17 April
2024
i3 Energy plc
("i3", "i3 Energy",
or the "Company")
Partial Sale of the Company's Royalty
Assets and Elimination of All Bank Indebtedness
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 that its
subsidiary, i3 Energy Canada Ltd., has entered into a definitive
agreement with a newly formed private royalty company for the sale
of certain of the Company's royalty assets (the "Royalty
Disposition") for a total gross cash consideration of USD 24.81
million (CAD 33.50 million(1)) before customary closing
adjustments. The proceeds of the Royalty Disposition mark the next
step in transitioning i3's capital structure, enhancing the
Company's financial flexibility through improved liquidity and
enabling acceleration of its growth and income-based business
plan.
Highlights:
·
Accelerating and Unlocking
Value: Realization of USD 24.81 million in
gross proceeds from the sale of an estimated 388 barrels of oil
equivalent per day ("boe/d")(2), translates to 6.9 times
2024 forecasted cash flow and approximately USD 63,960 per flowing
boe/d, which represents a significant premium to the Company's
current market valuations.
·
Pro Forma Financial Position
Upon Closing: The proceeds of the Royalty
Disposition will fully eliminate i3's outstanding bank indebtedness
and establish a working capital surplus(4) without
materially impacting its working interest production base; which,
together with forecasted cash flows and undrawn credit facility,
provides the Company with significant liquidity to execute its
growth and income strategies.
·
Retained Key Royalty
Position at Greater Simonette: As part of i3's
high-impact Montney oil asset at Simonette, the Company has
retained its 16,160 acre royalty position, along with approximately
35 boe/d of associated production(3) (collectively the
"Simonette Royalty"), throughout this core area.
Ryan Heath,
President of i3 Energy Canada Ltd.,
commented:
"i3 Energy
Canada Ltd. is extremely pleased to have closed this complex
accretive transaction with a newly minted private Canadian royalty
company. Proceeds from the Royalty Disposition advantageously
position the Company to fully eliminate its bank debt and create a
working capital surplus; all while preserving a substantial, low
decline, production base exceeding 19,000 boe/d (~48% liquids). The
increased liquidity on the Company's balance sheet combined with
its stable cash flows, will support both its organic and inorganic
initiatives, as we actively look towards a dynamic
2024."
The Royalty Disposition, involving most of the
Company's royalty assets, but not its core Simonette Royalty,
provides substantial capital and will allow i3 to accelerate value
associated with its extensive inventory of high-return drilling
locations, while jointly pursuing accretive inorganic growth
initiatives.
The Royalty Disposition is comprised of i3 fee
royalties, i3 gross overriding royalties, along with certain newly
created royalties on a minor subset of previously unburdened lands,
and is expected to average 388 boe/d in 2024, while delivering USD
3.61 million in royalty income based on strip pricing (as at 3
April 2024).
The Company now has a fully undrawn USD 55.56
million (CAD 75 million) senior secured revolving credit facility
with a Canadian chartered bank and will remain disciplined with its
conservative approach to debt management as it looks to balance
stable, predictable, growth, along with its ongoing dividend
programme. The Company now looks forward to updating the market
later this month with its capital programme for 2024.
Norton Rose Fulbright Canada acted as legal
counsel to i3 in relation to the Royalty Disposition.
(1) Unless otherwise denoted, all figures are
referenced in USD ($) and assume a foreign exchange rate of 1.35
CAD:USD
(2) Production numbers reflect the Company's 2024
average
(3) Production numbers reflect the Company's
December 2023 average
(4) Non-IFRS measure, refer to 'Non-IFRS Financial
Measures'
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.
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.
Forward-Looking Statements
This press release offers our
assessment of i3's future plans and operations as at April 17,
2024, and contains certain forward-looking information and
statements within the meaning of applicable securities laws. The
use of any of the words "anticipate", "continue", "estimate",
"expect", "forecast", "may", "will", "project", "should", "plan",
"intend", "believe" and similar expressions (including the
negatives thereof) are intended to identify forward looking
information or statements.
The forward-looking information and
statements included in this news release are not guarantees of
future performance and should not be unduly relied upon. Such
information and statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information or statements including, without
limitation: those relating to results of operations and financial
condition; general economic conditions; industry conditions;
changes in regulatory and taxation regimes; volatility of commodity
prices; escalation of operating and capital costs; currency
fluctuations; the availability of services; imprecision of reserve
estimates; geological, technical, drilling and processing problems;
environmental risks; weather; the lack of availability of qualified
personnel or management; stock market volatility; the ability to
access sufficient capital from internal and external sources; and
competition from other industry participants for, among other
things, capital, services, acquisitions of reserves, undeveloped
lands and skilled personnel. Risks are described in more detail in
our Financial Review, which is available on
www.i3.energy and on www.sedar.com. Forward-looking statements are provided to allow investors
to have a greater understanding of our business.
You are cautioned that the
assumptions used in the preparation of such information and
statements, including, among other things: future oil and natural
gas prices; future capital expenditure levels; future production
levels; future exchange rates; the cost of developing and expanding
our assets; our ability to obtain equipment in a timely manner to
carry out development activities; our ability to market our oil and
natural gas successfully to current and new customers; the impact
of increasing competition; the availability of adequate and
acceptable debt and equity financing and funds from operations to
fund our planned expenditures; and our ability to add production
and reserves through our development and acquisition activities,
although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. Our actual results,
performance, or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements. We
can give no assurance that any of the events anticipated will
transpire or occur, or if any of them do, what benefits we will
derive from them. The forward-looking information and statements
contained in this document is expressly qualified by this
cautionary statement. Our policy for updating forward-looking
statements is that i3 disclaims, except as required by law, any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Non-IFRS Financial Measures
i3 uses the following terms for
measurement within this press release that do not have a
standardized prescribed meaning under International Financial
Reporting Standards ("IFRS") and these measurements may not be
comparable with the calculation of similar measurements of other
entities. The Company refers to these as Non-IFRS Measures or
Alternate Performance Measures ("APMs"). APMs are not defined under
IFRS and are not considered to be a substitute for or superior to
IFRS measures. Other companies may not calculate similarly defined
or described measures, and therefore their comparability may be
limited. The Company continually monitors the selection and
definitions of its APMs, which may change in future reporting
periods.
The term "working capital surplus" in
this press release is not a recognised measure under IFRS. i3
refers to working capital surplus as "Net Debt" in other public
filings, which is defined as borrowings and leases, trade and other
payables, other non-current liabilities, and incomes taxes
receivable/payable, less cash and cash equivalents and trade and
other receivables. Management of i3 believes that that Net Debt is
a meaningful measure to monitor the liquidity position of the i3
Energy Group.
See i3's Interim Report and Annual
Report and Consolidated Financial Statements as filed on
www.i3.energy and on www.sedar.com for the periods ended 30 June 2023 and 31 December 2022,
respectively, for a discussion of Net Debt.
51-101 Advisory
In conformity with National
Instrument 51-101, Standards for Disclosure of Oil and Gas
Activities ("NI 51-101"), natural gas volumes have been converted
to barrels of oil equivalent ("boe") using a conversion rate of six
thousand cubic feet of natural gas to one barrel of oil. In certain
circumstances, natural gas liquid volumes have been converted to a
thousand cubic feet equivalent ("mcfe") on the basis of one barrel
of natural gas liquids to six thousand cubic feet of gas. Boes and
mcfes may be misleading, particularly if used in isolation. A
conversion ratio of one barrel to six thousand cubic feet of
natural gas is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Given that the value ratio based
on the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion ratio on a 6:1 basis may be misleading as an
indication of value.