TIDMI3E
RNS Number : 5956K
i3 Energy PLC
22 December 2022
22 December 2022
i3 Energy plc
("i3", "i3 Energy", or the "Company")
2023 Capital Budget, Production Guidance, Increased Dividend and
Investor Presentation
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 following operational update along with the
Company's 2023 guidance and increased dividend for 2023. i3 will
hold an investor presentation on 9 January at 4:00pm GMT via
Investor Meet Company; to register for the call, details are
below.
Highlights:
-- Record Corporate Production in 2022
Record corporate peak production achieved in December exceeding
24,000 barrels of oil equivalent per day ("boepd") on strong
operational results across the Company's extensive asset portfolio,
in line with previously forecasted peak 2022 production
estimates
-- 2023 Capital Budget
2023 Capital Budget of USD 64.05 million, forecasted to deliver
23 gross wells (15.2 net, 70% net i3-operated) to be drilled across
the Company's diversified portfolio in Central Alberta, Simonette,
Wapiti and its northern Clearwater acreage
-- Production Growth
Forecast 2023 annual average production of 22,250 - 23,000
boepd, representing a year-over-year increase of approximately 10%
- 13%, with an expected 2023 peak production rate of approximately
26,000 boepd
-- Cash Flow
USD 159.6 - 166.7 million of 2023 Net Operating Income ("NOI")
and USD 144.0 - 150.5 million of EBITDA, based on our budget price
assumption of USD 80/barrel ("bbl") for WTI and CAD 4.50/Gigajoules
("GJ") for AECO natural gas
-- Shareholder Returns
As part of the i3's commitment to its total return model, the
Company is increasing its 2023 minimum dividend by 59.4% above the
total dividends paid during 2022 to GBP 24.475 million (USD 30.095
million), through an increased monthly dividend of 0.171 p/share -
equating to an annual dividend of 2.052 p/share or a 9.7% yield
(1)
Majid Shafiq, CEO of i3 Energy plc, commented:
"2022 was a year of exceptional performance for i3 Energy. We
entered the year with corporate production of circa 18,000 boepd
and will exit having achieved our target of 24,000 boepd having
successfully implemented a USD 97 million capital program on time
and on budget in Canada and the UK . The success of our 2022
drilling program in Canada has continued to de-risk our growth
strategy in certain key development assets within our portfolio and
we are confident that our 2023 capital program will be equally
successful and should result in production growth of up to 13% in
2023. We are also pleased to offer year-on-year dividend growth
from GBP3.4 million in 2021, to GBP15.4 million this year and a
minimum pay-out of GBP24.5 million in 2023."
Production Update
i3 has successfully delivered record corporate production,
exceeding 24,000 boepd (based on field estimates) as forecast by
the Company on May 2022 when it announced an expanded capital
budget for 2022, as new wells were brought on stream, cleaned-up
and optimized. This achievement is a testament to the expertise,
attention to detail and unwavering dedication of all our staff
combined with the Company's stable, low-decline base production and
the predictable nature of its extensive inventory of development
drilling opportunities.
2023 Capital Programme Highlights
Building on the successful execution of the Company's USD 97
million 2022 capital programme, the strong performance of the
Company's asset base and the current commodity price outlook, i3 is
pleased to provide its 2023 operational and financial guidance,
balancing growth and a sustainable long term dividend. The Board
has approved a USD 64.05 million capital programme for 2023, which
will be fully funded from existing Company resources and forecast
internally generated cash flow, focused on delivering estimated
year-over-year average production growth of 13% despite the impact
of planned facility turnarounds in Central Alberta which have been
incorporated into the annual 2023 forecast and are expected to
impact total annual production by approximately 415 boepd, or 2% on
the year.
The 2023 budget currently reflects an estimated total capital
investment of USD 64.05 million, of which approximately USD 54.2
million is allocated to drilling and development with the balance
apportioned to maintenance capital, facilities, land, ESG and
seismic. The 2023 budget reflects inflationary pressures
experienced in 2022 and accounts for expected increases across the
industry, including but not limited to, materials, labour and
service costs.
i3's 2023 capital programme will be 67% weighted to the second
half of the year with wells expected to be brought on production
ahead of historically stronger winter pricing and further enabling
the Company to manage certain near-term infrastructure constraints
associated with the strong drilling results realized in 2022,
seasonal restrictions and regularly scheduled facility turnarounds
in Central Alberta. Corporate guidance incorporates the drilling of
23 (15.2 net) wells with locations split between i3's key operating
areas, comprising 8 gross (5.0 net) wells in Central Alberta, 3
gross (2.9 net) wells in Simonette, 7 gross (3.7 net) wells in
Wapiti and 5 gross (3.5 net) wells across the Clearwater
fairway.
