REG - i3 Energy PLC - Q2 2024 Operational and Financial Results
13/08/2024 09:45
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RNS Number : 2590A i3 Energy PLC 13 August 2024
13 August 2024
i3 Energy plc
("i3", "i3 Energy", or the "Company")
Q2 2024 Operational and Financial Results
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 its
operating and financial results for the three and six months ended 30 June
2024. i3's unaudited condensed interim financial statements for the three and
six months ended 30 June 2024 and related Management's Discussion and Analysis
("MD&A") are available on i3 Energy's website at https://i3.energy/
(https://i3.energy/) and filed on SEDAR+.
Highlights:
· 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 at the time of Closing translated to 6.9 times 2024
forecasted cash flow and approximately USD 63,960 per flowing boepd
· Free cash flow (FCF)((1)) for Q2 2024 was USD 28.5 million fuelled by
the aforementioned Royalty Disposition and certain property divestments in the
quarter.
· i3 posted a profit before tax of USD 24.4 million during Q2 2024 and
net cash flow from operating activities of USD 7.6 million for same period.
· Achieved an average Q2 2024 production of 18,271 barrels of oil
equivalent per day ("boepd"), despite the sale of ~415 boepd and management of
several scheduled and unscheduled production outages.
· The Company further closed the accretive disposition of a non-core,
non-operated, shallow dry gas focussed Northern Alberta asset (Hangingstone),
along with two non-producing, non-core mineral rights divestments, for total
realized proceeds of USD 2.75 million.
· At 30 June 2024 i3 was undrawn on its credit facility, posting a net
cash surplus((1)) of USD 6.96 million and i3 is pleased to announce a
successful borrowing base redetermination at the original CAD 75 million.
· As part of i3's commitment to its total shareholder return model, Q1
2024 dividends of £3.084 million (USD 3.890 million) were declared and paid
in Q2 2024.
Majid Shafiq, CEO of i3 Energy plc, commented:
"Q2 2024 was a very busy period for the Company as we completed the
strengthening of our balance sheet through the highly accretive sale of the
majority of our royalty interests and the refinancing of our outstanding debt
with a revolving non-amortising reserves-based loan. This corporate activity
essentially made i3 debt free and created significant liquidity to finance our
development program.
We are very pleased to announce the successful semi-annual redetermination of
our reserves-based borrowing facility, achieved in a lower commodity price
environment which demonstrates the quality of our resource and asset base. Our
production assets continue to perform robustly, and we are pleased to
reconfirm existing production and EBITDA guidance for the year, which is a
result of the Company's stable, low-decline, production profile and a
rigorously enforced hedging programme.
With a solid half year behind us, we now look forward to our H2 focussed
development and drilling programme which has already commenced with the
successful drilling of our first operated well in Central Alberta. Our team
will be busy during the second half of the year with back-to-back drilling
across our portfolio, which will set the Company up for the commencement of
our Montney development drilling in Q1 2025 for which we now are evaluating
asset backed debt financing solutions to accelerate development."
