i3 Energy PLC (AIM:I3E, TSX:ITE, OTC:ITEEF) has secured a new C$75 million reserve-based lending facility, and at the same time has settled a prior loan with Trafigura.
The company, in a statement, said the new arrangements ‘enhance its financial flexibility through improved liquidity and enabling acceleration of its growth and income-based business plan’.
At the same time, chief executive Majid Shafiq highlighted that i3 Energy maintains an extremely positive working relationship with Trafigura – which is a major commodities trading and financier in the natural resources sector.
i3 Energy, in a separate statement, formally reported its annual reserves statement which thanks to a successful 2023 capital programme saw the firm maintain inventory- proved and probable (2P) reserves stood at 179.9 million barrels, despite a significant decline in gas prices compared to the prior year.
The 2P reserves were valued (NAV) at US$1.02 billion, equating to 67p per share, whilst Proved Developed Producing (PDP) reserves were marked at US$501.3 million
i3 stated: “We are extremely pleased with the results of our 2023 year-end reserves audit which once again confirms the high-quality nature of our assets and speaks to the tenacity and diligence of our employees in Canada, both in the head office and at field level.
“In 2023 we limited our capital expenditures due to the low commodity price environment and despite that, we have managed to maintain our reserves volumes essentially flat.
“This is a testament to the quality of our base assets and also our drilling inventory.
“This quality is characterised by a low decline rate, the substantial scale of our operations and the diversity of the fields and reservoirs we produce from, which allows us to add reserves with good oil field management in addition to drilling operations.”
New debt terms
The new credit arrangement with a Canadian bank consists of a C$55 million revolving facility and a C$20 million operating loan. The arrangement has a two-year term, extendable on an annual basis thereafter.
It is secured against substantially all the assets and shares of i3 Energy Canada, it carries interest at the Canadian prime rate plus 2%.
i3 noted that the new credit facility is non-amortising and it releases C$25 million per annum, which the company will deploy in its production growth initiatives.
The new facility replaces the Trafigura financing, repaying C$57 million (as the outstanding balance of the original C$75 million loan).
"We are very pleased to have re-financed our existing loan with a traditional reserve-based lending facility provided by a major Canadian chartered bank with a long history of financing the country's oil and gas industry,” Shafiq said.
“The non-amortising structure of the facility has an immediate benefit in increasing liquidity, which we can deploy in high return growth initiatives.
A very positive validation
“This is a very positive validation of the strength of our underlying portfolio, and we look forward to building our new financial relationship in a mutually beneficial manner as we expand and grow our Canadian operations.”
He added: “We maintain an extremely positive working relationship with Trafigura, and the expansion of our commercial dealings with a range of sophisticated debt capital market investors attests to the quality of our portfolio, staff, and the success of our development operations in Canada over the last several years."
The company, meanwhile, highlighted that its estimated net debt position (at the end of 2023) of $23 million along with cash flow projections position the company with significant liquidity to contribute to its growth and income strategies.