Mr. Majid Shafiq reports

I3 ENERGY PLC ANNOUNCES Q4 2023 OPERATIONAL AND FINANCIAL UPDATE

i3 Energy PLC has released the following Q4 2023 operational and financial update.

Highlights:

• 2023 annual average production of 20,711 barrels of oil equivalent per day (boepd), which represents record annual corporate production and is at the high end of the company's 2023 guidance range of 20,000 boepd to 21,000 boepd;
• Q4 2023 production averaged 20,413 boepd;
• 2023 drilling program completed, delivering 12 gross (8.0 net) wells, which met or exceeded management's expectations and were completed on budget despite a high inflationary environment;
• In Q4, four gross oil-focused wells (2.54 net) were drilled in i3's central Alberta core area;
• Full-year 2023 net operating income (NOI) (unaudited) is approximately $93-million (U.S.), in line with guidance, with year-end 2023 net debt expected to be approximately $23-million (U.S.) (unaudited);
• Dividends of 3,083,000 million pounds sterling were declared and paid during the fourth quarter, with total dividends of 13,298,000 pounds sterling declared and 15,338,000 pounds sterling paid in 2023. Additionally, the Q4 2023 dividend of 3,084,000 pounds sterling was declared and paid in early 2024.

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

"The fourth quarter of 2023 rounded off a highly successful annual capital program for the company, with a dozen wells drilled, and which, like our 2022 program, in aggregate exceeded predrill expectations, and was executed safely and in line with budget. We are very pleased that this program, combined with our robust, low-decline asset base and a razor-sharp focus on operational efficiency, delivered very strong financial performance, despite a challenging commodity price environment, and ensured that the company met its production and net operating income guidance for the year. This is a testament to the quality of our portfolio, and the skill, expertise and dedication of our staff. Our strong production and financial performance supported our capital program, debt repayments and dividend payments to shareholders of over 15 million pounds sterling throughout the year, and our extensive drilling inventory provides multiple options to maximize return on capital deployment. As we enter 2024, with continued weakness in commodity price forecasts, in particular for North American gas, our business strategy remains flexible between high rate of return organic drilling and inorganic growth opportunities. The company is progressing several initiatives, which will be incorporated into an optimized 2024 drilling and capital program, and we look forward to updating the market on this during the course of March."

Production update

Production in Q4 2023 averaged 20,413 boepd, composed of 63.9 million standard cubic feet of natural gas per day (mmcf/d), 5,180 barrels per day (bbl/d) of natural gas liquids (NGLs), 4,155 bbl/d of oil and condensate, and 429 boepd of royalty interest production. The quarterly production represents a decrease of approximately 3 per cent relative to Q3 2023, resulting from conservative capital management during the period of softening gas prices.

Corporate production for the second week of February, 2024, averaged 20,042 boepd, with 49 per cent representing oil and NGLs. Although intermittent seasonal production curtailments have occurred in 2024, the continued performance of i3's predictable, low-decline reserves reflects the sustainable production base that the company has acquired and developed.

Hedging program

i3 continues to employ a defensive risk management strategy, protecting approximately $41-million (U.S.) of 2024 NOI with current hedges in place as shown in the associated table.

Operational results

In total, i3's 2023 Canadian drilling program was composed of 10 gross (7.5 net) operated wells and two gross (0.5 net) non-operated wells. The total 2023 capital expenditures of approximately $30-million (U.S.) (unaudited) served to efficiently delineate and develop its core areas of central Alberta, Wapiti and the Clearwater. The well performance associated with the targeted formations, in aggregate, continues to meet or exceed management expectations. Further, the company diligently managed the long-term performance of its high-impact Simonette Montney oil wells, drilled in 2022, further increasing the company's conviction and commitment to unlocking the value inherent in these prolific, oil-weighted assets.

The Q4 2023 program, focused on central Alberta, included the drilling, completion and tie-in of two gross (2.0 net) horizontal Glauconite oil locations, one gross (0.53 net) vertical Leduc oil well and a minor working interest (0.01 net) in a non-operated Belly River oil well.

Central Alberta

Based on the company's record of successful Glauconite drilling in central Alberta and the strong well results of industry peers in proximal acreage, i3 drilled, completed, equipped and tied in two gross (2.0 net) one-mile Glauconite oil wells from a single surface pad location. Resulting from upfront logistical work and efficient drilling, this two-well development was delivered approximately 13 per cent under budget. The wells were brought on production at the end of December, 2023, and have delivered strong performance while continuing to clean up and recover load fluid.

