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RNS Number : 1207I i3 Energy PLC 25 March 2024
25 March 2024
i3 Energy plc
("i3", "i3 Energy", "i3 Canada", or the "Company")
i3 Energy Canada Ltd. Announces Year-End 2023 Reserves
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
results of its 2023 year-end reserve 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 2023. All cash figures presented below are expressed in USD unless
otherwise stated.
Highlights
Successful Execution of 2023 Capital Programme and Strong Performance of the
Company's Production Base Maintained Reserve Volumes Across Key
Categories Despite Limited Capital Expenditures Due to Declining Commodity
Prices
· Total Company Interest Total Proved ("1P") reserves and Total Proved
plus Probable ("2P") reserves were effectively maintained year-over-year at
92.9 million barrels of oil equivalent ("boe") and 179.9 million boe,
respectively.
· Proved Developed Producing ("PDP"), 1P and 2P reserve volumes all
experienced strong positive technical revisions, despite the dramatic
reduction in forecasted natural gas and natural gas liquids pricing which
impacts approximately 76% of the Company's produced commodities.
Established Reserves Highlights Strong Underlying Corporate Value
· The Before-tax Net Present Value ("NPV") of cash flows attributable
to the Company's reserves, discounted at 10%, has been determined to be USD
303.1 million (CAD 400.9 million), USD 501.3 million (CAD 663.1 million), and
USD 1,026.4 million (CAD 1,357.5 million) for its PDP, 1P and 2P reserves,
respectively, being indicative of the Company's robust portfolio of economic
development opportunities.
· Reserves values per share, after adjusting for year-end net debt of
approximately USD 23 million, of £0.18 per share (CAD 0.31) (PDP), £0.31 per
share (CAD 0.53) (1P) and £0.67 per share (CAD 1.10) (2P), represent
significant premiums to the Company's current share price.
Long Reserve Life and Low Decline Rate Reinforce the Sustainability of the
Company's Total Return Model
· PDP, 1P and 2P reserve life index of 7.1 years, 12.6 years, and 23.0
years, respectively, show increased reserve life across each of the
categories.
· Following the 2023 capital programme, i3's top-tier corporate decline
rate for 2024 of approximately 15%((10)), allied with an extensive portfolio
of diversified booked drilling locations, underpins the Company's growth and
income strategy.
Strong Finding, Development and Acquisition ("FD&A") Metrics and Recycle
Ratios
· Very strong economics demonstrated by low cost and high return
projects.
· Efficient FD&A of $5.67/boe (PDP), $2.32/boe (1P) and $1.76/boe
(2P), after including changes in FDC, translate to strong recycle ratios of
2.17x (PDP), 5.31x (1P) and 6.97x (2P).
Large Inventory of Booked Development Locations with Significant Inventory of
Future Unbooked Locations
· Total gross booked locations of 391 (254.4 net) across the Company's
four core areas, for a total Company inventory (booked and unbooked) of
greater than 950 gross (550 net) undeveloped locations.
· Total undeveloped inventory represents greater than 50 years of
development drilling based on the Company's 2023 capital programme.
Majid Shafiq, CEO of i3 Energy plc, commented:
"We are extremely pleased with the results of our 2023 year-end reserves audit
which once again confirms the high-quality nature of our assets and speaks to
the tenacity and diligence of our employees in Canada, both in the head office
and at field level. In 2023 we limited our capital expenditures due to the low
commodity price environment and despite that, we have managed to maintain our
reserves volumes essentially flat. This is a testament to the quality of our
base assets and also our drilling inventory. This quality is characterised by
a low decline rate, the substantial scale of our operations and the diversity
of the fields and reservoirs we produce from, which allows us to add reserves
with good oil field management in addition to drilling operations. Our 2P
reserves are valued at over USD 1.0 billion or £0.67 per share, demonstrating
the value potential of this portfolio, and the scope for many years of growth
from a total shareholder return perspective."
2023 Reserves Review
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 2023.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 2024.
Reserves included are Company Interest 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 on Forms 51-101 F1-F3 which will
be filed on SEDAR+ at www.sedarplus.ca (http://www.sedarplus.ca) . The numbers
outlined in the tables below may not add due to rounding.
