i3 Energy PLC has successfully secured a strategic refinancing arrangement while reporting stable reserves, positioning the UK-based energy company with Canadian operations for future growth initiatives. The company entered into a reserve-based lending facility totaling C$75 million, secured against its Canadian reserves and assets. This new financial arrangement offers improved terms compared to the previous loan, including a slightly better interest rate that is expected to become more favorable as central bank interest rates decline.
According to Majid Shafiq, i3 Energy's chief executive, the refinancing has created significant financial flexibility by freeing up C$25 million annually that was previously allocated to amortizing the existing loan. This substantial amount will now be available for reinvestment in the business, providing the company with enhanced liquidity to pursue strategic opportunities. Shafiq emphasized the importance of partnering with a Canadian bank, noting their specialized understanding of the Canadian oil and gas sector and their capability to accurately assess risk in this specific market environment.
The banking relationship represents a strategic advantage for i3 Energy beyond the immediate refinancing benefits. This partnership is crucial for accessing development capital that will support both organic growth initiatives and potential mergers and acquisitions activity. The company's ability to secure this facility with a major Canadian financial institution reflects confidence in i3 Energy's asset base and operational strategy within the Canadian energy landscape.
Complementing the refinancing announcement, i3 Energy's 2023 reserves update demonstrates remarkable stability despite ongoing production activities. The company reported reserves of 93 million barrels on a 1P basis and 180 million barrels on a 2P basis, maintaining these levels with minimal capital expenditure during a period of low gas prices. Shafiq highlighted that this reserves stability underscores the quality of i3 Energy's assets and the efficiency of its management approach. The company maintains a low production decline rate and operates a diverse portfolio that provides flexibility to adapt to changing commodity price environments.
Looking forward, i3 Energy plans to leverage its enhanced financial position to pursue growth initiatives, with plans to update the market on its capital program in the near future. The strategic relationship with a major Canadian bank is expected to provide significant flexibility and multiple options for executing the company's growth strategy, positioning i3 Energy to capitalize on opportunities in the evolving energy market while maintaining financial stability and operational efficiency.
