i3 Energy today announced the following Q3 2022 operational and financial update.

Highlights:

· Canadian portfolio validated through consecutive quarter-on-quarter organic growth since completing Canadian asset acquisitions in Q3 2021

· Record corporate production exceeding 23,000 barrels of oil equivalent per day ("boepd") achieved in October with forecasts in line to reach 24,000 boepd prior to year-end

· Average Q3 production of 20,571 boepd, comprised of 64.2 mmcf/d, 5,038 barrels per day ("bbl/d") of natural gas liquids, 4,396 bbl/d of oil & condensate and 440 boepd of royalty interest production

· 2022 drilling programme nearing completion, delivering wells to date which have met or exceeded pre-drill expectations, with programme costs in line with the budget

· Brought onto production nine operated gross wells (7.93 net) including the following key wells:

o  In Central Alberta, successfully drilled two operated (100% working interest ("WI")), wells targeting the Falher zone in Willesden Green and two operated (65% WI) wells targeting the Belly River formation in Leedale

o  In Simonette North, successfully drilled one operated (100% WI) well targeting the Middle Montney formation

· Post Q3 operations continuing with five gross (4.3 net) operated wells and five non-operated gross (1.4 net) wells to be brought on stream before year-end

· Assuming the full implementation of the Company's previously announced Enlarged Capital Budget (as announced on 9 May 2022), full-year 2022 net operating income ("NOI")(1) is now forecast to be approximately USD 172(2) million based on current strip pricing.

· Completed the 13/23c-12 appraisal well on the UK North Sea Serenity field with results currently being evaluated

· Dividends of £5.098 million paid in the quarter with £11.952 million in dividends paid to date in 2022

Majid Shafiq, CEO of i3 Energy plc, commented: 
"Q3 2022 was another extremely busy operational period for the Company with extensive drilling operations being conducted in Canada and the UK. We achieved record production levels in the quarter and are on track to exceed 24,000 boepd before year end; a highly significant achievement built on the organic growth of the superbly executed drilling campaign in Canada. The benefits of this drilling success will be largely realised in 2023 as most of the production growth commenced in the second half of the year. Whilst the Serenity appraisal well in the UK didn't prove up the anticipated volumes hoped for, we remain confident in our ability to commercialise value from the discovery. We have commenced our annual budgeting cycle and will announce before year end a 2023 capital programme, based on our total shareholder return model, balancing activities to seek to grow the share price with sustainable growing cash returns to shareholders".

Production Update

Production in Q3 2022 averaged 20,571 boepd, comprised of 64.2 million standard cubic feet of gas per day ("mmcf/d"), 5,038 barrels per day ("bbl/d") of natural gas liquids, 4,396 bbl/d of oil & condensate and 440 boepd of royalty interest production. The strong quarterly production represents an increase of approximately 55% and 6% over Q3 2021 and Q2 2022, respectively. The growth realized in the third quarter marks the fifth consecutive quarter-on-quarter production increase for i3, which reflects both the predictable low-decline nature of the Company's base assets and the efficiency of its 2022 drilling programme to date.

Subsequent to Q3, i3 has achieved record corporate production of over 23,000 boepd as new wells were brought on stream, cleaned-up and optimized. The Company remains on track to reach 24,000 boepd by year-end with contribution increases from five gross (3.93 net) Montney and Cardium wells, which are still being cleared up, two gross (2 net) Falher wells recently drilled, tied-in and commencing clean-up and seven gross (3.7 net) recently drilled wells in the Glauconite, Clearwater, and Belly River formations, all of which are expected to be completed and tied-in prior to year-end.

Operational Results

i3 continued the execution of its expanded 2022 drilling programme, and in Q3 2022, the Company brought 11 gross (8.5 net) wells on production, which focussed on operated oil and liquids rich gas wells, in its strategically important Central Alberta (Glauconite), Wapiti (Cardium), Simonette (Montney) and Clearwater (operated and non-operated) assets. In the quarter, i3 participated in six gross (4.2 net) wells across its drilling portfolio, including four gross (3.7 net) operated wells and two gross (0.51 net) non-operated wells. 

