Mr. Majid Shafiq reports

I3 ENERGY PLC ANNOUNCES Q3 2023 OPERATIONAL AND FINANCIAL UPDATE

i3 Energy PLC has provided its Q3 2023 operational and financial update.

Q3 highlights:

• Average Q3 2023 production of approximately 21,156 barrels of oil equivalent per day (boe/d), representing a 14-per-cent increase over the prior quarter and a 3-per-cent increase from Q3 2022;
• Net operating income for the quarter, reflecting restored production and strengthening commodity prices, was $25.97-million (U.S.) (as compared with $17.66-million (U.S.) in Q2), representing a 47-per-cent increase quarter over quarter;
• i3 remained focused on repayment of its new credit facility, with the original drawn amount of $75-million (Canadian) reduced to $66.67-million (Canadian) ($49.39-million (U.S.)) and net debt as at Sept. 30, 2023, of approximately $27.56-million (U.S.), down from $38.98-million (U.S.) as at June 30, 2023;
• As part of i3's commitment to its total shareholder return model, dividends of 3.08 million pounds sterling ($3.91-million (U.S.)) were declared in Q3 and paid in October, 2023;
• Postquarter-end, the board of directors approved a $6-million (U.S.) capital program, for the balance of 2023, centred on the company's Glauconite and Leduc oil fairways in central Alberta.

Majid Shafiq, chief executive officer of i3 Energy, commented:

"Following the major scheduled maintenance activities and disruptions due to wildfires in Q2, we are very pleased with the recovery of production levels in Q3, and we remain on track to meet our previously stated guidance for 2023 production and net operating income. We will also shortly commence a three well drilling program, focused on oil development in central Alberta."

Production update

Production in Q3 2023 averaged 21,156 boe/d, comprising 68.7 million standard cubic feet of natural gas per day (mmcf/d), 4,887 barrels per day (bbl/d) of natural gas liquids (NGLs), 4,485 bbl/d of oil and condensate and 342 boe/d of royalty interest production. The strong quarterly production represents an increase of greater than 14 per cent from Q2 2023 and approximately 3 per cent over Q3 2022, despite a 21-day curtailment in central Alberta associated with a meter station outage. The meter station outage impacted i3's calendar-day volumes by 1,120 boe/d in August or 377 boe/d for Q3 2023. The performance of the assets in Q3 2023, after Q2 2023 turnarounds and disruptions, and in light of the downtime experienced in Q3 2023, reflects both the deliverability of the underlying reservoirs and their predictable low-decline nature, and supports the quality of the company's large inventory of development drilling locations.

Hedging program

i3's risk management strategy currently protects $50.65-million (U.S.) ($67.87-million (Canadian)) and $28.32-million (U.S.) ($37.95-million (Canadian)) of net operating income for 2023 and 2024, respectively, with current hedges in place to cover 29 per cent, 33 per cent, 12 per cent, 11 per cent and 2 per cent of the company's projected Q4 2023, Q1 2024, Q2 2024, Q3 2024 and Q4 2024 production volumes, respectively. i3's hedges are provided in an attached table.

Q3 2023 operations

The company experienced a strong Q3 2023 after a challenging Q2 2023 period, in which corporate production averaged 18,529 boe/d, with approximately 3,100 boe/d offline for the quarter, due to restrictions resulting from the Alberta wildfires, unanticipated apportionment issues associated with the Pembina Peace pipeline liquids line, critical downtime related to debottlenecking projects and i3 turnaround initiatives (both operated and non-operated). After such significant downtime experienced in Q2 2023, the company is pleased to report that production returned rapidly to prerestricted levels and continued to outpace anticipated declines throughout Q3, achieving quarterly production of 21,156 boe/d.

Capital activities in Q3 2023 were limited to $1.73-million (U.S.) ($2.23-million (Canadian)), with the company focusing on re-establishing and optimizing productive capacity after turnarounds and disruptions experienced in the prior quarter. Of the total Q3 2023 capital expenditure program, i3 invested $410,000 (U.S.) ($550,000 (Canadian)), focused primarily in the Lodgepole area of central Alberta, on pipeline infrastructure to consolidate and optimize volumes at its operated 13-35-047-10W5 gas plant.

Similar gathering system improvements in the Wapiti area, completed in Q2 2023 by a third party operator, have alleviated line pressure constraints and allowed the company to optimize production in the quarter from its three-well Cardium pad that was drilled and brought on production earlier this year. After debottlenecking, the three Cardium wells have performed above GLJ's proved plus probable type curve expectations, with unrestricted rates having exceeded peak rate predictions.

The strong volumes associated with the Wapiti program have occurred despite unanticipated apportionment issues associated with the Pembina Peace pipeline liquids line, resulting in reduced liquids yields realized by area operators. i3 expects the apportionment issues to be resolved over the coming months as local operators work diligently to optimize throughput efficiencies for all relevant parties. This was evidenced by the September production, which averaged 21,380 boe/d, comprising 67.6 mmcf/d, 5,200 bbl/d of NGLs, 4,480 bbl/d of oil and condensate, and 433 boe/d of royalty interest production.

Environmental, social and governance (ESG)

i3 is committed to conducting its operations responsibly and in accordance with industry best practices. The company's commitment to high ESG standards is central to maintaining i3's social licence to operate, creating value for all stakeholders and ensuring long-term commercial success.