The 2023 capital programme is forecasted to deliver total
average production of between 22,250 and 23,000 boepd (natural gas,
oil & condensate, natural gas liquids and royalty interest
production expected to average approximately 50%, 25, 24% and 1%,
respectively), with estimated peak production, achieved in the
second half of the year of approximately 26,000 boepd. Despite
inflationary pressures, these production gains are expected to be
delivered with a capital efficiency(2) similar to that achieved in
2022 of USD 13,500/boepd. For its planning case, i3 has used
commodity price assumptions of USD 80.00/bbl for WTI crude oil and
CAD 4.50/GJ for AECO natural gas and expects to generate NOI of
approximately USD 159.6 - 166.7 million and EBITDA of USD 144.0 -
150.5 million for 2023.
2023 Guidance and Commodity Price Assumptions
2023 guidance and assumptions
(3)
Annual Average Production 22,250 - 23,000 boepd
(4)
----------------------------------
Average Expenses ($/boe)
Royalty 15.2%
Operation & Transport 11.70 - 11.50 / boe
----------------------------------
Net Operating Income (5) USD 159.6 million - 166.7 million
----------------------------------
EBITDA (6) USD 144.0 million - 150.5 million
----------------------------------
Capital Expenditures USD 64.074 million
----------------------------------
Dividends (7) USD 30.095 million
----------------------------------
Net Debt (8) USD 8.8 million - 3.0 million
----------------------------------
2023 Commodity Assumptions (9)
WTI (USD/bbl) $80.00/bbl
MSW Oil Differential (USD/bbl) $3.85/bbl
-----------
AECO Natural Gas (CAD/GJ) $4.50/GJ
-----------
USD / CAD Foreign Exchange 1.35
-----------
GBP / CAD Foreign Exchange 1.66
-----------
Next Twelve-Month Net Operating Income Sensitivity (10)
Next twelve months' sensitivity Estimated change to net operating
income
Change in WTI USD 1.00/bbl USD 2.48 million
----------------------------------
Change in AECO CAD 0.10/GJ USD 2.49 million
----------------------------------
Change in CDN/US exchange rate USD 2.51 million
CAD 0.01
----------------------------------
(1) Based on i3's closing share price of GBP0.2115 (AIM) on 21
December 2022
(2) As used here, capital efficiency is the capex required to
add production capacity which will flow at an average of one boepd
over the course of the first year of production
(3) i3's 2023 guidance for its Net Operating Income, EBITDA and
year-end Net Debt is based on an annual average production range of
22,250 - 23,000 boepd.
(4) Total annual average production (boepd) is comprised of
approximately 49% Oil, Condensate & NGLs, 50% Natural Gas and
1% Gross Overriding Royalty Production
(5) Net Operating Income is a non-GAAP financial measure and is
defined as gross profit before depreciation and depletion and gains
or losses on risk management contracts, which equals revenue net of
royalty expenses, less production costs
(6) EBITDA is a non-GAAP financial measure and is defined as
earnings before depreciation depletion, financial costs, and
tax
(7) Based on i3's annual common share dividend of GBP24.475
million (US$30.095 million assuming 1.23 GBP:USD) paid in 2023. The
declaration of dividends is subject to the approval of i3's board
of directors and is subject to change
(8) Net Debt is a non-GAAP financial measure and is defined as
borrowings and leases and trade and other payables, less cash and
cash equivalents and trade and other receivables
(9) Commodity prices and foreign exchange reflect full year
average realized prices or rates
(10) Illustrates the expected impact of changes in commodity
prices and the CAD:USD exchange rate on i3's estimate of Net
Operating Income for 2023 of USD 159.6 million to $166.7 million,
holding all other variables constant. The sensitivity is based on
the commodity price and exchange rate assumptions set forth in the
table above. Calculations are performed independently and may not
be indicative of actual results. Actual results may vary materially
when multiple variables change at the same time and/or when the
magnitude of the change increases.
