ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
REGISTRATION NUMBER: 10699593
CONTENTS
Strategic Report
i3 Energy at a glance
Highlights
Chairperson’s and Chief Executive’s Statement
Business Model
Strategy
Key Performance Indicators
Reserves
Environment, Social and Governance
Principal Risks and Uncertainties
Section 172 Statement
Financial Review
Governance
Board of Directors
Corporate Governance Report
Audit and Risk Committee Report
Corporate Governance Committee Report
Health, Safety, Environment and Security Committee Report
Reserves Committee Report
Remuneration Committee Report
Directors’ Report
Financial Statements
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flow
Notes To the Group Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes To the Company Financial Statements
Appendix A: Glossary
Appendix B: Alternate performance measures
Corporate Information
01
03
05
09
10
12
15
19
25
29
31
39
41
48
50
51
53
54
55
61
67
68
69
70
71
105
106
107
111
113
117
STRATEGIC
REPORT
01
i3 Energy at a glance
15 Reserves
03 Highlights
19 Environment, Social and
Governance
05 Chairperson’s and
Chief Executive’s Statement
25 Principal Risks and Uncertainties
09 Business Model
29 Section 172 Statement
10 Strategy
31 Financial Review
12 Key Performance Indicators
04
05
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
I3 ENERGY
AT A GLANCE
DIVERSIFIED PORTFOLIO OF OPPORTUNITIES
LARGE DEVELOPMENT PORTFOLIO
376 Booked Diversified Locations
564 Unbooked Future Locations
UK
CANADA
i3 CANADA – ALBERTA FOCUSSED
BASE DECLINE OF 17%
628K Net Acres (2,520 Km2)
v SShhaallllooww
ooiill,,
focused
and
rreeppeeaattaabbllee
ddeevveellooppmm
eenntt in the
Cardium &
Dunvegan
zones
2022 PRODUCTION
v HHiigghh--iimmppaacctt
CANADA
UK
Oil + Cond
21%
MMoonnttnneeyy ooiill &
liquids-rich
gas with
existing
infrastructure
20,317
boe/d
Royalty
Production
v HHiigghhllyy
pprroossppeeccttiivvee,,
low cost,
eeffffiicciieenntt
LARGE DEVELOPMENT PORTFOLIO
sshhaallllooww ooiill
376 Booked Diversified Locations
potential
564 Unbooked Future Locations
•
•
2022 OIL AND GAS SALES
BASE DECLINE OF 17%
628K Net Acres (2,520 Km2)
v PPrreeddiiccttaabbllee,,
llooww--ddeecclliinnee,
production
with extensive
infrastructure
delivering
ssttaabbllee ffrreeee
ccaasshh ffllooww
£235.7
MM
NGLs
25%
Gas
52%
Oil + Cond
48%
2022 PRODUCTION
May 2021 – i3 to
consolidate Simonette
March 2020
– i3 to
acquire
Toscana
July 2021 – i3 to acquire
CVE Central AB
2022 OIL AND GAS SALES
May 2021 – i3 to
consolidate Wapiti
Oil + Cond
21%
June 2020 – i3
to acquire Gain
20,317
boe/d
Royalty
Production
£235.7
MM
NGLs
25%
Gas
52%
Oil + Cond
48%
NGLs
17%
Gas
33%
01
: APRIL 2023
ACHIEVEMENTS IN 2022
Organic Production Growth
Reserves Growth
• Four quarters of production growth with peak daily
rates exceeding 24,000 barrels of oil equivalent
per day (“boepd”).
Shareholder Return
• Increased dividends declared from £3.4 million in 2021
to £17.4 million in 2022 and announced 2023 dividend
guidance of £24.5 million (2.052 pence / share).
Capital Program
• £75.8 million capital expenditure in 2022 delivered 31
gross (20.1 net) wells.
• Increased the Group’s leasehold position to 628,000
• Aggregate well productivity met or exceeded
management expectation and key wells drilled in
strategic Simonette and Clearwater acreage.
• Through participation in land sale auctions, farm-ins and
joint ventures, and partner consolidation, i3 has grown its
acreage in the strategic Clearwater play to greater than
69,600 acres (109 sections) with an average working
interest of 76%
• Farmed out 25% of the Serenity licence to Europa who
paid 46.25% of the Serenity 13/23c-12 appraisal well costs.
The well was drilled in October 2022. The company is
evaluating one well development options.
• Our 2022 capital program helped to increase Proved
plus Probable reserves (“2P”) by 18% to 182 Million
Barrels of Oil Equivalent (“mmboe”), resulting in reserves
replacement of 479% on a 2P basis.
• The Group now has 376 gross booked drilling
locations in its audited reserves and 940 including
un-booked locations.
ESG Performance
• Published inaugural annual ESG Report.
• Eliminated all high-bleed pressure controllers and
commenced installation of solar powered pumps. These
initiatives when complete will eliminate 71,450 tonnes
CO2e methane emissions equivalent to taking circa
16,000 cars off the road.
• Completed the electrification of 7 pumpjacks in
Carmangay and Retlaw to reduce use of diesel and
propane for power generation, with a further 29
electrifications underway.
• Implemented efficient disposal of oil based drilling fluid,
avoiding 2,500 tonnes of CO2e emissions.
• Ongoing annual abandonment and reclamation program
abandoned 69 wells and decommissioned 37 well
sites, representing approximately 14% of operated non-
producing wells.
net acres.
Aggressive consolidation
during sector downturn
with 5 strategic
acquisitions within core
areas for a combined
~$80MM
Established predictable,
low-decline, production
base with extensive
inventory of highly
economic development
locations to deliver go
forward growth + income
model
Increased share price
~490% from £0.05 to
£0.2465
Increased production and
liquids weighting to
>24,000 boe/d (~50% oil
& NGLs)
EExxcceeppttiioonnaall AAccqquuiissiittiioonn MMeettrriiccss((11))
NGLs
17%
•
Gas
33%
•
OUTLOOK
A summary of key events which occurred after the reporting period are presented in note 24 to the financial statements.
The Company’s focus for the remainder of 2023 will be on three key areas:
Production
($/boe/d)
Reserves
($/2P boe)
NTM NOI
1 The growth of i3’s Canadian
business through the
deployment of capital into
<$4,350
its large proven undeveloped
reserves base, operational
excellence to improve uptime
~$0.72
and field performance, and
1.36x
strategic upsizing in core areas;
(1) Includes 2020 and 2021 acquisitions and NTM
production and NOI forecast at time of announcement
4
2 Maintaining flexibility to adapt
to economic challenges while
maximizing total shareholder
return; and
3 Conducting its operations safely
and in an environmentally
secure manner.
The Company continuously
evaluates opportunities to
strengthen its balance sheet whilst
maintaining tight control of its costs
and working capital position.
02
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
HIGHLIGHTS
UK AND CORPORATE
GROUP PROFIT / (LOSS)
AFTER TAX £m
GROUP ADJUSTED
EBITDA(1)
£m
42.0
25.1
2022
2021
2020
2019
11.7
-10.9
2022
2021
30.2
2020
-0.8
2019
-5
98.0
GROUP NOI(1)
£m
DIVIDENDS DECLARED £m
2022
131.7
2022
17.4
2021
48.6
2020
4.9
2019
0
03
2021
3.4
2020
0
2019
0
CANADA
AVERAGE DAILY
PRODUCTION BOE/D
20,317
12,442
8,732
2022
2021
2020
2019
0
GROUP
REVENUE £m
86.8
2022
2021
2020
13.0
2019 0
208.4
2P AND PDP
RESERVES MMBOE
2P RESERVES
BEFORE-TAX NPV 10 (USDm)
181.5
154.1
2022
2021
2020
183
2019
0
1,162
775
49.1
46.2
54.0
2022
2021
2020
18.1
2019
0
0
*Non-IFRS measure. Refer to Appendix B
■ 2P reserves ■ PDP reserves
04
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CHAIRPERSON’S AND
CHIEF EXECUTIVE’S STATEMENT
Overview of the year
Following its very successful entry
into Canada through M&A and the
aggregation of a significant portfolio
of development assets over the
course of 2020 and 2021, the
strengthening of oil and gas prices in
2021 resulted in a shift of strategy for
the Company to focus on internally
generated growth through the
exploitation of its extensive portfolio
of development drilling locations.
In January 2022 i3 embarked on its inaugural drilling
campaign in Canada. The Company announced in December
2021 an internally funded USD 47 million programme of drilling
which was designed to drill 17 gross wells (12.6 net) across its
key assets. The programme was designed to maximize near-
term production and cash flow through further development
of the Company’s large inventory of predictable and highly
economic Glauconite locations in Central Alberta, while
continuing to advance i3’s high-impact Simonette Montney
position and recently expanded Clearwater holdings. The
program was expected to add incremental peak production
of 5,250 boepd and result in average 2022 production of
over 20,000 boepd while testing and advancing important
growth catalysts in its portfolio. Based on the very positive
results of the wells drilled in the first quarter, the Company’s
strong operational performance and the forecasted strength
of commodity prices, the Company decided in May to expand
its program with an additional USD 50 million of capital.