Financial and Operating Summary
Three-months Ended Six-months Ended
OPERATIONAL: 30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
Average daily production:
Oil and condensate (bbl/d) 3,983 4,247 4,113 4,740
Natural gas liquids (bbl/d) 4,616 4,057 4,714 4,809
Natural gas (mcf/d) 57,508 58,965 58,759 64,231
Royalty interest (boepd) 87 398 218 386
Average Sales Production (boepd) 18,271 18,529 18,838 20,640
Total Sales Production (boe) 1,662,661 1,686,139 3,428,516 3,735,840
Average realised pricing:
Oil and condensate (CAD$/bbl) 101.72 93.13 95.45 94.60
Natural gas liquids (CAD$/bbl) 19.24 18.03 20.21 22.97
Natural gas (CAD$/mcf) 1.25 2.59 1.94 2.97
Royalty interest (CAD$/boe) 36.16 31.71 31.02 36.14
Total (CAD$/boe) 31.15 34.22 32.32 37.01
NET OPERATING INCOME PER BOE: USD/BOE USD/BOE USD/BOE USD/BOE
Oil and gas sales 22.74 25.41 23.81 27.47
Royalties (3.36) (2.47) (3.38) (3.48)
Processing income 1.20 0.86 1.15 0.88
Production costs (11.16) (13.33) (12.36) (12.02)
Net Operating Income((1)) per BOE 9.42 10.47 9.22 12.85
FINANCIAL: USD'000 USD'000 USD'000 USD'000
Revenue (net of royalties) 36,483 40,123 76,303 93,078
Net Operating Income((1)) 15,659 17,646 31,621 48,019
Adjusted EBITDA((1)) 15,770 16,088 24,163 47,546
Profit before Tax 24,351 2,294 19,484 17,840
Profit after Tax 18,245 912 10,585 13,494
Net cash from operating activities 7,636 3,990 24,751 29,955
Acquisitions & Capex((1)) 3,316 4,317 5,497 20,268
FCF((1)) 28,528 462 43,526 9,702
Dividends Declared 3,890 5,129 7,801 12,595
Pence / share Pence / share Pence / share Pence / share
Basic earnings per share 1.22 0.06 0.70 0.91
Diluted earnings per share 1.20 0.06 0.69 0.90
30 Jun 2024 31 Dec 2023
USD'000 USD'000
Borrowings and leases 264 44,065
Net (cash surplus) / debt((1)) (6,958) 23,005
(1) Non-IFRS measure. Refer to Note 1.
The Company experienced strong FCF((1)) for Q2 2024 of USD 28.5 million and
posted a net profit before tax of USD 24.4 million, primarily as a result of a
gain on the Royalty Disposition, and further bolstered through three separate
non-core asset divestitures.
Production Update
Production in Q2 2024 averaged 18,271 boepd, comprised of 57.5 million
standard cubic feet of natural gas per day ("mmcf/d"), 4,616 barrels per day
("bbl/d") of natural gas liquids ("NGLs"), 3,983 bbl/d of oil & condensate
and 87 boepd of royalty interest production. The quarterly production
represents a decrease of approximately 6% relative to Q1 2024, resulting from
multiple non-core dispositions achieved throughout the period (consisting of
~415 boepd) along with conservative capital management during a period of
softening gas prices, and downtime in the Wapiti area due to an outage to
debottleneck third-party Pembina Pipeline Corporation infrastructure.
Producing assets were further impacted by several additional temporary
third-party facility outages and scheduled third-party facility turnarounds.
Post period, field estimated production for the last week of July 2024
averaged 18,371 boepd, not considering ~310 boepd of production that was
voluntarily shut-in at the beginning of July due to current natural gas
pricing.
Hedging Programme
i3 continues to employ a defensive risk management strategy with current
hedges in place protecting USD 46.5 million of net operating income in 2024,
and covering 31%, 25%, 34% and 28% of the Company's projected Q1, Q2, Q3 and
Q4 2024 production volumes, respectively. i3's 2024 hedges are as follows:
Swaps Basis Swaps
GAS Volume (GJ) Price (C$/GJ) Volume (mmbtu) Price ($US/mmbtu)
Q1 2024 2,275,000 3.04 nil nil
Q2 2024 1,365,000 2.52
Q3 2024 2,300,000 2.15
Q4 2024 1,685,000 2.64
Costless Collars
OIL Volume (bbl) Price (C$/bbl) Volume (bbl) Avg Floor Price (C$/bbl) Avg Ceiling Price (C$/bbl)
Q1 2024 189,750 95.89 22,750 100.00 121.32
Q2 2024 182,000 98.45 38,000 95.99 108.46
Q3 2024 84,500 100.08 137,750 100.20 111.43
Q4 2024 145,550 97.41 64,450 100.95 112.36
PROPANE Volume (bbl) Price ($US/bbl) Volume (bbl) Avg Floor Price ($US/bbl) Avg Ceiling Price ($US/bbl)
Q4 2024 23,000 34.97 nil nil nil
Strategic Non-Core Dispositions
Since entering Canada in 2020, i3 has executed a series of strategic
acquisitions. This targeted acquisition strategy focused on establishing four
high quality core operating areas (Central, Simonette, Wapiti & the
Company's Clearwater position), each area consisting of strong, low-decline,
production profiles and an inventory of economic development drilling
opportunities. Through these strategic acquisitions, i3 also acquired a series
of minor, non-core assets, which the Company continues to monetize to focus
the business, thereby unlocking and accelerating unrecognized value.
