I3 Energy successfully completes two wells at Clearwater ‘on time and on budget’
(I3E ) said it has successfully concluded drilling, completion and tie-in operations on the first two wells in the Company's Marten Hills Clearwater acreage, “on time and on budget.”
i3 Energy owns a 50% working interest in these wells and has the option under the associated farm-in agreement, previously announced in May 2021, to participate in a further 7 wells, at least 4 of which will be spud by March 2022, which would see i3 earn 11.5 net sections of land (c.29.4 km2), in the Marten Hills, Cadotte and West Dawson areas of the Clearwater play.
The independent oil and gas company with assets and operations in the UK and Canada said these operations have been completed for the wells 01-12-075-26W4 and 02-12-075-26W4.
Overall, eight horizontal lateral legs which totalled 13,057m in the 01-12 well and 12,644m in the 02-12 well, at a maximum true vertical depth of 630m, were drilled from each wellbore.
The drilling of the wells encountered a clean upper shoreface sandstone, with porosities ranging from 24% to 27%, and oil was evidenced throughout via oil shows on cuttings.
The Company highlighted to investors that the wells are now in production and flowing back drilling fluid and that the clean-up process is expected to take approximately three to four weeks, after which the market will be updated on initial stabilised oil flow rates, it reported.
As outlined last month, i3 has now completed the Wapiti production acquisition with a 1 April 2021 effective date. These assets produce 230 boe/d and i3 intends to conduct six well reactivations to bring Next Twelve Months (NTM) production to an estimated 310 boe/d.
This results in a total acquisition and capital cost of $0.4mm, which translates to only 0.56x expected NTM net operating income (revenue minus royalties, opex, transportation and processing).
Meanwhile, the Company said it will be drilling two wells with a partner at a net cost of $2.1mm at its Elmworth Wapiti acreage where Well 09-17-071-10W6 was spud this week.
I3 said these operations are planned to conclude in early 3Q21 and that these oil-weighted wells are expected to initially increase i3's production by approximately 175 boe/d and are estimated to return the full investment in 1.3 years based on current commodity strip pricing.
Commenting on I3’s progress to date, Majid Shafiq, Chief Executive of i3 Energy said:
"We are very pleased to have successfully concluded drilling, completion and tie-in operations on the first two wells in the Company's Marten Hills Clearwater acreage, on time and on budget. Operations were performed very efficiently, and the experience will assist greatly in the programming of the second phase of drilling on this acreage. These Marten Hills and Wapiti wells are expected to add very profitable incremental production and cash-flow to the Company's portfolio. We now look forward to our next drilling program in Wapiti Elmworth."
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Last Week, I3 told investors that it had successfully drilled the second well in its Marten Hills Clearwater drilling programme ahead of the well being brought onto production this month.
Last month, i3 told investors that its maiden dividend could be paid in July. In addition, in recent weeks, i3 Energy noted in an update that production in 2Q21 has averaged 9,142 boepd, with this including the impact of routine facility maintenance on third-party facilities.
The independent oil and gas company, which holds assets and operations in the UK and Canada, said production has averaged 9,353 boepd at the A-52-G horizontal well on its Noel acreage in northeast British Columbia which was previously brought on-stream on 17 June.
I3 explained that the tie-in and equipping of the wells at Clearwater is expected to take five days following rig release, with production from both wells anticipated to start in late July.
Overall, total revenue from the company’s Canadian assets amounted to £13m for 2020. Meanwhile, profit after tax for the final year ended 31 December 2020 came to £11.7m.
Last week, i3 announced that it had signed a CA$65 million ($53.7million) deal to acquire a package of oil and gas assets in Canada from senior oil and gas producer, Cenovus Energy.
i3 explained to investors that the deal will see the business acquire production of around 8,400 barrels of oil equivalent per day, with proven plus probable reserves of 79.5m barrels.
I3 believe the assets will be materially accretive to its forecast production, NOI, and reserves (around 30%, 20%, and 76%, respectively) in the year following the closing of the acquisition.
Looking ahead, i3 highlighted that negotiations continue with multiple potential farm-in partners in regard to the Serenity field appraisal drilling programme in the North Sea.
I3’s focus for 2021 will include growing the Canadian business, ensuring the farmout of its UK licences and distributing dividends to shareholders with up to 30% of free cash flow.
Shares in I3 Energy have more than doubled in value since the beginning of 2021. The stock was trading 2.12% higher this morning at 11.18p following the announcement.
Reasons to I3E
i3E’s is focused on the development of discoveries located close to existing infrastructure and the exploitation of producing fields, whilst maintaining limited exploration exposure.
Majid Shafiq, CEO of I3E said i3’s entry into the WCSB is “to provide a platform to execute on a strategy for the rapid growth of a Canadian onshore production portfolio via M&A.”
Alongside its acquisition of Toscana, i3 has continued to expand its Canadian assets, with CEO, Majid Shafiq, and in particular, has viewed 2020 as “a transformational year.”
In September 2020, the company told investors that it completed its acquisition of all the petroleum and infrastructure assets of Gain Energy for CAD$80m after raising around £29m in August in order to complete its proposed acquisition of the Gain Energy assets in Canada.
i3 Energy also agreed to sell Gain's Saskatchewan portfolio to Harvard Resources Inc. for CAD$45m, c.US$33m, immediately following the completion of its acquisition of Gain.
i3 believes the diversification of its portfolio will add ‘a quality production base to provide internal free cash flow to grow the enlarged group and provide a near-term return to its shareholders.’
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