I3 Energy (I3E ) said production at its Canadian operations is outperforming expectations with average production reaching 8,856 barrels oil equivalent per day during Q1 of 2021.
This consisted of field estimate sales equalling 31.6 million standard cubic feet of gas per day, 2,123 barrels per day ("bbl/d") of natural gas liquids and 1,466 barrels of oil per day.
The oil and gas company said it has achieved this rate despite adverse weather conditions with production remaining above the expected rate based on the competent persons reports commissioned for the acquisition of the Canadian production assets in 2H20.
I3 said it has maintained financial discipline and implemented an initial hedging strategy while 2021 full-year net operating income is expected to increase to CAD$38m for the year.
“We continue to evaluate opportunities to extract incremental value from our portfolio and look forward to completing the first of these initiatives with the tie-in of the Noel well in the middle of the year,” said CEO, Majid Shafiq on the Noel well which is expected to come into production in June.
Currently, the Company explained to investors that the tie-in project for the Noel gas well in British Columbia is progressing both on schedule and on budget. It added that the well still remains subject to regulatory approvals and tie-in to third-party gas processing facilities.
The Company outlined to investors that it has ‘significant initiatives’ in the Clearwater play with planning currently underway for an appraisal and development drilling programme in the Marten Creek area which follows successful oil appraisal recompletions at the acreage.
In recent weeks, i3 expanded its territory in Clearwater with a farm-in to additional acreage which will see the Company earn up to 29.4 km2 through drilling activity at the site. The first two wells of a potential nine-well commitment were spud at Marten Hills back in May 2020. The Group also acquired a further 17.9 km2 through the recent Alberta Crown Land Sale.
“We have made significant progress in growing our land position in the Clearwater play and look forward to our first drilling activity this summer in Marten Hills and further activity in the upcoming winter access period on our operated Clearwater acreage in Marten Creek,” it said.
Meanwhile, in regard to the Serenity appraisal drilling in the UK, the Company said discussions continue with potential farm-in partners for the drilling programme here.
“The farm-out process for the Serenity appraisal drilling in the UK continues to make progress and we remain confident that we will achieve a successful outcome,” said Shafiq.
i3 also informed investors that it has nearly completed the necessary preparatory work and creditor approvals process for a court-led balance sheet restructuring which is required to create distributable reserves in order for the business to pay its maiden dividend.
“Although our balance sheet restructuring has taken longer than anticipated we will shortly complete this process and pay our maiden dividend,” the Company highlighted to investors.
Shares in I3 Energy have increased by over 75% in value since the beginning of 2021. The stock was trading 2.07% higher this morning at 9.85p following the announcement.
Reasons to Follow I3E
i3 Energy’s strategy is to focus on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.
Positive Drilling Results
i3 Energy has several positive re-rating catalysts from near-term drilling results from the existing asset portfolio.
Transitioning to Production with Dividend
Recently moved into production with low-risk growth opportunities in production at low marginal cost.
i3 previously stated that it expects to begin paying a dividend of between 20% and 30% of free cash flow annually prior to the end of 1Q21, and then up to 40% as its Canadian business expands.
Platform for Organic and Acquisitive Growth
Established a platform to transform the business over the next 12 months through organic production growth and complementary acquisitions.
Majid Shafiq, CEO of I3E said i3’s entry into the WCSB is “to provide a platform to execute on a strategy for the rapid growth of a Canadian onshore production portfolio via M&A.”
Alongside its acquisition of Toscana, i3 has continued to expand its Canadian assets, with CEO, Majid Shafiq, and in particular, has viewed 2020 as “a transformational year.”
In September 2020, the company told investors that it completed its acquisition of all the petroleum and infrastructure assets of Gain Energy for CAD$80m after raising around £29m in August in order to complete its proposed acquisition of the Gain Energy assets in Canada.
Meanwhile, i3 Energy also agreed to sell Gain's Saskatchewan portfolio to Harvard Resources Inc. for CAD$45m, around US$33m, immediately following the completion of its acquisition of Gain.
i3 believes the diversification of its portfolio will add ‘a quality production base to provide internal free cash flow to grow the enlarged group and provide a near-term return to its shareholders.’
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