During Q2 2024, i3 closed four asset transactions for combined net proceeds of
USD 26.29 million. Proceeds from these transactions assisted in the
elimination of all outstanding Net Debt. The Company exited Q2 2024 with a net
cash surplus((1)) of USD 6.96 million, positioning i3 with a strong balance
sheet, a fully undrawn CAD 75 million credit facility, and strong cash flow
base to execute its growth and income-based business strategy.
Partial Sale of Royalty Assets
On 17 April 2024, i3 announced the sale of the majority 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 includes USD 2.22 million (CAD 3.00 million) from a
seismic license sale agreement which was recorded within our operating income.
The Royalty Disposition involved most of the Company's royalty assets, but not
its core Simonette Royalty, and translated to 6.9 times 2024 forecasted cash
flow and approximately USD 63,960 per flowing boepd, representing a
significant premium to the Company's equivalent current market trading
metrics.
Partial Sale of Hangingstone
On 16 April 2024, i3 closed a disposition encompassing most of its non-core,
non-operated, shallow dry gas focussed Northern Alberta Hangingstone asset,
for realized proceeds of USD 0.3 million. The sub-economic asset produced net
115 boepd for the month of February 2024 and was forecast to return negative
cash flows for the 12-month period of March 2024 to February 2025, based on
strip pricing. The sale of these non-core assets is highly accretive to the
Company's Asset Retirement Obligations ("ARO") level, further reducing the
Company's total ARO by USD 1.2 million.
Undeveloped Bluesky Land Disposition
On 10 April 2024, i3 Closed a disposition of 13.5 gross (10.1 net) sections of
land in northern Alberta for realized proceeds of USD 1.72 million which
translates to approximately USD 171,000 per section or USD 667 per hectare.
Rights associated with these lands were limited to the Bluesky formation, with
the Company retaining all associated Clearwater rights. The Company preserved
upside exposure in the Bluesky formation through a retained 25%, non-operated,
working interest in the lands. The acquirer has committed to drilling a
horizontal Bluesky well on these lands on or before March 31, 2025.
Undeveloped Central AB Land Disposition
On 6 May 2024, the Company closed a disposition of approximately 3.75 net
sections of land in the greater Gilby area of Central Alberta for realized
proceeds of USD 730,000, which translates to approximately USD 195,000 per
section or USD 761 per hectare. Rights associated with the transaction were
focused primarily on deep unconventional formations and i3 had no production
or reserves associated with these lands.
Woodland Cree First Nation Relationship Agreement
During the quarter, the Company entered into a relationship agreement with the
Woodland Cree First Nation (the "WCFN"). This agreement, based on mutual
respect and understanding, provides a framework for development of the
Company's Clearwater assets and a platform upon which the WCFN and i3 will
establish a long and mutually beneficial relationship. The Company, in
consultation and collaboration with the WCFN, is actively preparing its
upcoming drilling program. i3 is looking forward to working together with the
WCFN to advance its near- and long-term Clearwater initiatives.
Semi-Annual Credit Redetermination
In the first quarter, the Company announced the successful establishment of a
CAD 75 million senior secured revolving reserve-based lending facility (the
"Credit Facility") with National Bank of Canada. The new Credit Facility
marked a significant step in transitioning i3's capital structure, enhancing
the Company's financial flexibility through improved liquidity and enabling
acceleration of its growth and income-based business plan.
