i3 Energy plc (LON:I3E)


Founded in 2014, i3 Energy Plc is an independent energy company engaged in development and production of high-return hydrocarbon fields and discoveries. Its shares are listed on the Alternative Investment Market of the London Stock Exchange as LON: I3E as well as on the Toronto Stock Exchange as TSX: ITE. Headquartered in Westhill in the UK, it has a diverse portfolio of assets located across Canada and North Sea. It is operating through its three core assets: Western Canadian Sedimentary Basin (WCSB), Serenity and Liberator.

The company’s aim is to deliver high return value to its shareholders by investing in new opportunities through divestment, strategic acquisition, farm-ins, farm-outs, and exchange of interest by entering new ventures at the appraisal, development, production or near-field exploration phase that are located close to its existing infrastructure.

Its business model includes high-quality assets that can provide high technical and economic opportunities. The company aims to acquire producing or late-stage development assets from companies where market conditions, cost of capital, and finish-line financing are sustainable and offer opportunities with high-profit margin and safety. It also actively develops tie-ups with other companies to ensure efficient operation, lower delivery risk and to maintain overall project value. Lastly, it extracts high shareholder value by taking advantage of the market conditions.

The company’s Western Canadian Sedimentary basin asset was successfully acquired in 2020, which includes large contiguous holdings in several of Alberta’s economic zones through a reverse takeover of private company Gain Energy. It has produced 8,948 boepd through its portfolio of 242 operated wells with an average working interest of 78%, 1,044 non-operated wells with an average working interest of 14%, 172,000 net development acres and 186,000 net undeveloped acres of lands. 

Serenity assets were discovered in 2019 with well 13/23c-10 located in the north of block 13/23c between the producing capital field to the west and the underdeveloped Tain field next to the west. It discovered a high quality 20-ft thick oil-bearing sand unit at the top of the Lower Ceretaceous capital sequence with maximum expected column of 1,123ft TVD and its pre-drill P50 estimates of 197 MMbbls STOIIP.

In 2020, the company successfully completed the integration of around 9,000 boepd of Canadian oil and gas production. Since then, the assets have outperformed CPR expectations by over 10% and the company is further planning to bring a new well on stream with 500 boepd of net production. Further, it has announced that it has entered a letter of intent to acquire synergistic Cardium and Dunvegan production in the Wapiti area in Canada, which is currently producing 230 boepd. It has also been chosen to drill two high-return wells located in the Wapiti area of Alberta in Canada.

The oil prices have outperformed the expectations and i3’s entry prices are also improving with the stocks already offering a 7.7% running yield. It can further increase on the back of organic growth and acquisitions. The production is also expected to improve with the imminent tie-in of the Noel Falher well in Northeast British Columbia. At an average price of approx. US$2.3/mcf, the company’s 70% of gas production has been hedged through to 31 October.

The company is now expecting to pay its maiden special dividend in July, which will be followed by half-yearly dividends after the release of interim financials and full-year financials that will be published around September and April every year. The company will pay up to 30% of free cash flow as dividends each year. The latest guidance on the annual net operating income, which is revenue minus operating expenditure, processing and transportation cost and royalty payments, is US $44 million for the next 12 months.

Meanwhile, a further 750 barrels per day of oil and 200 barrels per day at US $26.4/ barrel of oil of condensate have been hedged till this year’s end. Going forward, the company is planning to hedge 50% of its oil volume and 50-70% of its gas volume with an attempt to protect dividend and maintain capex.

Contact Information

company address i3 Energy PLC Westpoint House Prospect Road Arnhall Business Park Westhill AB32 6FJ United Kingdom

company phone+44 122 494 598

company websitehttps://i3.energy/

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