Summary of Reserves
The tables below outline GLJ's estimates of i3's reserves at 31 December
2023.
i3 YE 2023 - Reserves Volumes
Company Interest Reserves
Reserves Category Oil NGL Gas Total Liquids Weighting
Mbbl Mbbl MMcf Mboe
Proved Producing 7,185 15,144 148,627 47,100 47%
Proved non-Producing 128 773 7,031 2,073 43%
Proved Undeveloped 5,973 14,814 137,856 43,763 47%
Total Proved 13,286 30,731 293,515 92,936 47%
Probable Producing 9,575 19,810 194,024 61,723 48%
Total Probable 19,179 25,630 252,731 86,931 52%
Proved plus Probable 32,465 56,361 546,247 179,867 49%
i3 YE 2023 - Reserves Values
Before Tax Net Present Value (USD M)
Discount Rate
0% 5% 10% 15% 20%
Proved Producing 251,569 342,870 303,140 262,382 230,319
Proved Developed Non-Producing 16,489 12,920 10,454 8,681 7,364
Proved Undeveloped 438,715 283,408 187,733 126,418 85,373
Total Proved 706,773 639,198 501,327 397,481 323,055
Probable Producing 477,183 470,120 386,120 321,997 276,059
Total Probable 1,308,636 794,983 525,070 367,867 268,697
Proved plus Probable 2,015,408 1,434,180 1,026,396 765,349 591,752
Performance Measures - Finding and Development ("F&D"), Finding,
Development and Acquisition ("FD&A") Costs and Recycle Ratio
F&D and FD&A costs for 2023, 2022, 2021 and the three-year average are
presented in the tables below. The capital costs used in the calculations are
those costs related to land acquisition and retention, seismic, drilling,
completions, tangible well site, tie-ins, and facilities, plus the change in
estimated Future Development Costs ("FDC") as per the GLJ report. Net
acquisition costs are the cash outlays in respect of acquisitions, minus the
proceeds from the disposition of properties during the year. The reserves used
in this calculation are working interest reserve additions, including
technical revisions and changes due to economic factors. The recycle ratio is
the net operating income (revenue minus royalties, opex, transportation and
processing) per barrel divided by the cost per barrel (F&D or FD&A).
2023 2022 2021 3-Year Average
Proved Developed Producing
F&D costs (per boe) $5.70 $9.89 $2.41 $6.72
F&D recycle ratio 2.2x 2.2x 5.7x 2.4x
FD&A costs (per boe) $5.67 $9.89 $1.81 $3.92
FD&A recycle ratio 2.2x 2.2x 7.5x 4.1x
Total Proved
F&D costs (per boe) $2.32 $14.74 $3.72 $8.81
F&D recycle ratio 5.3x 1.5x 3.7x 1.8x
FD&A costs (per boe) $2.32 $14.74 $4.17 $6.08
FD&A recycle ratio 5.3x 1.5x 3.3x 2.7x
Total Proved Plus Probable
F&D costs (per boe) $1.77 $15.26 $3.17 $10.96
F&D recycle ratio 7.0x 1.4x 4.3x 1.5x
FD&A costs (per boe) $1.76 $15.26 $4.00 $6.62
FD&A recycle ratio 7.0x 1.4x 3.4x 2.5x
Reserve Life Index ("RLI")
RLI is calculated by taking the Total Company Interest Reserves from the GLJ
Report and dividing them by the projected 2024 production as estimated in the
GLJ Report.
Company Interest Reserves 2024 Company Production YE 2023 RLI
Reserves Category (Mboe) (Mboe) (Years)
Proved Producing 47,100 6,666 7.1
Total Proved 92,936 7,349 12.6
Proved plus Probable Producing 61,723 6,934 8.9
Proved plus Probable 179,867 7,828 23.0
Forecast Prices Used in Estimates
GLJ has employed the 3 Consultants Average forecast prices in the GLJ Report.
The 3CA forecast prices, exchange rate and inflation (2% post 2038)
assumptions as at 31 December 2023 are tabulated below.
Canadian Light Sweet Western Canada Select Alberta AECO-C Pentanes Plus Butanes Propanes Inflation Rate Exchange Rate
40° API WCS 20.5 API Spot FOB Edmonton
Year ($Cdn/bbl) ($Cdn/bbl) ($Cdn / MMBTU) ($Cdn/bbl) ($Cdn/bbl) ($Cdn/bbl) (% / year) (USD/CAD)
2024 92.91 76.74 2.20 96.79 47.69 29.65 0.0 0.752
2025 95.04 79.77 3.37 98.75 48.83 35.13 2.0 0.752
2026 96.07 81.12 4.05 100.71 49.36 35.43 2.0 0.755
2027 97.99 82.88 4.13 102.72 50.35 36.14 2.0 0.755
2028 99.95 85.04 4.21 104.78 51.35 36.87 2.0 0.755
2029 101.95 86.74 4.30 106.87 52.38 37.60 2.0 0.755
2030 103.98 88.48 4.38 109.01 53.43 38.35 2.0 0.755
2031 106.07 90.24 4.47 111.19 54.50 39.12 2.0 0.755
2032 108.18 92.04 4.56 113.41 55.58 39.90 2.0 0.755
2033 110.35 93.89 4.65 115.67 56.70 40.70 2.0 0.755
2034 112.56 95.77 4.74 117.98 57.83 41.52 2.0 0.755
2035 114.81 97.68 4.84 120.34 58.99 42.35 2.0 0.755
2036 117.10 99.63 4.94 122.75 60.17 43.20 2.0 0.755
2037 119.44 101.63 5.03 125.20 61.37 44.06 2.0 0.755
2038 121.83 103.66 5.13 127.71 62.60 44.94 2.0 0.755
Escalation rate of 2% thereafter
Notes:
1. $ = USD.
