I3 Energy: Two wells at Martin Hills now in production; Wapiti acquisition completed

AIM-listed independent oil and gas company I3 Energy (LON: I3E) (TSX: ITE) announced today that its two wells at the Martin Hills Clearwater site are now in production and have started producing drilling fluid.

The operational update also stated that the company’s recently announced Wapiti acquisition has been completed and that I3 Energy’s well at the Wapiti Elmworth location was spud.

Martin Hills operational update

The company announced that the two wells at the Martin Hills site, 01-12-075-26W4 and 02-12-075-26W4, were now in production and were producing drilling fluid.

The company, which owns up to 50 per cent of working interest at the Martin Hills wells, expects its clean-up process at the site to get completed in three to four weeks. Soon after that, initial stabilised oil flow rates will be conveyed to the market.

I3 Energy had previously announced that its drilling operations at the second well were completed in mid-July.  The company has an option to participate in the operations of up to seven more wells under the associated farm-in agreement. Out of the additional seven wells, a minimum of four wells are expected to be spud by 31 March next year.

Also Read: I3 Energy announces completion of drilling at second Martin Hills well

Completion of Wapiti production acquisition

The company has also completed the Wapiti production acquisition, effective 1 April 2021. Wapiti’s production rate stands at 230 boepd at present, which I3 Energy aims to increase to about 310 barrel of oil equivalent per day (boepd) on a next twelve-month basis (NTM) through the reactivation of six wells.

This is expected to cost I3 Energy a total of US$ 0.4 million, including acquisition and other costs, and is expected to come at just 0.56 times the company’s NTM net operating income (NOI).

Also Read: I3 Energy continues to march ahead with a robust strategy

Wapiti Elmworth’s drilling operations

The company also plans to drill in the 09-17-071-10W6 well at the Wapiti Elmworth acreage located in Canada.

The well was spud on 27 July 2021, and the firm aims to drill two wells at the project site, which is expected to cost up to US$ 2.1 million. The drilling activities from the two wells at this site are expected to boost I3 Energy’s production by 175 boepd.

The company expects to recover the full investment in just 1.3 years as per the ongoing commodity strip pricing. The drilling operations, which the company is planning to carry out with a partner, will be completed by the beginning of the third quarter of 2021.