Net operating income set to come in lower for i3 Energy

UK and Canada-focussed oil and gas company i3 Energy reported “strong” average second-quarter production in a trading update on Friday, of around 19,502 barrels of oil equivalent per day, although it downgraded its net operating income forecast for the year.

The AIM-traded firm said that represented a 116% increase year-on-year, and an 8% increase over the first quarter, despite delays to drilling caused by expected seasonal wet weather conditions and maintenance shutdowns at third-party facilities.

Average field sales estimates exited July above 20,000 barrels per day, with current field estimates standing at around 20,500 barrels per day.

Assuming the full implementation of the company's previously-announced enlarged capital budget, i3 said full-year 2022 net operating income was now expected to be about $200m, down from previous guidance of $241m, primarily due to “volatile” near-term commodity pricing.

The firm continued its multi-well pad development of its core Glauconite, Cardium and Clearwater holdings, and the “strategic delineation” of its high-impact Simonette Montney position, having drilled seven wells with production testing underway.

It also completed a 25% working interest farmout of the Serenity discovery to Europa Oil, with Europa funding 46.25% of the cost of the upcoming appraisal well, up to a gross capped well cost of £15m.

Preparations remained on-track for a mid-September spud.

The board said an increased minimum annual dividend would be paid in 2022, rising by 25% to £14.784m on “strong” operational and financial performance, with £5.153m being paid out in the first half.

Its enlarged full-year capital budget, as the company outlined on 9 May, remained unchanged at $97m, with i3 saying it was “on track” to deliver peak 2022 production above 24,000 barrels of oil equivalent per day.

“The second quarter was another very busy period for i3 - the company managed to increase base production levels quarter on quarter, without any contribution from our second quarter drilling campaign, despite delays and operational challenges caused by expected seasonal wet weather conditions and maintenance shutdowns at third party facilities,” said chief executive officer Majid Shafiq.

“The recently drilled wells from our second quarter campaign have been tied in post quarter end and will imminently commence making a material production contribution post clean-up.

“Our expanded drilling campaign in Canada proceeds at pace and preparations for appraisal drilling on the Serenity field in the UK are on track for an expected spud in mid-September.”

At 1059 BST, shares in i3 Energy were down 5.23% at 26.44p.

Reporting by Josh White at Sharecast.com.