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 that the Company has achieved a record for corporate production as well as provide a 2021 year-end reserves report for its subsidiary i3 Energy Canada Ltd.
i3’s independent reserve report (the “GLJ report”) was prepared by GLJ Ltd. (“GLJ”) in accordance with standards contained in the Canadian Oil and Gas Handbook (COGEH) and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) with an effective date of 31 December 2021.
Highlights
Record Corporate Production on Strong Operational Performance.
- Based on field estimates, i3 exited the first quarter of 2022 with a record weekly average production of approximately 20,312 boepd comprised of 61.1 million standard cubic feet of gas per day (“mmscfd”), 6,290 barrels per day (“bbl/d”) of natural gas liquids (“NGLs”), 3,522 bbl/d of oil and 316 boepd of gross overriding royalty interest production.
- Current production continues to exceed expectations due to continual outperformance of the Company’s low decline production base, which has been further enhanced through strong drilling results via i3’s inaugural development drilling program.
- Based on forward strip pricing at 31 March 2022, i3 now forecasts full-year 2022 net operating income (“NOI” = revenue minus royalties, opex, transportation and processing) of $192 million, a 28% increase over that predicted in the Company’s December 2021 capital budget announcement. This increase reflects the upward shift in commodity prices, in addition to well results that have bettered i3’s pre-drill forecasts.
Acquisitions within Core Areas Provided Significant Reserve Additions.
- Proved plus probable developed producing reserves (“P50 PDP”) increased 262% to 60.1 million boe, total proved (“1P”) reserves increased 163% to 85.3 million boe and total proved plus probable (“2P”) reserves increased 185% to 154.1 million boe, compared to the prior year.
Material Increase in the Company’s Reserve Value.
- The Before-tax Net Present Value of cash flows attributable to the Company’s reserves, discounted at 10%, has been determined to be $354mm, $444mm, and $775mm for its P50 PDP, 1P and 2P reserves, respectively, being indicative of the Company’s strong production base and robust portfolio of economic development opportunities.
Accretive Acquisitions Provided Significant Reserve Additions on a Per Share Basis.
- P50 PDP net present value (“NPV”), using a 10% discount rate, increased by 231% to £0.24 per share, 1P NPV increased by 195% to £0.30 per share and 2P NPV increased by 172% to £0.52 per share, as compared to the prior year.
- The NPV calculations performed by GLJ used an average 2022-2026 WTI price of $69.18/bbl (three consultants average) which is significantly lower than current strip prices.
Excellent Organic Reserves Replacement Ratio, Long Reserve Life Assets and Low Decline Profile Demonstrate Sustainability of the Company’s Total Return Model.
- On a Proven reserves basis, the Company’s organic reserves replacement ratio in 2021 was 220%. P50 PDP, 1P and 2P reserve life index of 9.5 years, 11.8 years and 18.6 years, respectively, combined with our low base decline rate of approximately 12.4% and our extensive inventory of highly economic development drilling locations, underpins i3’s ability to sustainably grow production per share from our existing asset base and generate significant distributable cash flow for our shareholders.
Strong FD&A Metrics and Recycle Ratios Reflective of Efficient Development and Acquisition Strategy.
- Efficient development and disciplined acquisitions provided strong proved developed producing (“PDP”) FD&A of $1.96 per boe, 1P FD&A of $4.51 per boe and 2P of $4.31 per boe, delivering recycle ratios of 5.8x, 2.5x and 2.6x, respectively.
Ryan Heath, President of i3 Energy Canada Ltd., commented:
“The Canadian reserve report reflects the hard work and commitment of the entire i3 team. Strategic, accretive acquisitions along with efficient, low-cost field optimization has built predictable base production and a portfolio with extensive future development opportunities. i3 Canada is pleased to deliver record production exceeding 20,000 boepd, resulting from the Company’s low decline profile and strong drilling performance.”
Majid Shafiq, CEO of i3 Energy plc, commented:
“Our 2021 year-end reserves report encapsulates a very successful year for i3 Energy. We significantly increased our reserve base year-on-year through a combination of accretive acquisitions and operational activity, with our 2P reserves being valued at $775 million or £0.52 per share at year-end.
“Our organic reserves replacement ratio during the year was greater than 200% demonstrating the quality of our assets and operational capability to replace production from our existing asset base and with a 2P reserves life index of almost 19 years and multiple drilling opportunities, we have a portfolio ideally suited to deliver a consistent and progressive dividend and value growth.
“We are very pleased to exit the last quarter at over 20,000 boepd and look forward to updating the market with results from our currently active drilling program.”
2021 Reserves Review
The Company’s year-end reserves were evaluated by GLJ in accordance with the definitions, standards and procedures contained in the COGEH and NI 51-101 as of 31 December 2021. The reserves evaluation was based on the average forecast pricing of GLJ, McDaniel & Associates Consultants Ltd. and Sproule Associates Limited (“3 Consultants Average”, or “3CA”) and foreign exchange rates at 1 January 2022.
Reserves included are Company share reserves which reflect i3’s total working interest reserves before the deduction of any royalties and including any royalty interests payable to the Company. Additional reserve information as required under NI 51-101 will be included in our Annual Information Form which will be filed on SEDAR. The numbers outlined in the tables below may not add due to rounding.
Summary of Reserves
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
Majid Shafiq (CEO) / Graham Heath (CFO)
c/o Camarco
Tel: +44 (0) 203 781 8331