In Q3 2023, i3 invested $800,000 (U.S.) net, before any government grants, to abandon five wells, decommission seven sites and abandon 11 pipelines, while further advancing site reclamations across its portfolio. Incorporating activity from the first half (H1) of 2023 brings the company's year-to-date abandonment and decommissioning totals to 25 wells, 13 sites and 16 pipelines, with a further 13 sites having been reclaimed. i3 will continue its 2023 abandonment and reclamation program, with approximately $3.91-million (U.S.) being directed to pipeline/wellbore abandonments, pipeline/facility decommissioning and well site reclamation.

Serenity

The base case development for Serenity assumed a joint development with the Tain field. Following the relinquishment of the Tain licence by the licence holders, i3 and its partner, Europa Oil and Gas, are now considering other options for development and will update the market as and when necessary.

Q4 2023 capital program

The company has prepared an oil focused Q4 2023 drilling program to capitalize on the continued relative strength in oil prices. The program previously contemplated follow-up drilling at Dawson to further develop and delineate the company's initial successful Clearwater oil discovery from Q1 2023. However, access constraints have delayed Clearwater development until 2024. Given the company's extensive portfolio of development opportunities and flexible operating model, the Q4 2023 program has refocused to central Alberta and will now include the drilling, completion and tie-in of two gross (2.0 net) horizontal Glauconite oil locations and one gross (0.53 net) vertical Leduc oil well. The wells are expected to spud in early to mid-Q4, with tie-in occurring ahead of year-end. Despite the operational shift and delayed on stream date, corporate production is expected to meet i3's previously stated 2023 guidance. Additionally, the results of the two Glauconitic oil wells and Leduc drill are expected to position the company for a strong start to 2024.

Reiteration of 2023 guidance and return of capital

i3's 2023 guidance remains unchanged at 20,000 to 21,000 boe/d, delivering net operating income of $90-million (U.S.) to $95-million (U.S.) for the year (with 25.9 million realized in Q3). With board approval for the company's $6-million (U.S.) Q4 2023 capital program, i3's full-year 2023 exploration and development expenditures are in line with previously announced guidance. Strong operational performance of the company's predictable low-decline production base has allowed i3 to achieve the previously stated corporate guidance despite the unplanned disruptions the company has navigated throughout 2023.

On May 31, 2023, the company refinanced its outstanding debt of circa $50-million (Canadian) with a new $100-million (Canadian) facility, of which, $75-million (Canadian) was drawn for general working capital purposes and to settle the company's outstanding loan notes. To align with the company's conservative approach to debt management, the new facility amortizes on a straight-line monthly basis (unlike the prior senior secured guaranteed loan notes, which were non-amortizing). At the end of Q3 2023, the company has repaid $6.22-million (U.S.) ($8.33-million (Canadian)) of the new facility, exiting with $49.39-million (U.S.) ($66.67-million (Canadian)) remaining. This amortization schedule will repay the loan over its three-year term, beginning with $15.97-million (U.S.) in amortization ($21.40-million (Canadian)), interest commitments and associated set-up costs to be paid throughout 2023.

As part of i3's total shareholder return model, dividends of 3.08 million pounds sterling ($3.91-million (U.S.)) were declared in Q3 and paid in October, 2023. The company remains committed to its total shareholder return model, consisting of production growth through drilling and accretive M&A (merger and acquisition) activity, and shareholder cash returns via dividends, while prudently maintaining capital discipline. Subject to board approval at the end of quarter, the company expects to pay the Q4 dividend of 0.2565 pence per share in January, 2024, with an announcement made in due course. Including dividends declared thus far in 2023 and with the expected payment for the Q4 2023 period, the forecasted aggregate 2023 dividends to be paid to shareholders is 16.38 million pounds sterling, or 1.362 pence per share, representing a yield of approximately 11.6 per cent for 2023 and a forward running yield of 8.7 per cent based on the closing price of i3's ordinary shares of 11.74 pence on Nov. 7, 2023.

Unless otherwise denoted, all figures are referenced in U.S. dollars and assume foreign exchange rates of $1.34 (Canadian) to $1 (U.S.) and 1.27 pounds sterling to $1 (U.S.), which are the average rate for Q3 2023, or, where applicable, Sept. 30, 2023, period-end foreign exchange rates of $1.35 (Canadian) to $1 (U.S.) and 1.22 pounds sterling to $1 (U.S.).

Net operating income (NOI) and net debt are non-IFRS (international financial reporting standards) measures

Qualified person's statement

In accordance with the AIM (Alternative Investment Market) note for mining and oil and gas companies, i3 discloses that Mr. Shafiq is the qualified person who has reviewed the technical information contained in this document. He has a master's degree in petroleum engineering from Heriot-Watt University and is a member of the Society of Petroleum Engineers. Mr. Shafiq consents to the inclusion of the information in the form and context in which it appears.

i3 Energy is an oil and gas company with a low-cost, diversified, growing production base in Canada's most prolific hydrocarbon region, the Western Canadian sedimentary basin and appraisal assets in the North Sea with significant upside.

The company is well positioned to deliver future growth through the optimization of its existing 100-per-cent-owned asset base and the acquisition of long-life, low-decline conventional production assets.

i3 is dedicated to responsible corporate practices and the environment, and places high value on adhering to strong ESG practices. i3 is proud of its performance to date as a responsible steward of the environment, people and capital management. The company is committed to maintaining an ESG strategy, which has broader implications to long-term value creation, as these benefits extend beyond regulatory requirements.

i3 Energy is listed on the AIM of the London Stock Exchange under the symbol I3E and on the Toronto Stock Exchange under the symbol ITE.