Hedging
i3 continues to employ a defensive risk management strategy with
current hedges in place to cover 41.6% and 13.3% of the Company's
projected Q1 and Q2 2023 production volumes respectively. i3's
hedges, by quarter, are as follows:
Participation
Swaps Costless Collars Swaps(10)
Volume Price Volume Avg Floor Avg Ceiling
GAS (GJ) (C$/GJ) (GJ) Price (C$/GJ) Price (C$/GJ)
Q1 2023 2,397,500 4.41 1,125,000 5.80 10.09
Avg
Floor
Volume Price Volume Avg Floor Avg Ceiling Volume Price
OIL (bbl) (C$/bbl) (bbl) Price (C$/bbl) Price (C$/bbl) (bbl) (C$/bbl)
Q1 2023 58,500 106.85 162,000 100.00 124.44
Q2 2023 36,400 112.83 113,650 100.00 127.39 91,000 90.00
Volume Price Volume Avg Floor Avg Ceiling
PROPANE (bbl) (C$/bbl) (bbl) Price (C$/bbl) Price (C$/bbl)
Q1 2023 45,000 42.00 51.61
---------- ---------- ---------- ---------------- ---------------- ------- ----------
(10) i3 receives the average floor price plus 50% of difference
between the average floor price and the realised price if
higher
UK Operations
The Company's UK operations are focussed on advancing a Field
Development Plan ("FDP") for the Serenity field as a one well
development, tied in to existing third party infrastructure. Costs
for the UK operation have been optimised accordingly and total
capital allocation for the Serenity development is less than USD
0.6 million for 2023.
Environmental, Social and Governance ("ESG")
i3 Energy 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. i3 recognises the safety and
well-being of our employees, local communities, and other key
stakeholders as a priority, and considers climate change as having
a material impact on our business.
In 2022 i3 abandoned a total of 69 wells and decommissioned 37
well sites, representing approximately 14% of its operated
non-producing well stock. In 2023, and in accordance with the
Alberta Energy Regulator's decommissioning guidance, i3 expects to
deliver result in a similar number of abandonment operations as
achieved in 2022.
In 2022, i3 has taken significant steps to reduce greenhouse gas
emissions through electrification projects and the replacement of
high emission pneumatic controllers and pumps with low bleed
controller and solar powered pumps . i3 has aggressively pursued a
three-phase programme to reduce and eliminate methane sources,
whereby the combination of these programmes will result in a
reduction of 71,450 tonnes of CO2e annually - the equivalent of
removing 15,530 cars off the road each year. Similar initiatives
will continue in 2023 as we continue to reduce the carbon intensity
of our production base. These CO2e emissions reductions qualify for
carbon credits which can be sold or used to offset future carbon
tax obligations.
Continuing with historical practices, i3 is very pleased to have
donated, this Holiday Season, CAD 24,394 (coinciding with its peak
daily barrel of oil equivalent production rate) to local foodbanks
in which the Company has core operations and ongoing dealings with
vendors, residents, and lessors.
Return of Capital
As part of its total return model, the Company remains committed
to delivering a sustainable monthly dividend to complement its
organic growth profile. In 2022 i3 has paid total dividends of
GBP15.35 million. Based on the successful 2022 development program
and its forecasted 2023 guidance, i3 will increase its current
monthly dividend of 0.1425 pence per share by 20% to 0.171 pence
per share, resulting in minimum total 2023 dividends of GBP24.475
million (USD 30.095 million), representing an incremental
year-over-year increase of approximately 59%. The Company's
dividend is designed to grow with the underlying profitability of
the business and be sustainable despite fluctuations of the
commodity cycle.
Investor Presentation
I3 Energy Plc is pleased to announce that Majid Shafiq and Ryan
Heath will provide a live presentation relating to i3 Energy's 2023
Capital Budget via the Investor Meet Company platform on 9 January
2023 at 4:00pm GMT.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9:00am the day before the
meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet I3 Energy Plc via:
https://www.investormeetcompany.com/i3-energy-plc/register-investor
Investors who already follow I3 Energy Plc on the Investor Meet
Company platform will automatically be invited.
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
Georgia Edmonds, Violet Wilson Tel: +44 (0) 203 781 8331
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
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
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END
UPDUUSNRUBUUURA
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