i3 Energy PLC (I3E.L) Alberta Acquisition and Proposed Placing

Strategic Central Alberta Acquisition Delivers Strong Free Cash Flow

Proposed Conditional Placing and PrimaryBid Offer

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 its wholly owned Canadian subsidiary has signed into escrow, pending receipt of irrevocable commitments for the Placing (as defined below), a definitive agreement with Cenovus Energy Inc., a senior Canadian oil and gas producer, to acquire certain petroleum and infrastructure assets within i3’s Central Alberta core area (the “Assets”), for a total consideration of CA$65 million (US$53.7 million) (the “Acquisition”). The strategic Acquisition delivers extensive operational synergies, predictable low-decline production, a large reserve base with multi-year development inventory and expected strong free cash flow.

The Company intends to raise a minimum of £40 million (before expenses) through a placing of new ordinary shares of £0.0001 each in the capital of Company (the “Placing Shares”) at a price to be confirmed (the “Issue Price”) (the “Placing”). The Placing will be conducted through an accelerated bookbuild (the “Bookbuild”), which will be launched immediately following the publication of this Announcement. The Placing is subject to the terms and conditions set out in the Appendix to this announcement (which forms part of this announcement, such announcement and its Appendix together being this “Announcement”).

In addition to the Placing, the Company intends to raise further funding by way of an offer made by the Company on the PrimaryBid platform through the issue of new ordinary shares in the capital of the Company (the “PrimaryBid Shares”) at the Issue Price (the “PrimaryBid Offer”). A separate announcement will be made shortly regarding the PrimaryBid Offer and its terms. The Placing is not conditional upon the PrimaryBid Offer. The PrimaryBid Offer will close on completion of the Bookbuild process.

Highlights:

· Strategic core area consolidation – Acquiring approximately 8,400 boepd (51% oil and NGLs) of predominantly operated, conventional, low-decline production and an extensive network of complementary midstream infrastructure to support long-term sustainable operations

· Large reserve base with development upside – Total Proved plus Probable Developed Producing reserves of 27.5 mmboe with an NPV10 of US$90 million and 2P reserves of 79.5 mmboe with an NPV10 of US$193 million (inclusive of undiscounted asset retirement obligations (“ARO”) of US$92 million, inflated at 2% and discounted at 10% for an NPV10 ARO value of US$23 million), including an inventory of greater than 220 identified development drilling locations and reactivation opportunities

· Strong net operating income to support consistent free cash flow yields – Next twelve months (“NTM”) estimated net operating income (“NOI” = revenue minus royalties, opex, transportation and processing) of US$31 million supported by a low-decline production profile and minimal required annual maintenance capital provides predictable long-term free cash flow to support i3’s planned dividend distribution policy

· Immediately accretive on all key per-share metrics – Materially accretive to forecast production, NOI, and reserves (approximately 30%, 20%, and 76%, respectively) in the 12-month period following closing of the Acquisition

· “Hand-in-glove” acquisition provides synergies and scale – Significant expansion of ownership in existing and additional oil and gas licenses and infrastructure in i3’s Central Alberta core area will allow i3 to materially reduce unit operating costs and maximise third party tariff income

· Strengthened financial position – Pro forma at closing of the Acquisition, i3 expects to have estimated net debt of only US$27 million, which translates to a current net debt to NTM NOI ratio of approximately 0.36x

· Fundraise for the Acquisition – i3 is raising a minimum of £40 million (before expenses) at a price to be confirmed per share through the Placing and the PrimaryBid Offer to fund the Acquisition by way of (i) an accelerated book build to both current and new institutional investors, and (ii) a PrimaryBid Offer to retail shareholders.

· Shareholder approval – The Placing and the PrimaryBid Offer are conditional upon, amongst other things, the approval by the Company’s shareholders of certain resolutions to be proposed at a general meeting of the Company’s shareholders on or around 26 July 2021. The Company wishes to conduct the General Meeting in a way that limits the risk associated with the Coronavirus pandemic and complies with the law. In light of this, although shareholders (including their duly appointed proxies and/or corporate representatives) will be, subject to any changes to the rules which may arise after the publication of this Announcement, permitted to attend the General Meeting in person, shareholders will be discouraged from doing so.