The Company is pleased to announce that subsequent to the second quarter the
lender has affirmed that at 30 June 2024 the Credit Facility remains at CAD 75
million until the next redetermination period. The borrowing base has been
renewed at CAD 75 million, comprised of a CAD 55 million revolving facility
and a CAD 20 million operating loan facility.
Return of Capital
The Company remains committed to delivering a sustainable dividend as part of
its total return model. The Q1 2024 dividend of £3.084 million (USD 3.890
million) or 0.2565 pence per share was declared and paid in Q2 2024. The Q2
2024 dividend of £3.084 million (USD 3.890 million) or 0.2565 pence per share
was declared in early July and subsequently paid in early August. Subject to
Board approval, the Company expects to pay the Q3 2024 dividend of 0.2565
pence per share in early Q4 2024, which translates to a forward yield of 11.5%
based on the closing price of i3's ordinary shares on 12 August 2024.
Environmental, Social and Governance ("ESG")
During the second quarter, the Company continued with initiatives to reduce
its Scope 1 and Scope 2 carbon emissions. i3 installed and commenced the trial
of a solar powered air compression system at one of its operated facilities,
three booster compressors were shut-in to eliminate the combustion of fuel
gas, and the Company's Alternative Fugitive Emissions Management Programme
(ALT FEMP), which images methane emissions from the air, identified 51 leaks
which were repaired to eliminate 270 e3m3/year of emissions.
During the period, i3 also downhole abandoned 3 gross wells (3.0 net).
Outlook
Strong operational performance over the first half of 2024, combined with
disciplined financial results have placed the Company on a strong footing to
realize its growth plus income-based strategy. After accounting for the recent
dispositions, the Company's low-decline production continues to perform
in-line with expectations and remains on track to meet its 2024 annual average
guidance of 18,000 - 19,000 boepd and exit rate guidance of 20,250 - 21,250
boepd.
Despite volatile commodity prices to date in 2024, resulting in a slightly
reduced Net Operating Income forecast of USD 63-67 million, i3's hedging
programme has been designed to protect and stabilize cash flows. At current
strip prices, EBITDA after considering hedges remains within expectations of
USD 50-55 million, based on a capital programme of approximately USD 50.9
million and with an exit net debt of approximately USD 23-26 million.
Following Spring break-up, the Company has commenced its H2 capital program
with the drilling of its first horizontal well at Willesden Green, which was
spud on 9 July 2024. The well was successfully drilled, cased, and completed,
with tie-in operations ongoing. Following tie-in operations at Willesden
Green, the Company expects to maintain continuous drilling operations through
to year-end, with an initial focus on oil and liquid rich wells
The 2024 capital programme will be fully funded from existing Company
resources and is designed to balance growth, financial discipline, and a
sustainable long term-dividend through a predictable development-focused
programme, all while positioning the Company to commence its Simonette Montney
pad development drilling in Q1 2025. To accelerate development of our very
substantial Simonette Montney drilling inventory, the Company has commenced
evaluating options with third parties to finance an expanded drilling and
infrastructure development via asset backed debt financing.
The Company has the flexibility to both reallocate its drilling locations to
optimize economic returns or capitalize on strategic accretive transactions as
they are identified and evaluated.
The Company is pleased to present a snapshot of its 2024 three and six months
ended financial results below. i3's unaudited condensed interim financial
statements for the three and six months ended 30 June 2024 and related
Management's Discussion and Analysis ("MD&A") are available on i3 Energy's
website at https://i3.energy/ (https://i3.energy/) and filed on SEDAR+.
