i3 Energy (I3E ), a UK and Canada focused oil producer, has issued a Q3 2022 operational and financial update.
Production figures
i3 Energy said its Canadian portfolio has achieved consecutive quarter-on-quarter growth since acquisition in Q3 2021. i3 Energy achieved record corporate production exceeding 23,000 boe/d in October, with forecasts in line to reach 24,000 before year-end.
i3 Energy reported average Q3 production of 20,571, comprised of 64.2 mmcf/d or 5,038 bbl/d of natural gas liquids, 4,396 bbl/d of oil & condensate, and 440 bbo/d of royalty interest production.
Drilling Programme
i3 Energy said its 2022 drilling programme was nearing completion, having delivered wells to date that have "met or exceeded pre-drill expectations", with programme costs in line with budget.
The programme brought into operation 9 gross wells (7.93 net). Among these are two 100%-owned wells targeting the Falher zone in Willesden Green, Central Alberta; two more 65%-owned wells targeting the Belly River formation in Leedale, Alberta; and one 100%-owned well targeting the Middle Montney formation in Simonette North.
Post-period, i3 Energy operations continued with five gross (4.3 net) operated wells and 5 gross (1.4 net) non-operated wells expected to be brought on stream before year-end.
i3 Energy also completed the 13/23c-12 appraisal well on the UK North Sea Serenity Field in the quarter, with full results currently being evaluated.
Financials
i3 Energy now expects its full-year 2022 net operating income to be approximately US$172m based on current strip pricing, assuming full implementation of its US$97m enlarged capital budget announced in May.
The company announced dividends of £5.098m paid in Q3 with £11.952 m paid to date in 2022.
Majid Shafiq, CEO, commented:
"Q3 2022 was another extremely busy operational period for the Company with extensive drilling operations being conducted in Canada and the UK. We achieved record production levels in the quarter and are on track to exceed 24,000 boepd before year-end; a highly significant achievement built on the organic growth of the superbly executed drilling campaign in Canada. The benefits of this drilling success will be largely realised in 2023 as most of the production growth commenced in the second half of the year."
View from Vox:
i3 Energy has reported another quarterly increase in production to 20,571 boe/d, representing a c. 55% increase year-on-year. The growth realised in Q3 marked the fifth consecutive quarter-on-quarter production increase for the company, reflecting the efficiency of its 2022 drilling programme to date. In October alone, the company achieved record 23,000 boe/d production, expected to rise further to 24,000 boe/d before year-end.
i3 Energy continued the execution of its expanded 2022 drilling programme, and in Q3 brought 11 gross (8.5 net) wells to production. i3 saw contribution increases from five gross (3.93 net) Montney and Cardium wells, still being cleared up; two gross (2 net) Falher wells recently drilled, tied-in and commencing clean-up; as well as seven gross (3.7 net) recently drilled wells in the Glauconite, Clearwater, and Belly River formations, expected to be completed and tied-in prior to year-end.
Although i3 Energy's Serenity well in the UK did not deliver expected volumes, it was completed significantly under budget at a total cost to i3 of £5.6m, and provided data that should significantly enhance the company's understanding of the hydrocarbon-bearing Captain sand reservoir. i3 expressed confidence in its ability to commercialise value from the discovery at Serenity.
In May, i3 Energy announced a doubling of its 2022 capital budget to US$97m. i3 is now forecasting that its full-year development drilling spend will be approximately in line with this enlarged capital budget, a notable result given industrywide inflationary pressures during the year. i3 Energy now expects its full-year 2022 net operating income (NOI) to be approximately US$172m based on current strip pricing.
i3 Energy's drilling success and production growth in 2H22 should convert to revenues in 2023.
i3 Energy said it has commenced its annual budgeting cycle and will announce a 2023 capital programme before year-end. i3 continues to employ a defensive risk management strategy with current hedges in place to cover 34.6%, 40.7%, and 5.7% of its projected Q4 2022, Q1 2023 and Q2 2023 production volumes, respectively.
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