The revised capital budget was forecast to provide peak
production above 24,000 boepd by year end. We are very
pleased that the drilling programme was executed under
budget and the aggregate well performance met management
expectations. In total i3’s 2022 drilling programme delivered
31 gross (18.4 net) wells and was executed circa 5% under
budget with excellent capital efficiencies, which was a major
achievement considering the highly inflationary environment
the Company and its industry peers were challenged with.
Such success was achieved by a strong focus on operational
efficiency and cost control and is a testament to the dedication
and skills of all our staff. In addition to production wells in
our Core Central Alberta and Wapiti areas, key development
and delineations wells were drilled in our growth assets in
Simonette (in the Montney formation) and Marten Hills (in the
Clearwater formation), and production data from these wells
will help us plan for future expansion in these areas.
John Festival
Non-Executive Interim
Chairperson
Majid Shafiq
Chief Executive Officer
The very successful drilling campaign allied with an extensive
suite of regular workovers, reactivations and a focus on uptime
and operational efficiencies resulted in a continuation of
production growth since our entry into Canada. The company
entered the year at circa 18,000 boepd and reached 24,000
boepd in December, with a Q4 average production level of
22,757 boepd.
Although our focus in 2022 was on production growth, the
drilling campaign targeted locations that would advance the
development of strategic assets in our Simonette Montney and
Clearwater assets. We also significantly grew our exposure to
the Clearwater play through a series of strategic transactions
including successful bids at Alberta Crown Land Sales, joint
ventures, farm-in agreements and partner consolidation. This
activity has grown our Clearwater land position by circa 120%
to 109 net sections (279 km2) from the 50 net sections (128
km2) acquired as part of the Company’s first transaction in
Canada, the Toscana acquisition in 2020.
The Company’s year end 2022 audited reserves reflect the
successful reservoir management of ongoing operations and
the results of the 2022 drilling program. The Company offset
production declines and increased its Proven Developed
Producing (PDP), Total Proved (1P) and Proved plus Probable
(2P) reserves to 49.1 mmboe, 93.5 mmboe and 181.5 mmboe
respectively. Relative to year end 2021 the Company’s PDP, P1
and 2P reserves increased by 6%, 10% and 19% respectively.
This was a significant result and achieved with positive
revisions to existing reserves and reserves adds from new
development drilling locations. The scale and longevity of our
asset portfolio is demonstrated by a reserves life index of 22.5
years for the Company’s 2P reserves.
Our 2022 drilling program and subsurface technical work has
contributed to an increase in the Company’s total inventory to
940 gross (537 net) drilling locations of which only 376 gross
(255 net) are booked in the year end 2022 reserves report.
A significant proportion of these un-booked drilling locations
are located in Simonette, Wapiti and our Clearwater acreage,
which illustrate the organic growth potential in these assets.
Together the booked and un-booked drilling locations
provide for multiple years of future drilling activity and
production growth.
In the UK we farmed out 25% of our Serenity discovery to
Europa Oil and Gas Limited in return for a 1.85 for 1 carry,
resulting in the reduction of our drilling capex share from 100%
to 53.75%. The well was drilled in October but unfortunately
the targeted sand was not found at the appraisal well
location and consequently in place hydrocarbon volumes
are much lower than originally estimated. Updated mapping
of the field around the 13/23-10 discovery well, shows there
is the potential for a single well development, for which
development and monetization options are being evaluated.
The well was drilled significantly below budget resulting in a
net cost to the Company of USD 5.7 million.
Based on the success of our 2022 drilling campaign and our
budget commodity price forecasts, the Company announced
its 2023 capital budget and drilling programme on 22
December 2022. The Company plans to spend USD 64.05
million focussed on a drilling campaign on its Canadian assets.
Similar to the 2022 programme, the drilling targets production
wells in our key assets in Central Alberta, Simonette, Wapiti
and the Clearwater with an additional element of Clearwater
appraisal wells in our legacy acreage (acquired via the
Toscana acquisition) and an earn-in appraisal well in our
non-operated asset base. In total the 2023 programme is
scheduled to deliver 23 gross wells (15.2 net, 70% net i3
operated). Based on the expected performance of these
wells, forecast 2023 annual production is expected to be
in the range of 22,250 to 23,000 boepd, representing a
year-over-year increase of approximately 10% to 13%, with
an expected peak production rate in 2023 of approximately
26,000 boepd. Our budget allocation to the UK is limited to
USD 0.6 million, which will be used to advance the Serenity
one well development to field development plan stage. The
Canadian drilling programme for Q1 2023 has been completed
with wells being equipped and tied into production facilities
for clean-up. Drilling operations will recommence in Q3 2023
when surface conditions allow operations, following the Spring
seasonal wet period.
i3 Production Profile – Base, 2022&2023
We continue to actively identify production optimisation and
cost reduction opportunities within our portfolio, focussing
on maintaining high uptime, minimising operating costs,
optimising operated processing facilities and infrastructure,
and implementing high return workovers to offset natural
production declines. These efforts continue to increase
aggregate average net production and substantially reduce
the decline rates predicted within the Company’s competent
persons reports. This is a testament to the quality of the assets
in the portfolio and the dedication of our workforce. In parallel
with operational activity, we continue to review the reservoir
performance of the producing assets and identify mature fields
where redevelopment, particularly through the implementation
of relatively low-cost secondary recovery projects, could
materially increase production and ultimate hydrocarbon
recovery. Operating our assets in a safe and secure manner is
fundamental to our business and we continue to advance our
health and safety policies and procedures as we acquire and
integrate additional production assets. There were 101 routine
regulatory government inspections during 2022. 75 returned
satisfactory results, 20 were categorised as low
risk, and six that were deemed to be high risk were
subsequently remedied.
05
06
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Environmental Stewardship
Looking ahead
i3 is fortunate to operate in the UK and Canada which
have some of the world’s most stringent and rigorous
environmental laws and regulations and the Company strives
to meet or exceed all local, provincial or national operational,
environmental, reporting and compliance obligations and
abandonment and reclamation requirements. The Company
is committed to conducting its operations responsibly and in
accordance with industry best practices. i3’s commitment to
high ESG standards is central to maintaining our social licence
to operate, creating value for all stakeholders, and ensuring
long-term commercial success. i3 recognises the safety and
well-being of our employees, local communities, and other key
stakeholders as a priority, and considers climate change as
having a material impact on our business.
To demonstrate the Company’s commitment to long-term
sustainable resource development, environmental stewardship
and the well-being of employees and the communities in
which i3 operates, i3 published its inaugural annual ESG
report in July 2022. The ESG report set out the Company’s
goals and ambitions with respect to greenhouse gas emission
reductions, environmental stewardship, social policies and
governance. i3 published an updated ESG report in December
2022, which included disclosure on the assets acquired from
Cenovus Energy in 2021. This data was not available when the
inaugural report was published in July 2022.
The Company made big strides in 2022 to reduce methane
emissions. After completing the upgrading of high bleed
pneumatic controllers to low bleed or non-bleed alternatives
across its portfolio, the Company commenced replacement
of pneumatic pumps with solar driven pumps (no venting).
These initiatives have resulted in a decrease of 71,450 tonnes
of CO2e/year, which is the equivalent of removing 15,530 cars
from the road per year. i3 also completed the electrification
of 30 pumpjacks in its Carmangay and Retlaw properties,
reducing CO2e emissions by approximately 6,366 tonnes/
year. The Company further partnered with Recover Energy
Services (“Recovery”) to manage the efficient disposal of oil-
based drilling waste and as determined by Recovery, avoided
2,500 metric tonnes of CO2e emissions. Similar initiatives
will continue in 2023 as we continue to reduce the carbon
intensity of our production base. These CO2e emissions
reductions qualify for carbon credits which can be sold or
used to offset future carbon tax obligations.
i3 also takes its abandonment and reclamation obligations
very seriously and in 2022 it abandoned a total of 69
wells and decommissioned 37 well sites, representing
approximately 14% of its operated non-producing well stock. In
2023, and in accordance with the Alberta Energy Regulator’s
decommissioning guidance, i3 expects to deliver a similar
number of abandonment operations as achieved in 2022.
The Company looks forward to executing a successful drilling
program in Canada in 2023, growing production and returning
cash to shareholders and so delivering on its total shareholder
return model.
Looking beyond 2023, we have a high quality and diverse
asset portfolio in Canada with immense unrealized upside
potential. We will continue to focus our efforts on advancing
these key assets to efficient and rapid commercialisation and
value crystallisation. We will selectively target key assets
and wells to optimise these developments and conversion
of resources to reserves bookings. We are fortunate that we
operate the vast majority of our assets which allows us to
control the timing and pace of development. We also own high
working interests in our operated assets which also provides
us with optionality on how to finance these developments.
