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 Company's 2024 capital budget and production guidance. The Company will hold an investor webinar on Thursday 2 May 2024 at 12:00 pm BST including a Q&A session.
Highlights:
- 2024 Capital Budget
2024 Capital Budget of USD 50.9 million, forecasted to deliver 15 gross wells (10.5 net, 95% net i3-operated) to be drilled across the Company's diversified portfolio in Central Alberta, Simonette, and its northern Clearwater acreage.
- Production Growth
Forecast exit 2024 production of 20,250 - 21,250 barrels of oil equivalent per day ("boepd"), representing a year-over-year increase of approximately 3% from the prior year average exit rate (December 2023), or approximately 8% from current levels, as the Company expects to recommence drilling in June 2024 and positions for accelerated Montney development in 2025.
- Cash Flow
USD 70 - 75 million of 2024 Net Operating Income ("NOI") and USD 55 - 60 million of EBITDA before hedging gains and losses, based on budget price assumptions of USD 82/barrel ("bbl") for WTI and CAD 2.25/Gigajoules ("GJ") for AECO natural gas.
- Shareholder Returns
As part of i3's commitment to its total return model, subject to Board approval, the Company is expected to return forecasted dividends of £12.3 million (USD 15.7 million) in 2024, representing 0.2565 pence per share per quarter or 1.0260 pence per share for the year, which translates to a forward yield of 8.1% based on the closing price of i3's ordinary shares of 12.66 pence on 23 April 2024.
Majid Shafiq, CEO of i3 Energy plc, commented:
"Following very successful initiatives in the first half of the year to increase our balance sheet strength and liquidity, i3 is extremely pleased to announce a substantial USD 51 million capital programme for the remainder of the year, which will drill a diverse group of oil and gas wells across our portfolio in Canada. The majority of wells will be drilled in the second half of the year, with the high-volume Central Alberta gas wells producing into a forecast strong winter pricing environment and pad drilling of our exciting Montney acreage expected to commence early in Q1 2025. The programme is designed to deliver production growth and support our dividend programme, whilst maintaining liquidity and a conservative leverage position to maximise flexibility to deal with volatile market conditions and opportunities as they arise."
2024 Capital Programme Highlights
Following the Company's recent USD 24.8 million partial sale of its royalty assets, the elimination of all bank indebtedness and the establishment of a USD 55.6 million reserve-based credit facility, i3 Energy is pleased to announce a USD 50.9 million 2024 capital programme along with its 2024 operational and financial guidance. This programme will be fully funded from existing Company resources and is designed to balance growth, financial discipline, and a sustainable long term-dividend through a predictable development-focused programme, all while positioning the Company to commence its Simonette Montney pad development drilling in Q1 2025. The programme is constrained to fit within the available time window of the second half of the year.
The 2024 budget currently reflects an estimated total capital investment of USD 50.9 million in Canada, of which approximately USD 41.1 million is allocated to drilling and development, with the remaining balance (USD 9.8 million) apportioned to maintenance capital, facilities, land, ESG and seismic initiatives. The 2024 budget reflects the natural limitations associated with the Canadian operating environment, including, but not limited to, access issues associated with seasonal weather conditions. As such, the 2024 programme anticipates drilling operations will commence in late Q2, with continuous operations through to year-end.
i3's 2024 capital programme will be 85% weighted to the second half of the year with wells expected to be brought on production ahead of stronger forecasted winter gas pricing. Should it be the case that the forward strip forecast for gas prices deteriorates, the Company is well positioned to both reallocate its drilling locations to more oil weighted development opportunities or capitalize on strategic accretive acquisitions as they are identified. Corporate guidance incorporates the drilling of 15 gross (10.5 net) wells with locations split between i3's key operating areas, comprising 11 gross (7.6 net) wells in Central Alberta, 2 gross (1.9 net) wells in Simonette and 2 gross (1.0 net) wells across the Clearwater fairway. The programme is primarily focused on development opportunities, supplemented with targeted high-impact, large resource, oil-centred delineation.
The 2024 capital programme is projected to deliver total average production of between 18,000 and 19,000 boepd (natural gas, oil & condensate, natural gas liquids and royalty interest production expected to average approximately 53%, 22%, 24% and 1%, respectively), with estimated peak production achieved in December. Based on timing, with no operated wells drilled or planned until June, the 2024 drilling programme is forecast to deliver December exit rate production growth of 3% when compared to the same period of 2023. Additionally, when adjusting for the Company's highly accretive partial royalty disposition, announced on 17 April 2024, December exit production growth reflects 5% on a year-over-year basis.
The Company's 2024 Budget is designed to ensure a strong balance sheet and significant financial flexibility to support the Company's income plus growth strategy and positions i3 to commence its Simonette Montney development in Q1 2025. The capital programme will result in exit 2024 net debt of USD 23 - 26 million, representing a net debt to annualized December 2024 EBITDA before hedging, of approximately 30% and net debt credit utilization of less than 45%.
For its planning case, i3 has used commodity price assumptions of USD 82.00/bbl for WTI crude oil and CAD 2.25/GJ for AECO natural gas and expects to generate net operating income of approximately USD 70 - 75 million and EBITDA before hedging of USD 55 - 60 million for 2024.