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
. 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
Majid Shafiq (CEO)
|
c/o Camarco
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.
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.