Whilst our current focus is on organic growth, we recognise
that commodity price volatility and resulting market
dislocations will provide opportunities to grow through low-
cost mergers and acquisitions and we remain vigilant to take
advantage of these opportunities as and when they arise.
We are committed to operating in a safe and socially
responsible manner and the safety of our employees and
contractors is of primary importance. We are proud of
our green house gas emission reduction initiatives and
achievements in 2022 and we will endeavour to deliver year-
on-year reductions in the carbon intensity of our production.
As always, we extend gratitude to our shareholders for their
ongoing support and to our employees for their relentless
commitment to making i3 a success. Though we operate
within a macro environment that is beyond our control, we
believe we are doing the right things to create a very valuable
business that can weather good times and bad.
i3 will continue to manage our Canadian and UK
businesses in a manner that maximizes value creation
and distributed returns.
John Festival
Non-Executive Chairperson
6 June 2023
Majid Shafiq
Chief Executive Officer
6 June 2023
Financial Discipline
Governance
The Board and Management are focused on delivering
consistent value to shareholders. i3 is committed to its total
shareholder return model which allies production and asset
value growth with a progressively growing dividend and
protects this commitment through a conservative hedging
program. The Company has and continues to keep a
substantial portion of its production hedged through risk
management contracts to manage commodity price risk, with
free cash post dividend payments deployed to either acquire
production assets or develop our proven undeveloped (PUD)
and 2P inventory dependent on which option delivers higher
returns in the prevailing commodity price environment. As i3
continues to grow its portfolio, a proportion of all incremental
production will be hedged in order to secure future cash flows,
and the Company will remain commercial in monetising assets
when third-party interest warrants consideration.
With the well-timed acquisitions and capital deployment of
the last 30 months, the Company’s assets have continued
to outperform the Directors’ expectations. As per our
commitment to those shareholders who funded our entry to
and growth in Canada, and as part of our total shareholder
return model, we commenced paying a dividend in 2021 and
have grown that year-on-year from £3.4 million in 2021, to
£15.4 million in 2022 and plan to pay dividends of £24.5
million in 2023.
Operational flexibility and the short-term nature of forward
capital commitments in Canada mean that the Company
has considerable optionality to rapidly expand or reduce its
capital programme to prudently manage its balance sheet
to ensure risks are appropriately mitigated in volatile
commodity markets.
The Board recognises its responsibility for the proper
management of the Company and is committed to maintaining
a high standard of corporate governance. The Directors also
recognise the importance of sound corporate governance
commensurate with the size and nature of the Company and
the interests of its shareholders. The Quoted Companies
Alliance has published a set of corporate governance
guidelines for AIM companies, which include a code of
best practice comprising principles intended as a minimum
standard, and recommendations for reporting corporate
governance matters. The Directors comply with the QCA
Corporate Governance Guidelines for Smaller Quoted
Companies so far as it is practicable having regard to the size
and current stage of development of the Company. The Board
currently comprises two Executive Directors (being the Chief
Executive Officer and the President Canada) and four Non-
Executive Directors (including the Chairperson).
The Board’s decision-making process is not dominated by
any one individual or group of individuals. The composition
of the Board will be reviewed regularly and modified
as appropriate in response to the Company’s changing
requirements. The Board has established an Audit and Risk
Committee, Corporate Governance Committee, Health, Safety,
Environment and Security Committee, Reserves Committee,
and Remuneration Committee to ensure proper adherence to
sound governance and decision making.
07
08
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS BUSINESS MODEL
i3’s Total Shareholder Return Model
i3 is committed to a total shareholder return model via
accretive production and reserves expansion which should,
over the business cycle, deliver share price growth and
consistent distribution of profits via dividend payments. Our
asset base has characteristics that allow us to offer both
growth and income to our investors.
The Company participates in approximately 2000 production
wells, with high working interests and operates over 75%
of its production. It also owns or has access to significant
capacity in operated and non-operated production facilities,
and pipelines which allows it to maintain access to markets,
optimise netbacks and minimise downtime. Our current
production mix, which consists of approximately 50% gas,
25% oil and condensate and 25% natural gas liquids, spreads
commodity price risk and provides the option to regulate our
production mix to optimise revenues. This extensive portfolio
provides the risk diversification necessary to sustain the
reliable and stable production levels required to support a
dividend paying business.
Our business model delivers growth either via accretive
acquisitions when market conditions offer opportunities
to add production at low cost, or in high commodity price
environments by drilling our diverse portfolio of high return,
high working interest, operated drilling locations. This allows
i3 to deliver rapid payout on capital investment throughout
the business and commodity price cycle. We also seek to
add acreage which offers the potential for step changes
in production growth, and endeavor to own high working
interests in these assets to ensure we are in control of
project timelines and provide financing optionality to fund
developments.
Our dual listing in London and Toronto provides access to
international capital markets for equity and debt, which allows
the Company to quickly access a range of capital sources and
provides the ability to react quickly to acquisition opportunities
and raise finance at the lowest possible cost of capital.
i3 CORPORATE STRATEGY: BALANCING SHAREHOLDER RETURN
STRATEGY
ACQUIRE
i3 targets long-life and low-cost PDP
assets with robust PUD inventories, with
a focus on distressed, overleveraged or
non-core asset packages of high API/BTU
production streams with low sustaining
capex and decommissioning exposure
RATIONALISE
Newly acquired portfolios are
rationalised to extract value from
non-synergistic assets for
re-deployment into strategic
consolidation at i3’s core plays
• 2023 will deliver an increase in dividends of circa 60% relative to 2022 and the capital program is designed to
increase production by 10% to 13% over the 2022 average
• The drilling program will target key catalysts in strategic growth plays within the Company’s core areas, including
the Clearwater, Simonette, Central and Wapiti
09
: APRIL 2023
2
DIVIDENT & REINVEST
Pay a progressively growing dividend
and invest residual cash flow in PDP
assets or low-cost organic PUD and 2P
reserves development
PRODUCE
Optimise and streamline field
operations to increase efficiency and
improve per boe netbacks; actively
participate in non-operated partnerships
to influence value generation
010
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS When commodity prices are low, we focus on growth via asset and corporate
acquisitions. We are disciplined in our approach and evaluate all opportunities
against strict criteria which align with our business plan. The acquired assets
should be within or adjacent to our existing core area of operations in order
to maximise synergies and lower unit operating costs or if not, material
enough to establish a new core area. Rapid payback is a fundamental criteria
when we evaluate the economics of potential acquisitions, alongside drilling
inventory to provide production growth and reserves replacement.
In higher commodity price environments, when asset prices inflate and
potential transactions fail to meet our acquisition criteria, we shift to growth
via drilling and organic development. We currently have 940 locations in our
portfolio, which provides decades of drilling inventory.
Our extensive portfolio of diverse assets and drilling inventory, which produce
a balanced mix of commodities, provides significant optionality to deploy
capital in the most economically advantageous opportunities depending on
where we happen to be within the commodity price and business cycle.
We entered the Canadian E&P sector in 2020 via a series of acquisitions,
when a period of low commodity prices and a lack of capital availability
in the Canadian market provided a unique opportunity to build a material
production business with in-built drilling upside, at historically low acquisition
costs. In 2022, following a period of sustained oil and gas price inflation,
we pivoted to drilling driven growth, as per our strategy and successfully
executed a circa USD 90 mm capex program in Canada. Operated wells
were budgeted to payback in 14 months or less, which was comparable to the
aggregate acquisition metrics for the assets acquired in 2020 and 2021 from
Gain energy and Cenovus Energy respectively, and below what was being
observed in the M&A market at the time.
CYCLE-BOTTOM
ACQUISITION
Acquire PDP at
<2.0x NOI, adding
PUD/2P reserves at
very low cost
+
CYCLE-TOP
DRILLING
Drill commodity-driven
PUD/2P inventory
and hedge or sell
new production into
price strength
=
VALUE
MAXIMISATION
All weather portfolio
management that
maximises cycle and
inventory to create
shareholder value
KEY PERFORMANCE
INDICATORS
Health, Safety & Environment (“HSE”)
The safety of our staff and the maintenance of the environment in which we operate are the primary considerations in our
operations. 2022 was a very busy operational period for i3 Canada. We continued the integration of the substantial asset base in
Central Alberta acquired from Cenovus Energy (“CVE”) in August 2021 and we conducted our first operated drilling program, drilling
31 gross wells over the course of the year. In August we completed an update of our Health and Safety Management System to
incorporate operational and safety lessons learned since commencement of our operations in Canada. Our senior operations and
HSE leadership review operations on an ongoing basis and incidents in detail, including third party service providers in that process
where relevant, to ensure that lessons are learned and incorporated not only into our Safety Loss Management System but into the
daily work culture of our operational staff. We hold monthly safety meetings and conduct quarterly inspections of designated active
work sites and hold quarterly Joint Health and Safety Committee meetings. We also conduct annual comprehensive pipeline risk
assessments and through the course of the year conduct 2 full mobilisation emergency response plan (“ERP”) exercises and 5 table-
top ERP exercises.
