENITY | ||
H1 2023 revenue (net of royalties) of £75.5 million (H1 2022: £101.6 million), net operating income (1) of £38.9 million (H1 2022: £68.8 million), and cash flow from operations of £24.3 million (H1 2022: of £48.4 million).
Successfully completed the new CAD 100 million, 3-year, first lien Debt Facility with Trafigura Canada Ltd. (a subsidiary of Trafigura Pte Ltd.) and redeemed the H1 2019 Loan Notes in full.
During the first half of 2023, i3 declared total dividends of 0.855 pence/share (totalling £10.215 million).
In June 2023 the Company revised its annual dividend guidance from a monthly equivalent of 0.1710 to 0.0855 pence per share, to be paid quarterly, which annualises to approximately £12.3 million based on the number of ordinary shares outstanding as at 30 June 2023.
Average H1 2023 production of 20,640 barrels of oil equivalent per day ("boepd") for the six-month period (9% higher than 18,950 boepd achieved in H1 2022) while exiting H1 above 22,000 boepd.
Average Q2 2023 production of approximately 18,529 boepd, representing a 5% decrease from Q2 2022, was more favourable than anticipated given that approximately 3,100 boepd was offline for the quarter due to restrictions associated with the Alberta wildfires, unanticipated apportionment issues associated with the Pembina Peace Pipeline liquids line and the scheduled turnarounds and debottlenecking projects.
Post May / June curtailments, Company production has recovered with a July average rate of 22,065 boepd.
Drilled 8 gross wells (5.5 net) wells during H1 in the Company's core Central Alberta, Wapiti and Clearwater assets as part of the 2023 capital programme.
CO2e emission reduction initiatives continued with electrification of 12 well sites in Carmangay and Retlaw.
Responsive corporate action throughout Alberta and British Columbia during the May and June wildfire situation, focussing on the protection and safety of field staff, industry partners, emergency responders and the impacted communities, while minimizing production downtime and ensuring asset integrity.
As a result of the wildfires, certain facilities were periodically shut-in with resultant calendar day downtime estimated at 1,650 boepd and 385 boepd, respectively for May and June.
i3 performed 20 operated turnarounds on its facilities in Central Alberta, to ensure the regulatory compliance and integrity of its assets.
The turnaround operations were completed on time and within budgeted forecasts, and affected June's production by 7,230 boepd.
The Company's Q1 Wapiti Cardium programme is now producing unrestricted, with peak initial production ("IP") rates exceeding GLJ's Proved Plus Probable forecasts.
The growth of i3's Canadian business through the deployment of capital into its large established undeveloped reserves base, operational excellence to improve uptime and field performance, and strategic upsizing in core areas;
Maintaining flexibility to adapt to economic challenges while maximizing total shareholder return; and
Conducting operations safely and in an environmentally secure manner.
i3 Energy plc Majid Shafiq (CEO) / Jason Dranchuk (CFO) | c/o Camarco Tel: +44 (0) 203 781 8331 |
WH Ireland Limited (Nomad and Joint Broker) James Joyce, Darshan Patel | Tel: +44 (0) 207 220 1666 |
Tennyson Securities (Joint Broker) Peter Krens | Tel: +44 (0) 207 186 9030 |
Stifel Nicolaus Europe Limited (Joint Broker) Ashton Clanfield, Callum Stewart | Tel: +44 (0) 20 7710 7600 |
Camarco Andrew Turner, Sam Morris, Violet Wilson | Tel: +44 (0) 203 757 4980 |
"John Festival" John Festival | "Majid Shafiq" Majid Shafiq |
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