Interim Report and Operational Update for H1 2023-I3 ENERGY PLC

Interim Report and Operational Update for H1 2023-I3 ENERGY PLC

Interim Report and Operational Update for the Six Months Ended 30 June 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

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

 

(1) Non-IFRS measure. Refer to Appendix B.

HIGHLIGHTS

Financial Highlights

·       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.

(1) Non-IFRS measure. Refer to Appendix B

Dividends

·       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.

Operational Highlights

·       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.

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:

1      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;

2      Maintaining flexibility to adapt to economic challenges while maximizing total shareholder return; and

3      Conducting operations safely and in an environmentally secure manner.

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.

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