Metric
Unit
Target
Actual
Material lost
time incident
Reportable
injuries
1
1
Regulatory
inspections
Pass rate on
high-risk items
95%
94.1%
There was one minor injury to a third-party service contractor in
Canada. That party’s post HSE incident reporting and remediation
procedures were implemented. There were zero reportable injuries
during the UK drilling operations.
There were six high risk category reports on 101 inspections in Canada.
All items were resolved. There were no regulatory non-compliances
during the UK drilling operations.
Major incidents Major and critical
incidents as % of
all incidents
6%
5.8%
There were only 8 incidents classified as major out of 137 reported
incidents in Canada. There were no major incidents during the UK
drilling operations.
Complete or
initiate site
electrifications
Number of sites
25
43
7 sites were electrified and a further 36 were initiated
We are very pleased with our realised HSE record in 2022 as detailed in the table above. These metrics are key measures which
collectively reflect the aggregate HSE performance of the Company and driving improvements in these metrics will result in positive
HSE outcomes for i3.
Production
Our Production and Operations teams were able to deliver with total
production volume in 2022 3 % below our annual budgeted volume.
Metric
Production
Unit
Outcome as
% difference
to annual
average stated
production
Target
Actual
0%
-3%
2022 budget production average of 20,961 boepd versus outcome of
20,317 boepd
011
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I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Reserves
Decommissioning Stewardship
Reserves replacement is a critical requirement for all oil and gas production companies and in particular those like i3 which
offer a total shareholder return model. Proven Developed Producing (“PDP”) reserves replacement is a necessary and minimum
requirement to ensure the Company can maintain production volumes and cash flow in a flat commodity price environment.
The Alberta Energy Regulator (AER) specifies the annual abandonment and reclamation obligations (ARO) for oil and gas companies
operating in the province, through the Area Based Closure program (ABC). In 2022 it also offered subsidies to encourage
accelerated reclamation activities via the Site Rehabilitation Program (SRP) program.
Target
Actual
100%
135%
Total PDP add of 10.004 Mboe (revisions, drilling and net acquisition)
against production of 7.424 Mboe
SRP/ABC spend
efficiency
Metric
Unit
Target
Actual
100%
110%
ABC, Care and Custody and SRP programs removed USD 3.1 million of
liability with a net spend of USD 1.5 million.
Metric
Canadian
Reserves
UK Reserves
Unit
PDP reserves
replacement
(adjusted for
dispositions)
Serenity
Reserves
35
MMSTB
Circa 8
MMSTB
Internal estimate of Serenity P50 reserves
SRP and ABC
spend efficiency
in reducing
ARO (increasing
deemed LLR =
Asset Value /
Liability)
Inactive well
count reduction
Inactive wells
reduced
65
70
70 wells abandoned and 9 reclamation certificates achieved
i3 exceeded its regulatory requirements as specified in the ABC program. It is a major priority for the Company to operate in
an environmentally safe manner and to ensure we return our operating sites to their native condition following completion of
production activities. We expect to continue to exceed regulatory requirements on an on-going basis.
Due to a combination of a very successful 2022 drilling program and recompletion activities combined with refined subsurface
reservoir modeling, the Company achieved a very heathy PDP reserves replacement ratio of 135%. Due to what we believe is
the high degree of predictability of our proven undeveloped (“PUD”) well locations, (which are converted to PDP reserves upon
drilling), the performance in 2022 gives us a high degree of confidence that the Company’s asset base can continue to achieve high
reserves replacement ratios on a go-forward basis.
Operations
Operational performance is key to the economic success of our business. Our operational KPI’s address the efficiency of
deployment of operating and capital costs and the effectiveness of that deployment from an economic and strategic standpoint.
Target
Actual
0%
1.8%
Opex in 2022 was CAD14.14 /boe adjusted for 6.8% inflation (CPI) and
was 1.8% higher than opex in 2021
100%
114%
Budgeted aggregate IP30 for i3 Canada’s 2022 drilling program was
5,901 boepd, compared to actual achieved IP30 of 6,741 boepd
100%
110%
Based on i3 Canada’s operated AFEs. 2022 actual spend of USD 81.9
million versus AFE estimates of USD 74.6 million.
95%
80%
Final costs USD 10.5 million v dry hole AFE of USD 13.3 million
3
6
Successful development wells were drilled in the Glauconite, Cardium,
Falher, Clearwater, Montney and Belly River formations
Metric
Unit
Opex/BOE (exc.
Transportation &
processing)
Capital program
performance
Actual costs v
AFE 1
estimates
Opex per BOE
relative to prior
year (inflation
adjusted)
Aggregate
IP30 (post
commissioning)
Annual Actual
/ Annual AFEs
(adjusted for
estimated
inflation)
Actual costs v
AFE
Serenity Actual /
Serenity AFE
Successfully
drill & test key
strategic assets
Number
of assets
successfully
tested
(Simonette,
Wapiti, Cardium,
Glauconite,
Clearwater)
Note 1: Authorisation for Expenditure
i3 is very pleased with its operational performance in 2022, which included our first and substantial operated drilling program. It was
also the first full year including the integrated Central Alberta assets acquired from CVE. Our operating costs per BOE were only
marginally higher than those realised in 2021 and whilst total operated capital expenditure was 10% higher than AFE estimates, we
consider this to be a significant achievement considering the elevated inflationary environment for oilfield services and equipment
that persisted throughout the year. We also made considerable progress in evaluating the extensive upside in our portfolio by
drilling a number of strategic assets and reservoir formations.
013
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I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS RESERVES
Successful Execution of 2022 Capital
Programme Provided Year-over-Year Reserves
Additions Across All Reserve Categories
Since i3’s entry into Canada in 2020, it has consistently grown
its reserves position. Through 2021 asset growth through
acquisition activity drove the Company’s growing reserves
base. In 2022 due to prevailing high commodity prices the
Company decided to deploy its capital towards a drilling
programme in Canada, which focussed on development
drilling in i3’s key assets in Central Alberta, Simonette, Wapiti
and the Clearwater play. All wells were successful and results
in aggregate met or exceeded pre-drill expectations in terms
of type curve productivity. This program has resulted in
material reserve additions across all categories.
The Company’s year-end 2022 reserves volumes and
valuations as evaluated by its independent reserves auditor
GLJ are tabulated below. The valuations use forecast
commodity prices which are the averages of the 1 January
2023 forecasts of the reserves auditors GLG, Sproule and
McDaniel & Associates.
Category
PDP
PDNP + PUD
TP
P+PDP
Prob
P+P
Light Oil
(Mbbl)
NGL
(Mbbl)
Gas
(mmcf)
BOE
(Mboe)
8,076
6,322
14,398
10,915
19,705
34,103
16,793
17,094
33,887
22,390
27,954
61,841
145,121
126,003
271,124
194,596
242,186
513,310
GLJ (Jan 2023 3CA)
NPV10
($M)
$425,097
$197,871
$622,968
$510,964
$538,510
49,056
44,418
93,473
65,738
88,023
181,496
$1,161,478
Total Company Interest proved plus probable developed producing reserves (“2PDP”) increased 9% to 65.7 million boe, total proved
(”1P”) reserves increased 10% to 93.5 million boe and total proved plus probable (“2P”) reserves increased 18% to 181.5 million boe,
compared to the prior year.
Strong Organic Reserves Replacement Ratio, Long Reserve Life Assets and Low Decline Profile to Support the Company’s Total
Return Model.
i3’s assets in Canada contain an extensive portfolio of oil and gas fields and reservoir formations and 940 gross drilling locations.
This broad scale of opportunities to add both oil and gas reserves allowed the Company to carefully select a low-risk group of wells
to drill in 2022 resulting in successful outcomes for all wells and very positive reserves replacement.
015
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I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS The Company’s organic working interest reserves
replacement ratio in 2022 was 176% on a 2PDP reserves
basis, 214% on a 1P reserves basis and 479% on a 2P basis.
2PDP, 1P and 2P reserve life indices of 8.8 years, 12.2 years
and 22.5 years, respectively, combined with the Company’s
low base corporate decline rate of approximately 17% and its
extensive inventory of highly economic development drilling
locations, underpin its ability to sustainably grow production
per share from its existing asset base and generate significant
distributable cash flow for our shareholders. The Company’s
capital program has resulted in material reserves growth in
both absolute terms and on a per share basis over the last
two years.
Material Increase in the Company’s Working
Interest Reserve Value
As evaluated by GLJ, the Before-tax Net Present Value
(“NPV”) of cash flows attributable to the Company’s reserves,
discounted at 10%, has been determined to be USD 511.0
million, USD 623.0 million, and USD 1,161.5 million for its
2PDP, 1P and 2P reserves, respectively, being indicative of
the Company’s strong production base, successful
2022 drilling program and robust portfolio of economic
development opportunities.
