i3 Energy PLC, a UK-based energy company with significant operations in Canada, has announced a strategic refinancing move that not only secures its financial footing but also highlights the stability of its reserves. The company has entered into a reserve-based lending (RBL) facility amounting to C$75 million, secured against its Canadian reserves and assets. This new financial arrangement comes with a slightly improved interest rate compared to the previous loan, with expectations for further reductions as central bank interest rates decline.
Majid Shafiq, i3 Energy's chief executive, revealed that the refinancing has unlocked C$25 million annually, funds that were previously earmarked for amortizing the existing loan. This financial liberation allows i3 Energy to reinvest in its business, focusing on growth initiatives. Shafiq underscored the strategic advantage of partnering with a Canadian bank, citing their deep understanding of the Canadian oil and gas sector and their ability to accurately assess risk. This partnership is pivotal for i3 Energy as it seeks development capital for organic growth and potential mergers and acquisitions (M&A).
The company's 2023 reserves update further solidifies its position in the industry, reporting stable reserves of 93 million barrels 1P and 180 million barrels 2P, despite ongoing production. Shafiq attributed this stability to the quality of i3 Energy's assets and efficient management, achieved with minimal capital expenditure amidst low gas prices. The company boasts a low production decline rate and a diversified portfolio, providing the flexibility needed to navigate the volatile commodity price landscape.
Looking forward, i3 Energy is poised to leverage its enhanced liquidity for growth initiatives, with plans to update the market on its capital programme. The strategic relationship with a major Canadian bank is anticipated to offer the company significant flexibility and a variety of options to fuel its growth strategy. This development not only marks a significant milestone for i3 Energy but also signals potential shifts in the Canadian oil and gas sector, as companies seek innovative financial solutions to drive expansion and sustainability.