Financial Statements
Condensed Consolidated Statement of Comprehensive Income
Three-months Ended Six-months Ended
30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
£'000 £'000 £'000 £'000
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue 28,920 32,037 60,328 75,489
Production costs (14,721) (17,947) (33,511) (36,437)
Gain / (loss) on risk management contracts 1,624 387 (1,459) 3,343
Depreciation and depletion (8,027) (8,702) (16,660) (19,410)
Gross profit 7,796 5,775 8,698 22,985
Administrative expenses (3,394) (1,751) (6,245) (4,083)
Gain on asset dispositions 15,779 - 15,779 -
Operating profit 20,181 4,024 18,232 18,902
Finance income 72 120 288 249
Finance costs (950) (2,312) (3,115) (4,682)
Profit before tax 19,303 1,832 15,405 14,469
Tax charge (4,840) (1,104) (7,036) (3,525)
Profit for the period 14,463 728 8,369 10,944
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations (1,204) (621) (3,674) (4,449)
Other comprehensive loss, net of tax (1,204) (621) (3,674) (4,449)
Total comprehensive income 13,259 107 4,695 6,495
Earnings per share Pence Pence Pence Pence
Earnings per share - basic 1.22 0.06 0.70 0.91
Earnings per share - diluted 1.20 0.06 0.69 0.90
Condensed Consolidated Statement of Financial Position
30 Jun 2024 31 Dec 2023
£'000 £'000
(unaudited) (audited)
Non-current assets
Property, plant & equipment 183,732 205,667
Exploration and evaluation assets 62,058 63,133
Other non-current assets 1,136 -
Total non-current assets 246,926 268,800
Current assets
Cash and cash equivalents 8,802 23,507
Trade and other receivables 19,658 20,534
Income taxes receivable 27 205
Risk management contracts 2,669 1,701
Inventory 1,907 1,847
Total current assets 33,063 47,794
Current liabilities
Trade and other payables (23,479) (27,640)
Risk management contracts (2,450) (136)
Borrowings and leases (115) (14,001)
Decommissioning provision (3,778) (3,244)
Total current liabilities (29,822) (45,021)
Net current (liabilities) / assets 3,241 2,773
Non-current liabilities
Borrowings and leases (94) (20,568)
Decommissioning provision (73,853) (78,109)
Deferred tax liability (13,828) (9,817)
Other non-current liabilities (431) (84)
Total non-current liabilities (88,206) (108,578)
Net assets 161,961 162,995
Capital and reserves
Ordinary shares 120 120
Deferred shares 170 50
Share premium 148,397 -
Share-based payment reserve 7,331 6,892
Foreign currency translation reserve 156 3,830
Capital reorganisation reserve (148,517) -
Retained earnings 154,304 152,103
Shareholders' funds 161,961 162,995
Condensed Consolidated Statement of Cash Flow
Three-Months Ended Six-Months Ended
30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
OPERATING ACTIVITIES £'000 £'000 £'000 £'000
(unaudited) (unaudited) (unaudited) (unaudited)
Profit before tax 19,303 1,832 15,405 14,469
Adjustments for:
Depreciation and depletion 8,027 8,702 16,660 19,410
Gain on asset dispositions (15,779) - (15,779) -
Finance costs 950 2,312 3,115 4,682
Unrealised (gain) / loss on risk management contracts (1,815) (1,171) 1,311 (328)
Unrealised FX (gain) (427) (1) (408) (15)
Share-based payments expense - employees (including NEDs) 248 169 439 310
Expenditure on decommissioning assets (505) (953) (1,048) (1,921)
Current tax expense (1,479) (837) (2,734) (5,446)
Changes in non-cash working capital - operating activities (2,470) (6,867) 2,608 (6,867)
Net cash from operating activities 6,053 3,186 19,569 24,294
INVESTING ACTIVITIES
Acquisitions - - - (13)
Additions to property, plant & equipment (2,567) (3,274) (3,985) (15,225)
Disposal of property, plant & equipment 17,956 - 17,956 -
Disposal of E&E assets 1,234 - 1,234
Additions to E&E assets (62) (173) (361) (1,200)
Tax credit for R&D expenditure - - - 184
Changes in non-cash working capital - investing activities (52) (5,154) (5,428) (10,729)
Net cash used in investing activities 16,509 (8,601) 9,416 (26,983)
FINANCING ACTIVITIES
Exercise of warrants and options - 1 - 14
Repayment of H1-2019 LN facility - (28,856) - (28,856)
Issuance of Debt Facility - 44,481 - 44,481
Repayment of Debt Facility - (1,238) (35,272) (1,238)
Net draw on Credit Facility (12,024) - - -
Payment of deferred finance costs (34) (2,039) (1,307) (2,039)
Interest and other finance charges paid (140) (917) (996) (1,566)