2PDP NPV per share, using a 10% discount rate, increased
by 50% to £0.36 per share (CAD 0.58 per share), 1P NPV
increased by 43% to £0.43 per share (CAD 0.71 per share) and
2P NPV increased by 56% to £0.81 per share (CAD 1.31 per
share), as compared to the prior year.
Strong Finding, Development and Acquisition
(“FD&A”) Cost Metrics and Recycle Ratios
Reflective of Efficient Development and
Opportune Acquisition Strategy
Efficient development provided strong FD&A costs of
USD 7.68 per boe on a 2PDP basis, translating to recycle ratios
of 2.84x. Over the three-year period since its entrance into the
Western Canadian Sedimentary Basin, i3 has delivered FD&A
costs of USD 2.96 per boe on a 2PDP basis, translating to a
recycle ratio of 6.0x.
Partial Recognition of the Company’s
Undeveloped Locations Leaves Significant
Inventory of Future Unbooked Upside
Successful conversion of undeveloped locations to
production, while increasing the total net undrilled booked
locations by 25% to 376 gross (255.1 net) locations across the
Company’s four core areas, for a total Company inventory
(undrilled booked and undrilled unbooked) of 940 gross (537
net) undeveloped locations. Material increases in booked
Montney and Cardium oil locations, with 32 net and 12.2 net
locations added, respectively. Total undeveloped inventory
represents greater than 30 years of development drilling
assuming the current annual capital program.
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I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS ENVIRONMENT,
SOCIAL AND GOVERNANCE
ESG Vision and Strategy
i3 Energy is committed to conducting its operations responsibly and in accordance with industry best practices. We choose to
operate in jurisdictions with world-class regulations governing all aspects of ESG. Our commitment to high ESG standards is central
to maintaining our social licence to operate, creating value for all stakeholders and ensuring long-term commercial success. We
recognise the safety and well-being of our employees, local communities and other key stakeholders as a priority, and consider
climate change as having a material impact on our business. We endeavour to set a high standard of ESG performance not only to
benefit our business and stakeholders, but also to encourage similar actions amongst peers and have a positive influence on the
energy sector.
Our key ESG commitments include:
• Minimising our environmental impact in a manner that is
mindful of the climate science, while on the journey to
achieve our net zero target no later than 2050, or earlier if
technologically and commercially feasible
• Ensuring our business is resilient to the energy transition
and a low-carbon future
• Protecting the safety, health and well-being of all affected
stakeholders
• Maintaining positive and responsive relationships with local
communities
• Meeting or exceeding all applicable legal and regulatory
requirements
• Endorsing and aligning with international best-practice
initiatives
In 2021 and early 2022, i3 Energy with the support of its ESG
advisors conducted a high-level ESG materiality assessment,
which determined the relative importance of ESG issues to
the company and its external stakeholders, based on an
issue’s potential risk and opportunity, and the significance of
its impact. We conducted this assessment using the approach
below, which draws on the guidance outlined in SASB:
• Assessing our external stakeholder landscape
• Conducting internal discussions and interviews with key
external stakeholders to determine the impact of specific
ESG-related issues and to ascertain external sentiment
around current or emerging issues
• Conducting impact evaluation and mapping, using the
insights and data gathered, to inform the materiality analysis
• The list of material topics identified through our assessment
and analysis – which we will use in our ongoing risk
assessment and strategic planning – are outlined in the
graphic below.
As part of a comprehensive ESG review we conducted in late 2021 following the completion of the Cenovus Energy transaction,
we developed an ESG roadmap, setting out a detailed action plan to align our ESG approach with industry best practices and to
achieve net zero Scope 1 and Scope 2 emissions no later than 2050 or earlier if technologically and commercially feasible. Our
action plan includes commitments in each of the environmental, social and governance issue areas.
019
020
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS ENVIRONMENT
Amid increasing global attention to climate change, fossil
fuel producers like i3 Energy need to consider how to adapt
operations and business planning to align with a transition
to a low-carbon world. i3 Energy has therefore stated its
ambition to reach net zero Scope 1 and 2 emissions by 2050.
We are now in the initial stages of planning how to achieve
this and have undertaken a preliminary analysis to explore the
Company’s pathway to net zero and how we might accelerate
our 2050 target. This exercise represents an important first
step in our net zero journey. As we explore appropriate
pathways to net zero, building on the exercise and initiatives
we have already undertaken, we are committed to:
• Improving our emissions data integrity so that we better
understand the Company’s overall emission profile
• Continuing reduction/elimination of our operational GHG
emissions (including by building on steps already taken,
e.g. around reducing methane emissions)
• Looking at how we can accelerate the date by which we
achieve net zero
• Considering a range of decarbonisation options for our
portfolio, including improving operational efficiency and
investing in nature-based solutions where appropriate
After making our commitment to achieve net zero Scope 1
and Scope 2 emissions by 2050, we undertook a study to
identify and assess potential pathways the Company could
take to achieve this commitment, using marginal abatement
cost curve (MACC) analysis. The analysis highlighted that we
have multiple routes for achieving net zero, and we are now
conducting more in-depth emissions inventory work, as well
as considering what options would be most effective for us
from a cost and operations perspective, given new production
coming online over the coming years.
i3 Energy’s Emissions Profile
Our operating portfolio is relatively well positioned for a lower-
carbon economy, given its majority gas profile. Below are key
emissions metrics for our portfolio.
Our Scope 1 and Scope 2 intensity for 20201 was 44.8
kgCO2e/boe. This is in line with the average emissions
intensity for conventional oil production and natural gas
production and processing in Canada, which Environment
and Climate Change Canada projections for 2020 put at 48.1
kgCO2e/boe and 42.0 kgCO2e/boe, respectively2. For 2021,
our combined Scope 1 and Scope 2 emissions intensity was
reduced to 42.6 kgCO2e/boe.
Resource Use
Energy and resource use efficiency is a key priority for
i3 Energy to reduce our overall environmental impact
across our assets.
i3 Energy is proud to report that in order to minimise the use
of freshwater, the majority of the water used in our operations
is recycled, using flowback water for most of our operating
needs. We do use some fresh water sources for drilling and
completion work. In these instances, we apply for temporary
diversion rights from the provincial government to draw
primarily on dugouts, or occasionally, creeks. We are looking
at technology innovations to allow us to also use recycled
flowback water in this type of work.
Initiatives to Drive Energy Efficiency and
Reduce Energy Use
Rich-burn to low- or no-burn conversion
We have been in the process of identifying potential sites
within our operations since late 2020 for conversion from rich
burn to low- or no-burn compressor engines, in order to lower
emissions and reduce our own consumption of fossil fuels for
energy production.
Electrification
In 2022, we completed the electrification of 7 pumpjacks at
our Carmangay and Retlaw fields. This involves the conversion
of power sources for existing oil fields from propane to electric
engines, which now draws on grid power.
Effluent pipelines
Since 2020 i3 Energy has been in the process of
implementing an efficiency initiative at all its operations to
enable the conservation of vent gas volumes through effluent
pipelines. Bringing in more effluent pipelines allows our
operations to consume and utilise casing gas, rather than
venting it. This also allows us to reduce and, in some cases,
eliminate the trucking of emulsion to a processing site, thereby
reducing our overall GHG emissions.
Fugitive Emissions Reduction
Reducing methane emissions is an important part of our
strategy to reduce overall GHG emissions, and this has been
a core area of focus for i3 Energy in 2021 and 2022. We also
recognise that reducing methane emissions globally was a top
priority that emerged from COP26 in Glasgow.
In 2021, i3 Energy launched a programme to reduce methane
venting at its well sites, using innovative solutions to reduce
or eliminate various methane sources. As a first phase of our
strategy to minimise fugitive emissions, i3 Energy undertook
an initiative to identify high-bleed natural gas pneumatic
controllers at our operations and replace them with low- or
no-bleed models, and to replace pumps. This conversion
programme – which involved the legacy Gain Energy and
Toscana Energy assets – was highly successful and was a key
driver in cutting our methane emissions by 29,000 tCO2e in
2021. Phases two and three of the strategy took place in 2022.
Phase two involved the replacement of pneumatic pumps with
innovative solar driven pumps on reactivated wells, resulting
in the removal of 4,700 tCO2e annually. This was completed
in October 2022, when phase three was launched, which
involved the replacement of pumps on the assets acquired
from Cenovus. Approximately 400 pneumatic pumps will be
replaced with non-venting solar driven pumps. This will result
in an annual reduction of 11,600 tCO2e. Once complete, the
combination of these three phases are projected to result
in an annual reduction of 71,450 tCO2e – the equivalent of
removing 15,530 cars off the road annually. These initiatives
qualify for carbon credits which can be sold or used to offset
future carbon tax obligations.
