i3 Energy Announces Operational Update

Source: www.gulfoilandgas.com 2/23/2021, Location: Europe

i3 Energy, an independent oil and gas company with assets and operations in the UK and Canada, has announced the following interim operational update. The Company intends to provide regular quarterly updates starting with a summary of Q1 to be released in the second half of April 2021.

HIGHLIGHTS

- Production remains predictably stable with November 2020 to January 2021 averaging 9,150 boe/d (41% liquids)

- The diversified portfolio continues to perform at or above expectations, with forecasted 2021 net operating income (revenue minus royalties, opex, transportation and processing) of approx. CAD $35 million (US $27.6 million) based on mid-February strip pricing, an estimated maintenance capital budget of approx. CAD $3 million and excluding any additional production volumes associated with i3's recent Noel production test (referenced below)

- High impact horizontal Falher formation production test at i3's Noel property, located in Northeast British Columbia, further confirming the unrecognized potential within the Company's existing diversified portfolio of assets

- The well is expected to be brought on production at approx. 500 boe/d during Q2 2021

Intention to declare maiden dividend in Q1 2021

Majid Shafiq, CEO of i3 Energy, commented:

'We remain very pleased with the performance of our Canadian assets, which are producing better than both internal and independent third-party technical evaluator estimates and forecasts, generated at the time of the acquisitions.

'Our Canadian and UK teams continue to pursue synergistic opportunities to grow our platform through accretive M&A, while the current commodity environment also has i3 progressing organic opportunities from within, as is exemplified by the excellent result we've just achieved at Noel.'

Canadian Production

Over the three-month period ending 31st January 2021, i3's field sales estimate averaged 9,150 boe/d (41% liquids). These production volumes exceeded the forecasted rates of the competent persons reports used for i3's 2020 AIM Re-admission documents by over 1,000 boe/d. The Company remains confident in its high-quality portfolio of assets, with ongoing work revealing numerous opportunities that were previously undercapitalized or overlooked by the prior operators. At mid-February strip pricing, i3 predicts 2021 net operating income of approximately CAD $35 million (US $27.6 million), resulting in the Company having acquired its Canadian portfolio for just 1.0 times 2021's expected full year cash flow.

As part of i3's commitment to ESG leadership, the Company has been an active participant in the Government of Alberta's Site Rehabilitation Program ('SRP') and Saskatchewan's Accelerated Site Closure Program ('ASCP'). Through i3's involvement in the SRP and ASCP, the Company has received grants to date in excess of CAD $1.9 million, which is dedicated to accelerating the closure relating to inactive wells, pipelines and facility liabilities. This will result in a reduction to the Company's overall future decommissioning liability. The Company is further pursuing carbon emission reduction initiatives to meet and exceed current regulatory requirements. These initiatives will qualify for carbon credits which can be sold or used to offset future carbon tax obligations.

The Noel Falher Gas Well

In December 2020, i3 completed an 80 hour flow-test on a horizontal Falher formation well located on its Noel acreage in Northeast British Columbia. The flow-test ran for a sustained period at 4,200 mcf/d (700 boe/d) on a 1/4" choke. The well is expected to be brought on production at approximately 500 boe/d during the second quarter of 2021, following tie-in. Currently there are no booked reserves attributed to this well, or to any potential offsetting development locations.

Dividend Timing(1)

It is expected that the Company will declare its maiden dividend in Q1 2021 - subject to loan note holder, judicial, and shareholder approval - for payment in early Q2. As previously disclosed, the Company aims to distribute up to 30% of free cash flow as a dividend to shareholders.

Serenity Appraisal Drilling Farm-out

Discussions continue with a potential farm-in partner for the Serenity discovery and terms are being negotiated. The recent strength in commodity prices has reinvigorated activity within i3's virtual data room, and additional parties previously contacted during early 2020 have now re-engaged with the Company. The market will be updated if and when an agreement is reached.

(1) The Company can only pay a dividend out of distributable profits and the Company has retained losses. The Company is expecting to effect a reduction of share capital to create distributable reserves to offset the losses and create surplus profits. A reduction of share capital will require the approval by the shareholders and the UK Courts.


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