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2022 Canadian Investment Program and Dividend Forecast
EASTLEIGH, UK / ACCESSWIRE / December 20, 2021 / 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 its 2022 Canadian investment program and forecast for dividends.
- Investment budget of US $ 47 million, planned for:
- 17 gross wells (12.6 net, 88% operated by i3) will be drilled in the company’s diversified portfolio in central Alberta, at Marten Hills (Clearwater), Simonette (Montney) and Wapiti
- Incremental peak production of up to 5,250 bepd (net), with an estimated average production in 2022 exceeding 20,000 bepd and peaks reaching 21,000 bepd, resulting in an increase in production out of 2022 of 26% per year. compared to the ‘Blowdown’ case of i3 (no investment and conservative estimate of 14% natural declines)
- USD 184 billion of combined net operating income 2022/23 (“NOI” = revenue less royalties, operating expenses, transportation and processing) based on current commodity prices; a 37% increase compared to the Blowdown case
- The Company commits to pay a minimum of 11.827 million dividends during the year 2022 (3.5 times all dividends paid in 2021), which is equivalent to 1.05 pence per share or a yield of 10, 2% at the current share price.(1), with an “unencumbered cash in 2022” forecast of US $ 66 million that could support additional distributions to shareholders or share buybacks, mergers and acquisitions and additional development activities
Majid Shafiq, CEO of i3 Energy plc, said:
“After an intense period of technical work to assess our portfolio in Canada, we expect a very busy year 2022, when we embark on a major drilling program of 17 rough wells, 15 of which will be in operation. The program will target low risk, high return production, including wells from our Clearwater and Simonette Montney permits designed to accelerate value creation in these key areas. We are also very happy to be able to give clear indications on the minimum level of cash dividends to be paid in 2022. “
2022 capital program and dividend orientation
i3 remains intensely focused on maximizing total returns to shareholders through growth-based share price appreciation and consistent distribution of earnings through dividend payments. With the extreme volatility of the sector experienced since the start of 2020, the Company also considers the protection of its prudently leveraged balance sheet to be a top priority. With these considerations in mind, the Company has approved a capital budget of US $ 47 million for 2022 (the “Capital Budget”), so that production and cash flow can continue to grow. increase, targeting the upside in the Company’s core Clearwater and Simonette Montney areas. be advanced, and the substantial return of capital to its shareholders can be assured.
The capital budget, which is fully funded by the Company’s existing resources and internally generated cash flow forecast, is expected to provide additional peak production of up to 5,250 boej through the funding of 12.6 net wells ( 17 gross wells, 88% operated by i3, including one producer Montney in Simonette plus two producers and two non-productive test wells in the Clearwater area) and maintenance capital to support the producing wells and infrastructure. The budget also includes an amount of capital that has been allocated to fund highly economical untapped drilling opportunities as they arise, and projects that improve cash flow and increase net income such as reactivation of wells, debottlenecking, consolidation and third-party tariff generators. connections to facilities operated by i3. This activity is expected to generate a 26% increase in production compared to the 2022 exit rates predicted in the i3 Blowdown scenario (which does not take into account any investment and a conservatively estimated natural decline across the portfolio. of 14%), resulting in an average 2022 production exceeding 20,000 bpd. with peaks reaching 21,000 bepd. Based on current detached product prices, use of this capital budget is expected to result in a 2022 closing cash balance of approximately US $ 66 million (“2022 unencumbered cash”).
i3 previously announced that it would distribute in the form of dividends up to 30% of free cash flow, defined by the Company as “cash flow from operations less expenses on property, plant and equipment less expenses on assets of ‘exploration and evaluation’. With 2022 expected to be a particularly capital-intensive year, and with a flexible investment program, the forecast of the real level of Free Cash Flow is more uncertain. As such, and to make i3 investors clear about next year’s payout, the Company commits to pay a minimum of £ 11.827million in dividends in 2022 (split evenly and paid in conjunction with the release). of its 2021 and interim 2022 annual reports), which equates to 1.05 pence per share – a return of 10.2% based on the current i3 share price(1). This is approximately 3.5 times the £ 3.36million in total dividends paid in the year 2021. Subject to market conditions, outlook and board approval, cash not i3’s scheduled encumbrance for 2022 could be used to fund additional dividend distributions, potential share buybacks and M&A or development activity.
Importantly, a large portion of the benefits of i3’s 2022 capital program will be recognized in the coming years, with around 45% of the capital budget being allocated to drilling in the second half of the year. year. For its planning scenario, i3 relied on the recently softened forward curve, with WTI at US $ 69.79 / bbl and US $ 66.32 / bbl, and AECO gas at US $ 2.63 / GJ and US $ 2.50 / GJ, for 2022 and 2023, respectively. Under these offsetting pricing assumptions, i3’s combined 2022 and 2023 NOIs for its pressure reduction and investment budget cases are expected to be US $ 134 million and US $ 184 million, respectively. Under the front band, the average payment of all wells operated while drilling is less than 1.4 years; this measure is in line with that obtained for the acquisition in 2020 by i3 of the portfolio of Gain Energy Ltd. and the acquisition of assets in 2021 from Cenovus Energy, and below what the company currently observes in the market for available M&A transactions and acquisitions and acquisitions of similar asset quality.
For reference purposes only, and to demonstrate the significant rise associated with a moderate strengthening in commodity prices, the combined 2022 and 2023 NOI for i3’s capital budget is expected to be US $ 244 million to $ 80. US / b WTI and US $ 2.75 / GJ, with the average disbursement of operated wells falling to 0.8 years. The Company retains the possibility of paying special dividends to return excess cash flow to shareholders in a context of strengthening commodity prices, such as the one considered here.
1) The closing price on December 17, 2021 of 10.3 pence per share
|i3 Energy plc
Majid Shafiq (CEO) / Graham Heath (CFO)
c / o Camarco
WH Ireland Limited (Nomad and Joint Broker)
|Phone: +44 (0) 207 220 1666|
|Tennyson Securities (co-broker)
Phone: +44 (0) 207 186 9030
Stifel Nicolaus Europe Limited (Joint Broker)
Phone: +44 (0) 20 7710 7600
Phone: +44 (0) 203 781 8331
Notes to Editors:
i3 Energy is an oil and gas company with a low-cost, diverse and growing production base in Canada’s most prolific hydrocarbon region, the Western Canadian Sedimentary Basin, and valuation assets in the North Sea. North with significant upside potential.
The Company is well positioned to generate future growth through the optimization of its 100% owned asset base and the acquisition of conventional, long-lived, low-decline production assets.
i3 is dedicated to responsible business practices and the environment, and places great importance on adhering to sound environmental, social and governance (“ESG”) practices. i3 is proud of its performance to date as a manager responsible for the environment, people and capital management. The Company is committed to maintaining an ESG strategy, which has broader implications for long-term value creation, as these benefits go 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 more information on i3 Energy, please visit https://i3.energy/.
This announcement does not contain any inside information.
This information is provided by RNS, the information service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as the main information provider in the UK. General conditions relating to the use and dissemination of this information may apply. For more information, please contact [email protected] or visit www.rns.com.
THE SOURCE: I3 energy API
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