Abandonment and Reclamation
i3 Energy has been an active participant in government
programmes to accelerate the responsible decommissioning
of inactive well, pipeline and facility liabilities. In 2022 i3
abandoned 70 wells and decommissioned 37 well sites,
representing 15% of operated non-producing wells.
021
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I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS SOCIAL
Safety
Maintaining safe operations throughout our portfolio is of the
utmost importance to i3 Energy. This commitment has two
elements. First, we are committed to protecting the health and
safety of our workforce and maintaining a strong safety culture
for our employees and contractors. Our goal is to achieve zero
harm. Second, we endeavour to ensure that our operations
do not negatively impact the health and safety of local
communities, landowners or other affected stakeholders.
In this regard, we:
• Comply with, or exceed, all applicable environmental
legislation, regulation and policy (which is already very
stringent)
• Strive to create a workplace that is safe, prevent potential
workplace injuries, and conduct investigations into any
incidents that do occur
• Continuously work to improve health and
safety performance
• Work to understand any potential risks to the health and
safety of local communities
• Disclose our performance in quantifiable metrics
Our workforce
i3 Energy is a rapidly growing energy company, and we
recognise that our workforce – at all levels – is fundamental
to the success of our business. We aim to have a diverse and
inclusive working environment which recruits, respects and
rewards our staff based solely on their skills and contribution
to the goals and success of the Company. We endeavour to
be an enjoyable and rewarding place to work, where integrity,
openness and collaboration are fundamental to the way we
do business. We also see ourselves as a fully integrated
member of the communities in which we operate. Many of
our employees live in those communities, and we strive to
positively impact local society as we go about our
day-to-day business.
GOVERNANCE
Accountability and Integrity on ESG
i3 Energy’s approach to ESG is supported by strong
governance structures and corporate policies. To reflect the
increasing importance of ESG-related risks and opportunities,
i3 Energy has formed a Health, Safety, Environment and
Security (HSES) Committee with oversight of ESG matters.
We are in the process of developing a suite of ESG-focused
policies and procedures, recognising that this is a critical
element of good corporate governance as we continue to
grow our business.
As part of this process, we are committed to:
• Further enhancing board oversight and understanding of
ESG issues
• Utilising ESG-linked key performance indicators (KPIs), as
well as monitoring leading and lagging indicators on safety
• Developing management incentives for good performance
on ESG issues
• Implementing our Code of Business Conduct and Ethics,
which aligns with our commitment to operate in an ethical
and transparent manner
• Ensuring our employees receive first-class training and
guidance on ESG issues and engaging in dialogue with
suppliers and contractors about our ESG approach.
Corporate Governance and our board
i3 Energy’s board recognises the importance of sound
corporate governance commensurate with the size and
nature of the Company and the interests of shareholders. As
a UK corporation traded on the UK AIM, the UK Corporate
Governance Code does not apply to us. However, the Quoted
Companies Alliance (QCA) has published a set of corporate
governance guidelines for AIM companies, which include
a code of best practice comprising principles intended as
a minimum standard, and recommendations for reporting
corporate governance matters. i3 Energy’s board has adopted
the QCA Corporate Governance Guidelines for Smaller
Quoted Companies.
Stakeholder and Community Relationships
i3 Energy values the views and input of all stakeholders, and we seek to build and maintain strong relationships with local
communities, indigenous groups, regulators and our shareholders. Open and comprehensive engagement with stakeholders is
critical to our success as a company. In this regard, the Company strives to:
• Maintain dialogue with our investors and shareholders around ESG-related matters, including our performance and approach to
the most material issues
• Engage regularly and respectfully with the communities around our operations and maintain an open platform for dialogue
• Understand and respond to local needs in relation to community investments, socio-economic impacts and environmental
concerns
• Respond in a timely and transparent manner to concerns raised by stakeholders
• Identify and minimise adverse impacts on communities from our operations
We are fortunate to operate largely in Alberta, where the energy sector is heavily regulated by the Alberta Energy Regulator (AER).
The AER oversees some of the largest established energy reserves in the world and ensures that companies like i3 Energy develop
and produce oil and gas in a responsible and safe manner – and that stakeholders are regularly consulted and engaged with
respect to our operations. Similarly, the energy sector in the UK is stringently regulated by the NSTA. Companies like i3 Energy that
are active on the UK Continental Shelf are subject to robust oversight.
023
024
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS PRINCIPAL RISKS
AND UNCERTAINTIES
Key Operating, Strategic, and Financial Risks
The Group operates in the oil and gas industry in an environment subject to a range of inherent risks and uncertainties. The Group
completes a bottom-up process for identifying various operational, strategic, and financial risks. These risks are maintained on the
corporate risk register which is monitored by management. Management then assesses the potential probability and impact of each
risk, and those determined to be the most significant are classified as the Group’s key risks. The principal risks and uncertainties are
reviewed by management and the Audit and Risk Committee twice per year and approved by the Board annually. The current key
risks and their associated mitigations are set out below.
Key Risk
Description
Mitigation
Change in the period
Key Risk
Description
Mitigation
Change in the period
OPERATIONAL:
Sub-surface assessment
and production, reserve,
and resource estimation
Incorrect interpretation of
subsurface data may lead to
inaccurate reserves and production
forecasts which may have an
adverse impact on the financial
performance of the Group. See
Financial Statements note 3 where
the carrying value of intangible
exploration and evaluation assets
has been identified as a critical
accounting judgement.
The Group employs experienced sub-surface
professionals with deep knowledge of
different play types and contracts.
No change
The Group engages external consultants to
complete independent reserves assessments
and to compile Competent Persons Reports.
The Group’s appraisal programmes are
designed to de-risk the overall field
development. Well and seismic data is
continually reviewed to best allocate capital
and make drilling decisions.
OPERATIONAL:
Canadian operations risk
Health, Safety, Security
and Environment
Both onshore and offshore
development carry the risk of major
incident and harm to the Group’s
employees, contractors, and the
environment.
Integrated Management System (IMS) set up
to ensure all regulatory and environmental
and safety requirements are met, appropriate
training is in place and compliance verified.
No change
JV partner alignment
Various Health, Safety, Security and
Environment policies and manuals are
implemented in Canada, including a
comprehensive Emergency Response Plan.
IT security is ensured through an external
service provider.
The Group manages its regulatory and
compliance risks through the employment of
sufficient competent personnel and through
retaining suitably proficient advisors.
Increase
The Group actively engages with its regulators.
The Group continually monitors the status and
commitments on its licences.
The Group is not currently generating taxable
profits in the UK, and closely monitors its tax
position in Canada.
Regulatory and compliance The Group operates in two
jurisdictions which have unique
regulatory frameworks. Non-
compliance with regulations could
lead to loss of title to its assets,
financial damage, or reputational
damage. Future changes in
regulations or taxation regimes
could negatively impact the Group.
The Group considers the risk level
to have increased in 2022 due to
the UK Energy Profits Levy which
was introduced during the period,
which could impact potential future
taxable profits generated by the
Group in the UK. The future results
of i3 Energy Canada Ltd. could be
impacted if similar measures are
introduced in Canada in the future.
The Group continually monitors its human
resource base to ensure it has the experience
and qualifications to manage its operations
and appropriately mitigate associated
operational and business risks. Technical,
safety and business training is conducted to
ensure skill sets are up to date and relevant to
the Group’s business.
No change
The Group continually engages with its
operating partners and closely monitors the
operation of its assets.
No change
The Group will complete thorough due
diligence reviews before entering future farm
down transactions to ensure that their strategic
and operational objectives are aligned with
those of the Group.
There is a risk that financial and
operational performance of the
Group’s Canadian operations
are negatively impacted due to
sub-optimal well performance,
loss of access to third party
gathering, processing, and pipeline
infrastructure, weather patterns, and
non-integration of assets acquired.
Sub-optimal project management
could lead to project delays or
cost overruns.
The Group has both operated and
non-operated interests in Canada
and an operating interest in the
Group’s Serenity asset in the UK.
Where the Group operates as
non-operating partner it may have
limited control over the day-to-day
management or operations of these
assets. A third-party operator’s
mismanagement of an asset may
result in significant delays or
materially increased costs to the
Group, or to liabilities over which the
Group is joint and severally liable.
There is no guarantee that a third-
party operator’s HSSE standards are
aligned with the Group’s.
025
026
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Key Risk
STRATEGIC:
Climate change and
energy transition
Description
Mitigation
Change in the period
Key Risk
FINANCIAL:
Description
Mitigation
Change in the period
A global transition to alternative
energy sources could have an
adverse impact on commodity
prices and/or the Group’s access to
and cost of capital.
The Group maintains compliance with current
environmental regulations. It is committed to
conducting its operations with net zero GHG
emissions by 2050. Our strategy development
includes consideration of these risks and
potential mitigants. A strategy to participate
in the energy transition is being developed in
concert with discussions with the investment
community to ensure our investment
proposition remains relevant to the market.
i3 Energy plc has published an ESG Report
which is available at www.i3.energy.
