i3 Energy PLC (AIM: I3E, TSX: ITE, OTC: ITEEF) reported a strong first quarter with improved cash flow, largely influenced by significant corporate activities.
The company announced a free cash flow of $15 million, compared to $9.9 million in the previous year’s same quarter.
Production levels averaged 19,410 barrels of oil equivalent per day, slightly down from the last quarter, as the company implemented capital conservation measures in response to softer gas prices. Additionally, extreme winter cold caused some operational interruptions.
Highlights:
· Free cash flow (FCF)(1) for Q1 2024 was USD 15.0 million compared to USD 9.9 million for the same 2023 period.
· A new CAD 75 million reserve-based senior secured credit facility with the National Bank of Canada, comprised of a CAD 55 million revolving facility and a CAD 20 million operating loan facility.
· Repayment of approximately CAD 57 million, representing the outstanding balance of i3 Energy’s existing CAD 75 million loan facility (the “Debt Facility”) with Trafigura Canada Ltd., a subsidiary of Trafigura Pte Ltd (“Trafigura”).
· Average Q1 2024 production of 19,410 barrels of oil equivalent per day (“boepd”).
· The Company published its 2022 ESG Report, continued its CO2e emissions reduction initiatives with the electrification of 3 well sites, and downhole abandoned 4 wells.
· As part of i3’s commitment to its total shareholder return model, dividends of £3.084 million (USD 3.911 million) were declared and paid in Q1 2024.
· Post quarter-end, i3 entered into a definitive agreement to sell most of the Company’s royalty assets (the “Royalty Disposition”) for a total gross cash consideration of USD 24.81 million (CAD 33.50 million) before customary closing adjustments, which translates to 6.9 times 2024 forecasted cash flow and approximately USD 63,960 per flowing boepd.
· As at 31 March 2024, i3 had Net Debt(1) of USD 21.0 million, which was eliminated at the Close of the aforementioned Royalty Disposition.
· Post quarter-end, the Company further Closed the accretive disposition of a non-core, non-operated, shallow dry gas focussed Northern Alberta asset (Hangingstone), for realized proceeds of USD 0.3 million.
The quarter was notably active on the corporate front, as stated by CEO Majid Shafiq. A major debt refinancing was completed, with C$57 million repaid to settle an existing facility with Trafigura.
Post-quarter, i3 successfully negotiated the sale of most of its royalty assets for $24.81 million, equating to 6.9 times the forecasted annual cash flow from these assets.
Following this sale, the company cleared its remaining $21 million debt, significantly bolstering its balance sheet and liquidity, according to Shafiq.
He further commented, “This financial restructuring is pivotal for the long-term viability of our shareholder return strategy and prepares us for an active operational phase in the latter half of the year. We plan to drill at various sites across our Canadian holdings to boost production and further develop key assets.”
Shafiq concluded, “We anticipate keeping the market updated as the year unfolds.”