Lease payments (30) - (60) -
Dividends declared (3,084) (4,095) (6,168) (10,215)
Changes in non-cash working capital - financing activities - (1,817) - (1,750)
Net cash used in financing activities (15,312) 5,520 (43,803) (1,169)
Effect of exchange rate changes on cash 530 (20) 113 (20)
Net Decrease in cash and cash equivalents 7,780 85 (14,705) (3,878)
Cash and cash equivalents, opening 1,022 12,597 23,507 16,560
CASH AND CASH EQUIVALENTS, CLOSING 8,802 12,682 8,802 12,682
NoTE 1: Alternate performance measures
The Group uses Alternate Performance Measures ("APMs"), commonly referred to
as non-IFRS measures, when assessing and discussing the Group's financial
performance and financial position. APMs are not defined under IFRS and are
not considered to be a substitute for or superior to IFRS measures. Other
companies may not calculate similarly defined or described measures, and
therefore their comparability may be limited. The Group continually monitors
the selection and definitions of its APMs, which may change in future
reporting periods. All USD figures were derived from the Group's GBP figures,
which is the Group's IFRS presentation currency, and may differ from IFRS
figures prepared using USD as their presentation currency.
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before depreciation and depletion, financial
costs, and tax. Adjusted EBITDA is defined as EBITDA before gain on bargain
purchase and acquisition costs. Management believes that EBITDA provides
useful information into the operating performance of the Group, is commonly
used within the oil and gas sector, and assists our management and investors
by increasing comparability from period to period. Adjusted EBITDA removes the
gain or loss on bargain purchase and asset dispositions and the related
acquisition costs which management does not consider to be representative of
the underlying operations of the Group.
A reconciliation of profit as reported under IFRS to EBITDA and Adjusted
EBITDA is provided below.
Three-months Ended Six-months Ended
30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
£'000 £'000 £'000 £'000
Profit for the period 14,463 728 8,369 10,944
Depreciation and depletion 8,027 8,702 16,660 19,410
Finance costs 950 2,312 3,115 4,682
Tax 4,840 1,104 7,036 3,525
EBITDA 28,280 12,846 35,180 38,561
Gain on asset dispositions (15,779) - (15,779) -
Adjusted EBITDA 12,501 12,846 19,104 38,561
Adjusted EBITDA presented in USD ((i)) 15,770 16,088 24,163 47,546
(i) Amounts converted at the period-average GBP:USD exchange rates of
1.2615 and 1.2648 for the three and six months ended 30 June 2024,
respectively, and 1.2524 and 1.2330 for the three and six months ended 30 June
2023 periods, respectively.
Net operating income
Net operating income is defined as gross profit before depreciation and
depletion, gains or losses on risk management contracts, and other operating
income, which equals revenue from the sale of oil and gas and processing
income, less production costs. Management believes that net operating income
is a useful supplementary measure as it provides investors with information on
operating margins before non-cash depreciation and depletion charges and gains
or losses on risk management contracts. These metrics are also presented on a
per BOE basis.
A reconciliation of gross profit as reported under IFRS to net operating
income is provided below.
Three-months Ended Six-months Ended
30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
£'000 £'000 £'000 £'000
Gross profit 7,796 5,775 8,698 22,985
Depreciation and depletion 8,027 8,702 16,660 19,410
(Gain) / loss on risk management contracts (1,624) (387) 1,459 (3,343)
Other operating income (1,786) - (1,816) (107)
Net operating income 12,413 14,090 25,001 38,945
Net operating income presented in USD ((i)) 15,659 17,646 31,621 48,019
Total Sales Production (BOE) 1,662,661 1,686,139 3,428,516 3,735,840
Net operating income per BOE (£/BOE) 7.47 8.36 7.29 10.42
Net operating income per BOE presented in USD ((i)) 9.42 10.47 9.22 12.85
(i) Amounts converted at the period-average GBP:USD exchange rates of
1.2615 and 1.2648 for the three and six months ended 30 June 2024,
respectively, and 1.2524 and 1.2330 for the three and six months ended 30 June
2023 periods, respectively.