No change
Commodity price volatility
The Group engages with a range of advisors
and active competitor monitoring to provide a
range of opportunities for screening.
No change
Decommissioning costs
The Group is led by experienced professionals
spanning key disciplines to screen and fully
assess growth opportunities.
The Group has strong relationships within the
sector, both in the UK and Canada.
The Group continually reviews its portfolio of
assets to identify internal growth opportunities.
Increase
The Group welcomed Europa as a 25%
working interest joint venture partner in the
Group’s Serenity oil discovery which reduces
the future capital costs net to i3.
The Group is working on a field development
plan for a one well development of the
Serenity field.
The Group is in active discussion with
neighbouring operators regarding access to
shared infrastructure.
Lack of growth
The Group is seeking opportunities
to expand its portfolio of assets and
to increase production rates from
existing assets but may not find
such assets to be able to deliver
value from such acquisitions.
Development of
North Sea assets
Following the results of the 13/23c-
12 appraisal well drilled in 2022,
the Group is working on a field
development plan for a one well
development of the Serenity field.
There is a high cost associated
with a field development plan
and further appraisal drilling and
therefore it is contingent upon
raising the necessary funds. There
is uncertainty whether a one well
development of the field would be
commercial, and it is likely to require
access to third-party production,
processing, and transportation
facilities. See Financial Statements
note 3 where the carrying value
of intangible exploration and
evaluation assets has been
identified as a critical accounting
judgement and a key source of
estimation uncertainty.
The Group considers the risk level
to have increased in 2022 due to
the results of the 13/23c-12 and the
narrower scope of development
optionality available to the Group.
Oil and gas commodity prices can
be volatile and are dependent on
the level of supply and demand for
oil and gas products at any given
time, as most recently illustrated
following Russia’s invasion of
Ukraine in 2022. The Group’s
operating cash flows in the short-
term and returns on capital projects
in the long-term may be negatively
impacted by depressed oil and gas
prices. See Financial Statements
note 3 where the carrying value
of intangible exploration and
evaluation assets and oil and gas
assets have been identified as
critical accounting judgements.
The Group plans based on a range of
commodity prices, stress test scenarios and
sensitivities when allocating capital.
No change
The Group closely monitors the profitability of
its Canadian operations, including trends in
both spot and forward commodity pricing.
The Group continually reviews its hedging
strategy and executed various commodity
hedging contracts throughout 2022 and
2023. A summary of the Group’s hedges
are provided in note 18 and note 24 of the
financial statements.
The Group forecasts
decommissioning costs over the
next 50 years. There is a risk that
the cost estimates overrun either
due to inaccurate estimation or
unforeseen site contaminations.
See Financial Statements note 3
where decommissioning costs have
been identified as a key source of
estimation uncertainty.
The Group uses commonly accepted cost
estimation techniques based on rates
published by the Alberta Energy Regulator
(“AER”).
No change
The Group employs experienced professionals
to oversee the decommissioning cost
estimates.
The Group continually invests in
decommissioning its assets, including
participation in Alberta’s SRP program.
Capital requirements
and access to capital
The Group will require significant
capital to grow its operations in
Canada and to develop its oil and
gas assets on the UKCS. The Group
may be dependent or partially
dependent on access to external
capital to deliver this growth, and
there is no guarantee the capital will
be available at terms acceptable to
the Group.
The Group is publicly listed on both the TSX
and the AIM which provides access to equity
capital markets. The Group successfully
accessed these markets and secured equity
funding in 2020 and 2021.
In May 2023, the Group established a new
CAD 100 million loan facility, providing
additional capital to the Group. Further details
are provided in note 24 to the financial
statements.
No change
The Group continually engages with
shareholders and industry partners.
The Group generates positive cash flows from
its Canada operations which will decrease the
Group’s dependency on external financing.
The Group continually monitors its capital
allocation and will only pursue programs that
are of appropriate size and risk relative to the
Group’s capital resources.
The risks set out above are not exhaustive and it is likely that the risks identified will evolve and that additional
risks will arise in the future. Any of these risks could have a material adverse effect on the business.
027
028
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS SECTION 172 STATEMENT
Section 172 (1) of the Companies Act obliges the Directors to promote the success of the Company for the benefit of the Company’s
members as a whole. This section specifies that the Directors must act in good faith when promoting the success of the Company
and in doing so have regard (amongst other things) to:
a. the likely consequences of any decision in the long term,
b. the interests of the Company’s employees,
c. the need to foster the Company’s business relationship with suppliers, customers, and others,
d. the impact of the Company’s operations on the community and environment,
e. the desirability of the Company maintaining a reputation for high standards of business conduct, and
f. the need to act fairly as between members of the Company.
a. the likely consequences of any
decision in the long term,
The Board of Directors meets regularly
and uses these meetings to consider the
likely consequences of any decisions in
the long term. This includes its collective
responsibility for formulating the
Company’s strategy, which is to i) acquire
undervalued developed producing
fields and operate them efficiently,
safely and in full regulatory compliance,
and ii) ultimately deliver hydrocarbon
projects into production by graduating
assets through the industry life cycle
of exploration, appraisal, development,
production, and optimisation. Some key
decisions were taken by the Board since
the beginning of 2022 which were aimed
to deliver on this strategy.
These included:
• Welcoming Europa as a 25% non-
operated partner on Block 13/23c of the
UKCS P.2358 licence and subsequently
drilling the 13/23c-12 appraisal well
during the year;
• Executing the Group’s 2022 capital
and drilling programs in Canada and
the UK which invested £78.7 million of
acquisitions and capex, which helped
the Group achieve record corporate
production levels.
• Declaring £17.4 million of dividends as
part of the Company’s total return of
capital model, £15.4 million of which
were paid monthly throughout 2022
and £2.0 million paid in January 2023;
and
• Bolstering its position in the Clearwater
Play through land purchases and
acquisitions which are believed to have
substantial long-term upside.
The decisions outlined above
considered the interests of the
Company’s stakeholders, including
revenue and cash flow generation which
can be returned to shareholders through
dividends, an expanded asset portfolio,
and longer-term stability for
i3’s employees.
The Board places equal importance on all
shareholders and strives for transparent
and effective external communications,
within the regulatory confines of an
AIM-listed company. The primary
communication tool for regulatory matters
and matters of material substance is
through the Regulatory News Service,
(“RNS”). The Company’s website is
also updated regularly and provides
further details on the business as well
as links to helpful content such as our
latest investor presentations. We also
hold regular investor events which are
open to all shareholders and provide an
environment where shareholders can
interact with the Board and management,
ask questions, and raise their concerns.
b. the interests of the
Company’s employees,
Our employees are one of the primary
assets of our business and will be critical
to the future success of the Company.
Our employee headcount has expanded
steadily through the Company’s wholly
owned subsidiary i3 Energy Canada
Limited following a series of acquisitions
and subsequent growth through the
capital programs. The Company has
an employee onboarding process in
place that provides new employees
the information, relationships, and
tools they need to be comfortable
and confident in their work. First and
foremost, the Directors strive to ensure
a safe working environment for all its
staff and contractors, and we are proud
of our safety achievements in 2022. We
also seek to reward employees with
remuneration packages which align
the interests of the Company and its
shareholders with those of its employees.
We believe we have achieved this
through the award of share options which
contain vesting conditions aligned with
the strategic objectives of the Group.
To ensure our remuneration packages
are competitive and appropriate
the Remuneration Committee seeks
external advice on market practice
and benchmarks. Employees are also
provided with challenging work and
external training opportunities to ensure
their continual development. The Board
engages with the Group’s employees
throughout the year, both formally at
Board meetings, and also informally
through interaction and operational,
financial and M&A discussions with
certain employees.
During 2022 all employees with
vested share options were granted the
opportunity to exercise these options by
receiving ordinary shares at the post-tax
in-the-money value of the options. This
reduced the cash outlay required of the
employees, and the resulting Option
Shares and associated dilution by 42%.
c. the need to foster the Company’s
business relationship with suppliers,
customers and others,
The Company fosters its business
relationships with suppliers, customers,
contractors, and its various joint venture
business partners in Canada. The Group
engages frequently with key suppliers
through a regular review of vendor due
diligence, creating efficiencies within
the supply chain, and considering their
interests in our operations. An example
in 2022 was the repayment of balances
due from the 2019 Serenity and Liberator
drilling campaign. The Group also works
extensively with joint interest partners,
in particular through our Canadian
operations where we operate primarily
through joint interests on our producing
assets and communicates frequently
with these partners. In 2022, the Group’s
subsidiary i3 Energy North Sea Limited
welcomed Europa as a 25% non-
operated partner on Block 13/23c.