Majid Shafiq, CEO of i3 Energy plc, commented:

“We continue to execute on our business plan which is to build and grow a material and diversified production business through the most efficient deployment of capital, whether that is through exploitation of opportunities within the Company’s existing portfolio or through accretive acquisitions such as this one. This transaction not only scales up our cashflow, but it will also, in the near term, lower our unit operating costs, increase third party tariff income and add scale to i3’s expanding list of varied development opportunities, which will materially increase our options to both grow the business and manage risks.”

Ryan Heath, President of i3 Energy Canada Ltd., commented:

“i3 Canada is extremely pleased to have entered into the Acquisition from a top-tier veteran participant of the Western Canadian Sedimentary Basin. The inherent synergies of the transaction, being immediately evident and robust, will most certainly expand with time to further enhance field efficiencies and cash flow throughout our central Alberta core area, to the benefit of the Company and its stakeholders.”

Acquisition Details

On 6 July 2021, i3 has signed into escrow, pending receipt of irrevocable commitments for the Placing, an Asset Sale Agreement (“ASA”) with Cenovus Energy Inc. , a senior Canadian oil and gas producer, to acquire certain conventional central Alberta petroleum and infrastructure assets. The Acquisition includes approximately 8,400 boepd ( 51% oil and NGLs) of predictable low-decline production, 79.5 mmboe of 2P reserves with an NPV10 of US$193 million (inclusive of undiscounted asset retirement obligations (“ARO”) of US$92 million, inflated at 2% and discounted at 10% for an NPV10 ARO value of US$23 million), an inventory of greater than 140 net drilling locations and 80 net reactivation opportunities across approximately 212,000 net acres, an 1,140 km network of operated pipelines, and key processing facilities.

The Assets complement i3’s existing area assets with approximately 3,090 boepd of overlapping joint working interest production and associated land position. The complementary nature of the Assets provides the basis for strong operational and financial synergies and continued good stewardship on behalf of all stakeholders.

The profits attributable to the assets being acquired in the year ended 31 December 2020 were £7.1 million.

Under the ASA, i3 will be acquiring the Assets free of all encumbrances (apart from industry standard or acceptable permitted encumbrances) for cash consideration of CA$65 million (US$53.7 million). The Acquisition is subject to normal interim period adjustments, customary conditions, and standard regulatory approvals.

Pro Forma Benefits of the Acquisition

The Acquisition is a continuation of i3’s strategy of capitalizing on the recent market conditions to create a cash-generative, all-weather portfolio by efficiently consolidating high quality undercapitalized assets within its core operating areas. The production, infrastructure and lands associated with the Acquisition directly overlap i3’s current asset base and provide meaningful operational synergies which are expected to further enhance free cash flow, enabling the Company to unlock development upside within the acquired and i3’s existing portfolio of assets.

Through this strategic Acquisition, i3 significantly enhances its production, cash flow and reserve base while maintaining a strong balance sheet. Pro forma the Acquisition, i3 is expected to:

· Increase NTM production 84% to 18,470 boepd (47% oil and NGLs)

· Increase NTM net operating income 70% to US$75 million

· Increase 2P reserve volumes by over 150% to more than 132 mmboe

The Acquisition of the Assets enhances i3’s ability to grow production, free cash flow, and its planned return of capital to shareholders.

i3 will continue to balance its pursuit of organic and inorganic opportunities, directing disciplined capital allocation towards its core operating areas. i3 remains committed to its long-term growth while delivering to its shareholders meaningful share price appreciation and cash distributions.

Details of the Placing and the PrimaryBid Offer

i3 is raising a minimum of £40 million from current and new institutional investors and retail shareholders at a price to be confirmed . The financing is comprised of the Placing and the PrimaryBid Offer.

