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i3 Energy Canada Ltd. Announces 2023 Reserves

ACCESSWIRE - Sun Mar 24, 10:10PM CDT

EASTLEIGH, UK / ACCESSWIRE / March 25, 2024 / 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

SOURCE: i3 Energy PLC



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