ITE:CC - i3 Energy announces strategic refinancing and positive reserves update
(NewsDirect)
i3 Energy PLC (AIM:I3E, TSX:ITE,OTC:ITEEF) chief executive Majid Shafiq joins Proactive's StephenGunnion with details of a positive refinancing for the company.
The company has entered into areserve-based lending (RBL) facility, secured against its Canadianreserves and assets. The facility totals C$75 million, comprising aC$55 million revolver and a C$20 million operating loan, with anoption to index the rate to the Canadian prime rate. This newarrangement offers a slightly better interest rate compared to theprevious loan and is expected to reduce as central bank interest ratesfall. It also effectively halves the company's current interestcosts due to cash balances being held with the lending bank,offsetting the loan.
Shafiq said therefinancing has freed up $25 million Canadian annually, previouslyallocated to amortising the existing loan. This amount will now bereinvested in the business. Approximately C$50 million remains undrawnfrom the new facility, available for future investment to grow thebusiness. The flexibility and lower interest payments provided by thisfacility are highlighted as significant benefits.
Shafiq emphasised the importance ofpartnering with a Canadian bank, noting their understanding of theCanadian oil and gas sector and the capability to assess riskaccurately, leading to potentially lower capital costs. Thisrelationship is also strategic for accessing development capital fororganic growth and mergers and acquisitions (M&A).
Shafiq said the company's 2023reserves update reveals stable reserves despite production, with 93million barrels 1P and 180 million barrels 2P. He said this stability,achieved with minimal capital expenditure due to low gas prices,underscores the quality of i3 Energy's assets and its efficientmanagement. The company maintains a low production decline rate and adiverse portfolio, enabling flexibility in response to commodity pricechanges.
Looking ahead, Shafiq said i3 Energy plans to use itsenhanced liquidity for growth initiatives and will update the marketon its capital programme. The relationship with a major Canadian bankis expected to provide significant flexibility and options for thecompany's growth strategy.
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