i3 Energy revenue, operating income falls in first half

Independent oil and gas company i3 Energy reported a decrease in revenue and operating income in its first half on Thursday, with revenue sliding to £75.5m net of royalties, down from £101.6m in the first half of 2022.

The AIM-traded firm said net operating income for the six months ended 30 June was £38.9m, compared to £68.8m in the same period last year.

Additionally, cash flow from operations came in at £24.3m, down from £48.4m year-on-year.

Despite the decrease in financial performance, the firm successfully completed a CAD 100m (£58.3m), three-year, first lien debt facility with Trafigura Canada, and also fully redeemed the 2019 first-half loan notes.

i3 Energy announced total dividends of 0.855p per share, totalling £10.215m, for the first half of the year.

The company also revised its annual dividend guidance downward, changing the monthly equivalent from 0.171p to 0.0855p per share, to be paid quarterly, amounting to an estimated annual payout of £12.3m.

On the operational front, i3 Energy saw average production of 20,640 barrels of oil equivalent per day for the period, which was a 9% increase compared to the first half of 2022.

However, average second quarter production of around 18,529 equivalent daily barrels represented a 5% decrease from the second quarter of last year.

That was primarily due to disruptions caused by the Alberta wildfires and issues with the Pembina Peace Pipeline, among other factors.

Despite those challenges, production rates had recovered in July, averaging 22,065 equivalent daily barrels.

The company also drilled eight gross wells as part of its 2023 capital programme, focusing on its core Central Alberta, Wapiti, and Clearwater assets.

i3 said it had continued its efforts toward reducing carbon emissions as well, by electrifying 12 well sites.

For the rest of 2023, i3 Energy said it would focus on growing its Canadian business, maintaining flexibility to adapt to economic challenges, and conducting operations safely and in an environmentally secure manner.

The company was also planning to continue evaluating opportunities to strengthen its balance sheet while maintaining cost control.

“The first half was another very active period for i3 - we completed our planned first quarter capital programme, drilling eight gross wells in our Central Alberta, Wapiti and Clearwater acreage, re-financed our outstanding loan notes which were due in May with a new CAD 100m loan facility, and successfully conducted 20 planned operated facility turnarounds, whilst safely managing our operations during the recent extended period of wildfires in Alberta,” said chief executive officer Majid Shafiq.

“Our asset base continues to perform well, having averaged 20,640 barrels of oil equivalent per day in the first half, 9% higher than the same period last year and exiting the half-year at greater than 22,000 equivalent barrels per day, and with 2P reserves of 182 million barrels of oil equivalent, provides a solid platform for growth.”

Shafiq said commodity price weakness in the first half meant the company revised its 2023 capital and dividend programme in June, having declared £10.22m in dividends to its shareholders in the first half.

“Improvement in commodity prices in July and August and future pricing, has resulted in an increase of around 20% in our forecast for full year net operating income to $90m to $95m.

“Price volatility has also resulted in potential opportunities for growth via mergers and acquisitions, and we continue to monitor the market to ensure our capital allocation for the remainder of the year is optimised.

“We are confident that our business model, allied with our asset base and the skills and dedication of our staff, will continue to create and extract value through the commodity price cycle.”

At 1317 BST, shares in i3 Energy were up 6.69% at 13.51p.

Reporting by Josh White for Sharecast.com.