The Placing is being conducted by way of an accelerated book build in accordance with the terms and conditions set out in the Appendix to this Announcement. The Bookbuild will commence immediately following the publication of this Announcement. The Placing is not underwritten.

PrimaryBid (primarybid.com) is running the PrimaryBid Offer in order that i3’s retail shareholder base may participate alongside Placing participants. Total net funds raised from the Placing and PrimaryBid Offer (together, the “Placings”) will be used to fund the Acquisition and associated costs. Any residual funds will contribute to the Company’s ongoing operations and general corporate purposes.

The Placings and the related issue of new ordinary shares in the capital of the Company (“Ordinary Shares”) remain subject to, amongst other things, shareholder approval at a General Meeting of i3’s shareholders, expected to be held on or about 26 July 2021. Further details of the General Meeting will be announced in due course.

The Company has today entered into a placing agreement with Tennyson Securities Limited (“Tennyson”), W H Ireland Limited (“WH Ireland”) and Canaccord Genuity Limited (“Canaccord”) (Tennyson, WH Ireland and Canaccord together being the “Brokers”) relating to the Placing (the “Placing Agreement”), pursuant to which the Brokers have each agreed to use their respective reasonable endeavours as agents of the Company to procure subscribers for the Placing Shares at the Issue Price.

The Placing Agreement provides, inter alia, for the payment by the Company to the Brokers of commissions based on the number of Placing Shares placed by the Brokers multiplied by the Issue Price.

The Placing Agreement contains certain warranties and indemnities from the Company in favour of the Brokers and is conditional, inter alia, upon (i) the Placing Agreement having become unconditional in all respects (save for the condition relating to the admission of the Placing Shares to trading on AIM (“Admission”)) and not having been terminated in accordance with its terms prior to Admission, and (ii) Admission becoming effective not later than 8.00 a.m. on 13 August 2021. Each of the Brokers may terminate the Placing Agreement if, inter alia: the Company is in material breach of any of its obligations under the Placing Agreement; or there has occurred, in any of the Broker’s reasonable opinion acting in good faith, an event which is likely to materially and adversely affect the position of the Company’s corporate group taken as a whole.

Applications will be made in due course to the London Stock Exchange for the Placing Shares and the PrimaryBid Shares to be admitted to trading on AIM. Admission of the Placing Shares and the PrimaryBid Shares is expected to become effective and dealings in such shares are expected to commence at 8.00 a.m. on 27 July 2021.

The Placing Shares and the PrimaryBid Shares, when issued, will be fully paid and will rank pari passu, in all respects with the existing ordinary shares in the capital of the Company.

The Appendix contains the detailed terms and conditions of the Placing. Persons who have chosen to participate in the Placing, by making oral, electronic or written offers to acquire Placing Shares, will be deemed to have read and understood this Announcement (including the Appendix) in its entirety and to be making such offers on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in the Appendix.

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EXPECTED TIMETABLE OF EVENTS

Announcement of the Placing and the PrimaryBid Offer

7 July 2021

Expected posting of the shareholder circular convening the General Meeting

9 July 2021

Latest time and date for receipt of forms of proxy and CREST proxy instructions in relation to the General Meeting

11 a.m. on 22 July 2021

General Meeting

11 a.m. on 26 July 2021

Expected date for Admission and commencement of dealings of the Placing Shares and the PrimaryBid Shares

8.00 a.m. on 27 July 2021

Expected time and date for CREST accounts to be credited in relation to the Placing Shares and the PrimaryBid Shares

8.00 a.m. on 27 July 2021

Expected date for despatch of definitive share certificates (where applicable) in relation to the Placing Shares and the PrimaryBid Shares expected by no later than

The week commencing 2 August 2021

Proved plus Probable Reserves

The evaluation of the reserves set out in this Announcement has been prepared in accordance with the reserves definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook.

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 graduated with a Master’s Degree in Petroleum Engineering from Heriot-Watt University in 1988 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


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