i3 Energy (I3E), a UK and Canada-focused driller, has reported a successful Q4 2022 operational and financial update with an 11% increase in production from the previous quarter and record production exceeding 24,000 boepd achieved in December. Production over a seven-day period in mid-February averaged 23,472 boepd despite intermittent seasonal production curtailments occurred, due to operational freeze-up.
The 2022 drilling programme delivered 31 gross wells and was completed approximately 5% underbudget. i3 Energy brought 12 gross wells on production as part of the programme, with a focus on operated oil and liquids rich gas wells in its Central Alberta, Wapiti, and Clearwater assets.
The programme included 16 gross operated wells and 15 gross non-operated wells, incurring a total drilling capex of USD 71 million. The company achieved a total budget underspend of 5.3% despite high inflation. In Q4, i3 drilled three gross nine-leg multilateral horizontal wells at Marten Hills, achieving an average gross initial 30-day producing rate of 235 bbl/d.
i3 commenced operations on the 2023, USD 64.05 million capital programme ahead of schedule targeting 23 gross wells. It said its year end 2022 reserves audit is in progress, with final numbers expected in March.
The company continued its methane reduction initiatives in Q4 by replacing pneumatic pumps with solar-driven pumps, completing the electrification of 30 pumpjacks, and partnering with Recover Energy Services to manage the efficient disposal of drilling waste. These initiatives resulted in a decrease of 71,450 tonnes of CO2e/year, and i3 published an updated ESG report in December, including disclosure on assets acquired from Cenovus Energy in 2021.
i3 declared dividends of £5.098 million in Q4 via its monthly dividend programme of 0.1425 pence/share taking total 2022 dividends paid to £15.35m.
Majid Shafiq, CEO of i3 Energy plc, commented: "Q4 2022 was very busy as we completed our 2022 drilling programme which met management expectations, was executed under budget and achieved peak production rates in excess of 24,000 boepd. We have successfully completed the first phase of our 2023 drilling programme, with multiple wells now on clean-up flow and several Clearwater intervals tested, and we are now on course to deliver positive YE2022 financials and reserves data by the end of March."
View from Vox
The latest report is further demonstration of i3's predictable, low-decline asset base that has seen the company repeatedly beat production guidance. Though the recent share price performance has been disappointing, it reflects the downward trajectory of Canadian natural gas prices over the summer, rather than the steady operational progress which analysts expect to be reflected in next month’s reserve audit data. The regular and growing returns to shareholders represent a c. 10% yield, which suggests the shares may be undervalued.