Acquisitions & Capex
Acquisitions & Capex is defined as cash expenditures on acquisitions,
PP&E, and E&E. Management believes that Acquisition & Capex is a
useful supplementary measure as it provides investors with information on cash
capital investment during the period.
A reconciliation of the various line items per the statement of cash flow to
Acquisitions & Capex is provided below.
Three-months Ended Six-months Ended
30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
£'000 £'000 £'000 £'000
Acquisitions - - - (13)
Expenditures on property, plant & equipment 2,567 3,274 3,985 15,225
Expenditures on exploration and evaluation assets 62 173 361 1,200
Acquisitions & Capex 2,629 3,447 4,346 16,438
Acquisitions & Capex presented in USD ((i)) 3,316 4,317 5,497 20,268
(i) Amounts converted at the period-average GBP:USD exchange rates of
1.2615 and 1.2648 for the three and six months ended 30 June 2024,
respectively, and 1.2524 and 1.2330 for the three and six months ended 30 June
2023 periods, respectively.
Free cash flow (FCF)
FCF is defined as cash from / (used in) operating activities plus proceeds on
disposal of PP&E and E&E, less cash capital expenditures on PP&E
and E&E. Management believes that FCF provides useful information to
management and investors about the Group's ability to pay dividends. This
definition was expanded in Q2 2024 to include proceeds on disposal of PP&E
and E&E as the Group completed material dispositions in the period.
A reconciliation of cash from / (used in) operating activities to FCF is
provided below.
Three-months Ended Six-months Ended
30 Jun 2024 30 Jun 2023 30 Jun 2024 30 Jun 2023
£'000 £'000 £'000 £'000
Net cash from operating activities 6,053 3,186 19,569 24,294
Disposal of property, plant & equipment 17,956 - 17,956 -
Disposal of E&E assets 1,234 - 1,234 -
Expenditures on property, plant & equipment (2,567) (3,274) (3,985) (15,225)
Expenditures on exploration and evaluation assets (62) (173) (361) (1,200)
FCF 22,614 369 34,413 7,869
FCF presented in USD ((i)) 28,528 462 43,526 9,702
(i) Amounts converted at the period-average GBP:USD exchange rates of
1.2615 and 1.2648 for the three and six months ended 30 June 2024,
respectively, and 1.2524 and 1.2330 for the three and six months ended 30 June
2023 periods, respectively.
Net cash surplus or debt
Net cash surplus or net debt is defined as borrowings and leases and trade and
other payables, less cash and cash equivalents and trade and other
receivables. This definition was expanded in 2023 and 2024 to include other
non-current liabilities and other non-current assets which are new account
balances that arose during the respective years. When net debt is negative it
is referred to as a net cash surplus. Management believes that net cash
surplus or net debt is a meaningful measure to monitor the liquidity position
of the Group.
A reconciliation of the various line items per the statement of financial
position to net cash surplus or net debt is provided below.
30 Jun 2024 31 Dec 2023
£'000 £'000
Borrowings and leases 209 34,569
Trade and other payables 23,479 27,640
Other non-current liabilities 431 84
Income taxes (receivable) / payable (27) (205)
Cash and cash equivalents (8,802) (23,507)
Trade and other receivables (19,658) (20,534)
Other non-current assets (1,136) -
Net (cash surplus) / debt (5,504) 18,047
Net (cash surplus) / debt presented in USD ((ii)) (6,958) 23,005
(ii) Amounts converted at the period-end GBP:USD exchange rates of 1.2642
and 1.2747 for the 2024 and 2023 periods, respectively.