2. Any year-end figures converted from CAD to USD are done so at CAD
1.32 to USD 1, any 2023 full-year figures converted from CAD to USD are done
so at CAD 1.35 to USD 1, and any figures converted from CAD to GBP are
done so at CAD 1.68 to GBP 1.
3. Reserves estimates have been prepared by GLJ in accordance with
standards contained in the Canadian Oil and Gas Evaluation (COGE) Handbook.
4. Total Company Interest - Represents the sum of the company's
working interest and any royalty interests it may hold.
5. Working Interest - Represents the percentage of ownership in a
specific property's mineral rights that a company holds.
6. Proved reserves are those reserves that can be estimated with a
high degree of certainty to be recoverable. If probabilistic methods are used,
there should be at least a 90% probability that the quantities actually
recovered will be equal to or exceed the estimate.
7. Probable reserves are those additional reserves that are less
certain to be recovered than proved reserves. It is equally likely that the
actual remaining quantities recovered will be greater or less than the sum of
the estimated Proved plus Probable (2P) reserves. When probabilistic methods
are used, there should be at least a 50% probability that the actual
quantities recovered will be equal to or exceed the 2P estimate.
8. Developed reserves are those reserves expected to be recovered from
known accumulations from existing wells and facilities where no significant
expenditure is required to render them capable of production. They must fully
meet the requirements of the reserves category (for example proved or
probable) to which they are assigned.
9. Developed producing reserves are those reserves expected to be
recovered from completion intervals that are open and producing at the
effective date of the estimate.
10. Proved plus Probable Developed Producing (2PDP) reserves are those
reserves for which there is a 50% probability that the actual quantity of oil
and gas that will be recovered from the current producing assets will equal or
exceed the 2PDP estimate.
11. Undeveloped reserves are those reserves expected to be recovered from
known accumulations where a significant expenditure (for example, when
compared to the cost of drilling a well) is required to render them capable of
production. They must fully meet the requirements of the reserves category
(for example proved or probable) to which they are assigned.
12. The Company is in a tax paying position due to fully utilising its
Canadian non-capital tax loss pools during the year ended 31 December 2022.
13. F&D costs are calculated as exploration and development
expenditures, plus changes in future development capital. F&D costs are
also presented on a per Boe basis, dividing F&D costs by the change in
reserve volumes plus production volumes in the applicable period.
14. "FD&A costs" are calculated as exploration and development
expenditures, plus acquisition costs, disposition proceeds, and changes in
future development capital. FD&A costs are also presented on a per Boe
basis, dividing FD&A costs by the change in reserve volumes (including
reserve volumes associated with acquisitions and dispositions) plus applicable
production volumes.
15. Recycle ratio is calculated as the operating netback per boe
divided by F&D or FD&A costs per boe as applicable. The operating
netbacks used in the respective years are as follows: 2023 (unaudited and in
USD) - $12.30/boe; 2022 - $21.84/boe, 2021 - $13.67/boe and the three-year
average is $16.25/boe.
16. Reserves Life Index is calculated by dividing the relevant reserve
volume at year end, in boe, by i3's annual production during the year, in boe.
17. Per share numbers are calculated by dividing by the basic shares
outstanding as at December 31, 2023 of 1,202,447,663.
END
Enquiries:
i3 Energy plc c/o Camarco
Majid Shafiq (CEO) Tel: +44 (0) 203 757 4980
WH Ireland Limited (Nomad and Joint Broker)
James Joyce, Darshan Patel, Isaac Hooper Tel: +44 (0) 207 220 1666
Tennyson Securities (Joint Broker)
Peter Krens Tel: +44 (0) 207 186 9030
Stifel Nicolaus Europe Limited (Joint Broker)
Ashton Clanfield, Callum Stewart Tel: +44 (0) 20 7710 7600
Camarco
Andrew Turner, Violet Wilson, Sam Morris Tel: +44 (0) 203 757 4980
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 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
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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