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Market cheers I3 Energy’s move to increase net operating income guidance

Highlights

  • Independent oil and gas company I3 Energy shares rose by over 7 per cent as it increased net operating income guidance
  • Its July Q2 2021 net field sales estimates stood at 9,598 boepd, including its Wapiti and South Simonette acquisitions.
  • The company increased its NTM NOI guidance from US$ 75.3 million to US$ 94.8 million due to strong commodity pricing and CAD/USD exchange rate forecasts.

AIM-listed and independent oil and gas company I3 Energy PLC (LON: I3E) (TSX: ITE) on Monday came up with an upbeat financial updates and increased its guidance for net operating income (NOI) for 2021 and the next twelve months (NTM), starting 1 August 2021. The announcement came days after the company paid its maiden special dividend of 0.16 pence per share on 6 August 2021.

Increased NTM NOI guidance

The company increased its 2021 NOI to around US$ 62.4 million, based on strip pricing dated 13 August.  It also announced its NTM NOI guidance of about US$ 94.8 million, up from the previous figure of about US$ 75.3 million announced on 7 July. This increase can be attributed to firming commodity prices and the forecasted Canadian dollar to US dollar exchange rate.

The forecasts are inclusive of the company’s expected incremental volumes from its various drilling and reactivated projects such as the two drilled wells at the Marten Hills Clearwater play, Wapiti Elmworth’s two planned wells and reactivations in South Simonette and the Wapiti acquisition’s wells.

The forecast also includes the company’s latest commodity hedging portfolio including a crude oil swap contract for 200 barrels per day at a price of CAD 75.20 per barrel, for a contract period of 1 April to 31 December.

I3 Energy’s Q2 2021 production update

The energy company’s Q2 2021 production averaged 8,905 barrels of oil equivalent per day (boepd), slightly lower than Q1 2021 production of 9,090 boepd. The quarter’s production was based on net field sales estimates, which stood at 30.6 million standard cubic feet of gas per day (mmscfd).

I3 Energy’s July net field sales estimates were at an average of 9,598 boepd, including the production figures from the recently completed Wapiti and South Simonette acquisitions. The average production figure for the final week of July was 10,031 boepd.

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

Acquisitions update

I3 Energy also announced its Central Alberta Core Area asset acquisition of Canadian energy firm Cenovus Energy. The acquisition is set to close around 20 August and has a transaction effective date of 1 April. The deal will add up to 8,400 boepd to I3 Energy’s production output.

The company also announced that it completed the acquisition of 49.5 per cent operated interest that Anegada Oil Corporation held in I3’s South Simonette project. This acquisition, which was completed on 28 May, has given the company a 99 per cent operated interest in the play.

The company expects to restart operations at this play, which will be completed by end of this month and will add up to 720 boepd to its overall production.

Also, I3 reported that the Wapiti acquisition was completed on 20 July, with a production of 230 boepd. The six new well reactivations at Wapiti are expected to increase its production up to 310 boepd.

Related Articles: I3 Energy announces completion of drilling at second Martin Hills well

Drilling operations update

The company completed drilling both wells at the Martin Hills Clearwater play and the first two wells at the Wapiti Elmworth site on time and within its budget.

The Martin Hills wells, 01-12-075-26W4 and 02-12-075-26W4, are currently in production and are undergoing a clean-up process scheduled to be completed by the end of this month.

The two wells at Wapiti Elmworth are expected to increase production by 175 boepd and provide a return on investment in 1.3 years based on the company’s’ commodity strip pricing.

The energy company also updated that the Serenity field appraisal farm out discussions were still ongoing—though there is an in-principle agreement in place, further funding and specific details are yet to be confirmed.

I3 Energy also announced its plan to publish its maiden sustainability report by the end of this year. Also, the company has deployed up to CAD 0.2 million of its toal grant funding of CAD 2.4 million. The grants were received, thanks to the company’s involvement with the Government of Alberta's Site Rehabilitation Program and Saskatchewan's Accelerated Site Closure Program, as part of its initiatives to reduce carbon emission.

The remaining CAD 2.2 million will be deployed over the rest of the year as part of the company’s commitment towards sustainability goals.

Share price performance

The market cheered the operational and financial update announced by the company.

I3 Energy’s shares were trading at GBX 11.20, sharply up by 7.69 per cent on 16 August at 10:41 AM GMT+1, following the news. The company has netted shareholders 101.63 per cent on a year-to-date basis.

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