The 102/03-05-043-02W5 well was equipped with a hydraulic pumpjack and has produced peak oil rates of up to 150 bbl/d with associated gas, compared with an expected type curve IP30 (initial production rate for first 30 days) of 122 bbl/d, and is currently producing 120 boepd. The 102/14-08-043-02W5 initially flowed without artificial lift at peak oil rates in excess of 400 bbl/d, compared with an expected type curve IP30 of 124 bbl/d. Subsequently, this well has been equipped with a pumpjack and bottom hole insert pump, and its last weekly average production is at 232 boepd. Both wells are in line with expectations and have further optimization potential.

In Q4, i3 and its working interest partners drilled one gross (0.53 net) vertical Leduc oil well into the Homeglen Rimbey D-3 unit in central Alberta. This well was drilled into a structural high in the underlying Leduc formation that targeted unswept attic oil. The Leduc formation, accurately identified on 3-D seismic, was intersected approximately five metres to seven metres higher than offsetting producing wells. However, a seven-metre-thick tight dolomite cap was encountered, which effectively negated the structural gain. The well was swabbed and produced light oil with a high water cut, and is not deemed economic in the current price environment. i3 and its working interest partners will utilize the wellbore for continuing observation and optimization of the Homeglen Rimbey unit.

Serenity

The company continues, with its partner Europa Oil and Gas, to evaluate commercialization options for the Serenity discovery.

Environmental, social and governance (ESG)

Expanding on the ESG initiatives executed in 2022, i3 Energy has maintained its commitment to reducing its Scope 1 and Scope 2 carbon emissions. i3 replaced pneumatic pumps with solar-driven alternatives at 11 locations, which is expected to reduce methane emissions by an estimated 445 tonnes carbon dioxide equivalent (CO2e). Additionally, the electrification of 13 pumpjack engines in Carmangay and Retlaw is expected to further reduce emissions by an estimated 2,759 tonnes CO2e per year. In a further move toward greenhouse gas reduction, the company replaced natural gas-fired heaters with electric heaters at one of its Medicine River locations. In collaboration with an offset operator, i3 implemented an alternative fugitive emissions management program (ALT FEMP) at its locations in 2023, which images methane emissions from the air and is anticipated to contribute to a substantial reduction in fugitive emissions by over 50 per cent compared with the previous year. Concurrently, i3 implemented two compressor consolidation projects, which are expected to achieve annual emission reductions of 2,728 tonnes CO2e and 681 tonnes CO2e, respectively. These endeavours exemplify i3 Energy's dedication to environmental sustainability and continual progress in ESG practices. In January, 2024, the company was also pleased to publish its 2022 ESG report.

Return of capital

The company remains committed to delivering a sustainable dividend as part of its total return model. During 2023, 13,298,000 pounds sterling dividends were declared and 15,338,000 pounds sterling, or 1.2825 pence per share, were paid. Q4 2023 dividends of 0.2565 pence per share were declared in January and paid in February, 2024. Subject to board approval at the end of quarter, the company expects to pay the Q1 2024 dividend of 0.2565 pence per share in early Q2 2024, with an announcement made in due course, which translates to a forward running yield of 11.5 per cent based on the closing price of i3's ordinary shares on Feb. 23, 2024.

Year-end 2023 reserves update

i3's year-end 2023 independent reserves evaluation is in progress and the company expects to release its final numbers in late March, prior to the dissemination of its 2023 year-end financial statements.

Year-end 2023 and 2024 quarterly financial reporting

As the company's Canadian shareholding has now increased beyond 10 per cent, i3 is no longer a designated foreign issuer and therefore is no longer eligible for Toronto Stock Exchange continuous disclosure exemptions previously granted through National Instrument 71-102. As such, the company will commence issuing TSX-required quarterly financial reports for Q1 2024, including a management's discussion and analysis (MD&A). Additionally, an annual information form (AIF) will be included as part of the company's 2023 year-end financial statements, which will be issued by March 31, 2024.

Outlook

In lower-commodity-price environments, when drilling economics soften, i3 Energy evaluates opportunities in the M&A (merger and acquisition) market, where higher returns on investment are often achievable. Accordingly, the company is currently evaluating several options to enhance shareholder value, which include strategic acquisitions and disposition of non-core assets to increase liquidity.

The capital program will target the second half of the year, with wells brought on production ahead of stronger winter pricing. Considering the current weak forecast for North American gas prices, the drilling program currently being planned will focus on oil well locations, but the company retains the option to pivot to liquids-rich gas wells should gas pricing improve. The company currently has over 25 locations acquired and surveyed across its portfolio of assets (including oil and gas wells), which will allow the company to optimize capital allocation based on forecast H2 oil and gas prices.

Note:

Unless otherwise denoted, all figures are referenced in United States dollars and assume a foreign exchange rate for the relevant period or point in time.

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.

About i3 Energy PLC

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.