Central Alberta (Glauconite, Falher & Belly River)

Based on the Company's successful Q1 Glauconite drilling programme at Open Creek, i3 drilled, completed, equipped and tied-in three offsetting (100% WI) Glauconite wells from a single pad location. Post clean-up of these 3 wells, the Company's total Glauconite programme year to date has seen total project results outperforming type curve estimates and is on track to deliver pay-outs of approximately 8 months with peak 30-day individual well rates averaging in excess of 600 boepd. The Company spud the final Open Creek Glauconite well of its 2022 programme in October and the well reached total depth on 29 October, with completion operations commencing early November. Initial geological data conforms with pre-drill expectations.

In August, the Company spudded its first two (100% WI) 1.5-mile extended-reach horizontal Falher wells from a common pad at Willesden Green. The wells were drilled on time and on budget and exhibited strong gas response along the entire horizontal lateral lengths, consistent with the large-rate offsetting Falher wells and the Company's geotechnical interpretation. Completion and tie-in operations were finalized in late October, with clean-up flow having now commenced.

In late September, i3 commenced a two-well (1.3 net) Belly River drilling programme in Leedale, further demonstrating the multi-zone development inventory within the Company's Central Alberta portfolio. Drilling and completion operations were finished in late October and the wells are currently being equipped with production facilities and are expected to commence clean-up flow in mid-November.

Wapiti / Elmworth (Cardium)

In Q2, i3 drilled and operated four gross (2.94 net) horizontal Cardium oil wells, consisting of a 1.0 net single-well operation plus three gross (1.94 net) wells drilled from a common surface pad, representing the Company's initial operated development within this core area. The four-well programme has now been tied-in, with realized 30-day production rates of greater than 490 boepd per well, despite strong pipeline backpressure associated with the area gathering system. The Company expects ongoing third-party compression upgrades to alleviate current backpressure curtailment.

Simonette (Montney)

i3's initial two gross (1.99 net) Middle Montney and Lower Montney extended-reach horizontal wells at North and South Simonette, respectively, are now tied-in, following the installation of additional testing equipment. Both wells are now in the clean-up phase, recovering completion fluids associated with the stimulation operations. Peak rates from these high-impact 2-mile horizontal wells are expected to occur mid-to-late Q4 following an extended clean-up period, as is common with high intensity multistage Montney completions.

Clearwater

In Q3, i3 continued advancing the ongoing development and delineation of its Clearwater portfolio with the drilling of its initial six-leg horizontal multilateral well (0.5 net) in the greater Harmon area. This well is expected to begin clean-up flow in November following installation of production facilities.

Subsequent to the end of quarter, i3 and its working interest partner spud two gross (0.6 net) nine-leg multilateral horizontal wells at Marten Hills, with the third and final one gross (0.3 net) well in the programme being drilled at present. The initial two wells are currently being equipped with production facilities and all three wells are planned to commence clean-up flow in November. 

Additionally, i3 has continued to expand its Clearwater portfolio with the addition of 15 gross (15 net) sections of Clearwater rights within its core operating areas. Upon acquisition of these new lands, i3 increased its Clearwater position by approximately 16% to 109 net sections.

2022 Guidance Update

On 9 May 2022, following the excellent results of its initially budgeted drilling programme [and forecasted strength in commodity prices,] i3 announced an increase in its 2022 capital budget by up to 100%, to USD 97 million (the "Enlarged Capital Budget"). The Enlarged Capital Budget and expanded drilling programme had dual objectives - to increase production and grow booked reserves while demonstrating the upside from certain strategic assets in i3's Canadian portfolio. As outlined above, a significant number of the Company's recently drilled operated wells are still in the clean-up flow period or await tie-in to production facilities and are set to contribute during the remainder of the year. Although 2022 operations are not complete, i3 is currently forecasting that the full-year development drilling spend will be approximately in line with the Enlarged Capital Budget; being a major achievement considering industry wide inflationary pressures impacting the costs for oilfield equipment and services.

The Enlarged Capital Budget remains on track to deliver peak production above 24,000 boepd before year-end 2022. i3's full year 2022 NOI is forecasted to be approximately USD 170 million based on current strip prices. This is a reduction of USD$28 million compared to the Q2 Operational Update guidance and is primarily due to the recent softening of liquids and AECO gas forward pricing. Compared to the strip pricing used for the Q2 guidance, full year 2022 WTI oil pricing (to which the majority of i3's oil production is referenced) is down 2.3%, NGL pricing is down 7.4% and AECO gas pricing is down 8.8%.

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