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 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 c/o Camarco
Majid Shafiq (CEO) Tel: +44 (0) 203 757 4980
Zeus Capital Limited (Nomad and Joint Broker)
James Joyce, Darshan Patel 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
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
Forward-Looking Statements
This press release offers our assessment of i3's future plans and operations
as at the time of dissemination and contains certain forward-looking
information and statements within the meaning of applicable securities laws.
The use of any of the words "anticipate", "continue", "estimate", "expect",
"forecast", "may", "will", "project", "should", "plan", "intend", "believe"
and similar expressions (including the negatives thereof) are intended to
identify forward looking information or statements.
The forward-looking information and statements included in this news release
are not guarantees of future performance and should not be unduly relied upon.
Such information and statements involve known and unknown risks, uncertainties
and other factors that may cause actual results or events to differ materially
from those anticipated in such forward-looking information or statements
including, without limitation: those relating to results of operations and
financial condition; general economic conditions; industry conditions; changes
in regulatory and taxation regimes; volatility of commodity prices; escalation
of operating and capital costs; currency fluctuations; the availability of
services; imprecision of reserve estimates; geological, technical, drilling
and processing problems; environmental risks; weather; the lack of
availability of qualified personnel or management; stock market volatility;
the ability to access sufficient capital from internal and external sources;
and competition from other industry participants for, among other things,
capital, services, acquisitions of reserves, undeveloped lands and skilled
personnel. Risks are described in more detail in our Financial Review, which
is available on www.i3.energy (http://www.i3.energy/) and
on www.sedarplus.ca. Forward-looking statements are provided to allow
investors to have a greater understanding of our business.
You are cautioned that the assumptions used in the preparation of such
information and statements, including, among other things: future oil and
natural gas prices; future capital expenditure levels; future production
levels; future exchange rates; the cost of developing and expanding our
assets; our ability to obtain equipment in a timely manner to carry out
development activities; our ability to fund future dividends; our ability to
market our oil and natural gas successfully to current and new customers; the
impact of increasing competition; the availability of adequate and acceptable
debt and equity financing and funds from operations to fund our planned
expenditures; and our ability to add production and reserves through our
development and acquisition activities, although considered reasonable at the
time of preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. Our actual results,
performance, or achievement could differ materially from those expressed in,
or implied by, these forward-looking statements. We can give no assurance that
any of the events anticipated will transpire or occur, or if any of them do,
what benefits we will derive from them. The forward-looking information and
statements contained in this document is expressly qualified by this
cautionary statement. Our policy for updating forward-looking statements is
that i3 disclaims, except as required by law, any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Non-IFRS Financial Measures
i3 uses the following terms for measurement within this press release that do
not have a standardized prescribed meaning under International Financial
Reporting Standards ("IFRS") and these measurements may not be comparable with
the calculation of similar measurements of other entities. The Company refers
to these as Non-IFRS Measures or Alternate Performance Measures ("APMs"). APMs
are not defined under IFRS and are not considered to be a substitute for or
superior to IFRS measures. Other companies may not calculate similarly defined
or described measures, and therefore their comparability may be limited. The
Company continually monitors the selection and definitions of its APMs, which
may change in future reporting periods. Refer to Note 1 Alternative
Performance Measures for further discussion.
51-101 Advisory
In conformity with National Instrument 51-101, Standards for Disclosure of Oil
and Gas Activities ("NI 51-101"), natural gas volumes have been converted to
barrels of oil equivalent ("boe") using a conversion rate of six thousand
cubic feet of natural gas to one barrel of oil. In certain circumstances,
natural gas liquid volumes have been converted to a thousand cubic feet
equivalent ("mcfe") on the basis of one barrel of natural gas liquids to six
thousand cubic feet of gas. Boes and mcfes may be misleading, particularly if
used in isolation. A conversion ratio of one barrel to six thousand cubic feet
of natural gas is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of crude oil
as compared to natural gas is significantly different from the energy
equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be
misleading as an indication of value.
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