The Group and its suppliers, customers,
contractors, and various joint venture
partners are committed to ethical
principles and place great value on
integrity and compliance with the
applicable laws and regulations. The
Company expects all its business
partners to follow similar standards in
their behaviour.
d. the impact of the Company’s
operations on the community and
environment,
The Company considers the impact of
its operations on the community and
the environment. The Group maintains
offices in both Aberdeen and Calgary
through which we integrate with the local
communities and engage directly with
local municipalities on various matters.
The Company regularly engages with
the AER following our introduction to
Canadian operations and we have been
recognised as an upstanding operator
in the region. The Company closely
monitors its decommissioning obligations
in Canada which it intends to responsibly
decommission in accordance with local
regulations and in collaboration with the
AER. This was demonstrated by incurring
decommissioning spend and assistance
under the Alberta SRP program.
In 2022 the Company released its
inaugural ESG report which can be
viewed at www.i3.energy.
e. the desirability of the Company
maintaining a reputation for high
standards of business conduct, and
The Board has an obligation to
ensure the Company acts responsibly
and maintains a reputation for high
standards of business conduct. There
is regular communication between the
Directors, Executive Directors, and key
members of the management team to
ensure this culture is promoted and
maintained throughout the organisation.
The Company operates with open,
transparent, and two-way communication
and consistent access to the Directors.
All of the Company’s employees must
adhere to i3’s anti-bribery and corruption
policies and uphold the Company’s
business ethics at all times.
f. the need to act fairly as between
members of the Company.
The Company recognises its broad range
of stakeholders and the need to operate
in a manner that is fair to all these
stakeholders. The Board meets regularly
and considers the interests of the various
stakeholders in the decisions they make.
This was demonstrated through the
Company’s approach to the Cenovus
acquisition which were structured to
create value for shareholders, but also
to ensure continuity and integration
of certain employees from Cenovus
and to present growth opportunities to
existing employees of the i3 Group. The
Company communicates regularly with
external stakeholders through investor
roadshows and meetings and regular
operational and financial updates through
RNS announcements.
The Directors believe they have acted
in the way they consider most likely to
promote the success of the Company for
the benefit of its members as a whole,
as required by Section 172 (1) of the
Companies Act 2006.
029
030
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS FINANCIAL REVIEW
Production
Average Sales Production
Oil and condensate (bbl/d)
Natural gas liquids (bbl/d)
Natural gas (mcf/d)
Royalty interest (boepd)
Total Sales Production (boepd)
Average Sales Production
Oil and condensate
Natural gas liquids
Natural gas
Royalty interest
Year Ended 31
December 2022
Year Ended 31
December 2021
21%
25%
52%
2%
100%
20%
23%
55%
2%
100%
Year over year sales production increased 63%, primarily as a result of a full year of production attributed to the Cenovus acquisition,
which closed in August 2021. Sales production also increased year over year due to a successful 2022 drilling and workover
program, which mainly focused on i3s core areas in Central Alberta, Wapiti and Clearwater. Increased sales production from the
Cenovus acquisition and organic drilling and workovers was partially offset by natural declines.
A summary of average sales volumes for the 8 preceding quarters is presented below.
Average Sales Production
Oil and condensate (bbl/d)
Natural gas liquids (bbl/d)
Q1
2021
1,896
1,877
Q2
2021
1,734
1,909
Q3
2021
2,425
2,999
Q4
2021
3,624
4,601
Q1
2022
3,945
Q2
2022
3,886
Q3
2022
4,396
4,942
5,099
5,038
Q4
2022
5,119
5,106
Natural gas (mcf/d)
31,027
31,032
45,079
58,037
54,689
60,785
64,180
72,442
Royalty interest (boepd)
Total Sales Production (boepd)
229
9,173
203
302
331
389
385
440
458
9,018
13,239
18,229
18,391
19,502
20,571
22,757
Revenue
i3’s proceeds from the sale of oil and gas produced from its Canadian oil and gas assets are based on average sales production
volumes and averaged realised sales prices in Canadian dollars. The below table shows the average prices in Canadian dollars
realised by i3 in 2022 and 2021.
A summary of average sales volumes for the 8 preceding quarters is presented below.
Year Ended 31
December 2022
Year Ended 31
December 2021
Average Realised Pricing (1)
Year Ended 31
December 2022
Year Ended 31
December 2021
4,340
5,047
63,076
418
20,317
2,424
2,854
41,378
268
12,442
Oil and condensate (CAD$/bbl)
Natural gas liquids (CAD$/bbl)
Natural gas (CAD$/mcf)
Royalty interest (CAD$/bbl)
Total (CAD$/boe)
114.66
35.02
5.42
51.37
51.08
79.56
31.63
3.90
34.34
36.48
(1) Average realised prices derived by dividing oil and gas sales in GBP by averaged sales production and converting to CAD using period-average
GBP/CAD exchange rate year ended 31 December 2022 1.6073 (year ended 31 December 2021 1.7246).
Oil and condensate
Natural gas liquids
Natural gas
Royalty interest
Oil and gas sales
Royalties
Revenue from the sale of oil and gas
Processing income
Other operating income
Total revenue
Year Ended 31
December 2022
£’000
113,003
40,142
77,656
4,890
235,691
(33,536)
202,155
5,995
286
208,436
Year Ended 31
December 2021
£’000
40,829
19,107
34,134
1,951
96,021
(12,094)
83,927
2,605
231
86,763
Total revenue for the full year of 2022
was £208.4 million. Revenue over this
period was comprised of proceeds from
the sale of oil and gas of £235.7 million,
less associated royalties of £33.5 million,
plus processing and other income of £6.3
million. Revenue from oil and gas sales of
£235.7 million was comprised of 48% oil
and condensate, 17% natural gas liquids,
33% natural gas and 2% royalty interest.
Crown, freehold, and gross overriding
royalties of £33.5 million, as a percentage
of oil and gas sales, was 14%. Processing
and other income of £6.3 million over the
above period primarily resulted from fees
charged to third party users of various
facilities which are partially or wholly
owned by the Group.
Total revenue for 2021 was £86.8 million
and was comprised of proceeds from
the sale of oil and gas of £96.0 million,
less associated royalties of £12.1 million,
plus processing and other income of
£2.8 million. Revenue from oil and gas
sales of £96.0 million was comprised of
43% oil and condensate, 20% natural gas
liquids, 36% natural gas and 1% royalty
interest. Crown, freehold, and gross
overriding royalties of £12.1 million, as
a percentage of oil and gas sales, was
12.6%. Processing and other income of
£2.8 million for 2021 resulted from fees
charged to third party users of various
facilities which are partially or wholly
owned by the Group.
Total revenue year over year increased
140%, primarily a result of increased
production coupled with an increase in
commodity pricing in 2022. In general,
oil and condensate prices increased year
over year because of WTI benchmark
prices increasing as a result of global
supply disruptions due to the Russia-
Ukraine conflict and demand increasing
as the global economy recovered
from previous COVID-19 restrictions.
Natural gas prices increased year over
year primarily due to increased global
demand. An increase in processing
income year over year can mainly be
attributed to a full year of third-party
processing fees from the Cenovus
acquisition. The year over year increases
in oil and gas sales and processing
income were partially offset by an
increase in royalty expenses due to
increased production and increased
commodity pricing.
031
032
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Expenses
Production costs
Total Production Costs
Total Production Costs (£/boe)
Year Ended 31
December 2022
£’000
Year Ended 31
December 2021
£’000
76,418
10.31
37,945
8.36
Total production costs are primarily comprised of field labour and general field maintenance, land retention and taxes, well repairs
and workovers, processing, and product transportation.
Production costs for the year ended 31 December 2022 associated with the extraction and processing of i3’s Canadian oil and gas
assets were £76.4 million, or £10.31/boe. Production costs for the year ended 31 December 2021 associated with the extraction and
processing of i3’s Canadian oil and gas assets were £37.9 million, or £8.36/boe. The year over year increase in total production
costs on a £/boe is primarily due to scheduled facility turnarounds and costs associated with reactivation of previously shut-in wells.
In addition, costs increased in the fourth quarter of 2022 due to cold weather-related issues and increased power charges. Also,
general inflation in 2022 put pressure on existing production costs causing overall costs to increase, compared to 2021.
Tax charge
The Group’s current and deferred tax charge are presented in the following table.
Current tax charge / (credit)
Deferred tax charge
Total income tax charge
Year Ended 31
December 2022
£’000
Year Ended 31
December 2021
£’000
10,002
3,824
13,826
(487)
1,148
661
The current tax charge in 2022 resulted from taxable income at the Group’s Canadian operations, which prior to 2022 had been
sheltered by the Group’s accumulated non-capital losses. These non-capital losses were fully utilised in 2022 and the residual
taxable income was subject to taxation at the combined rate of 23%. The Group is not required to pay any cash income taxes
related to the current income tax expense for the year ended 31 December 2022 until the first half of 2023. The current tax credit in
2021 resulted from the receipt of R&D tax refunds in the UK in respect of the 2019 fiscal year.
Administrative expenses increased from £13.1 million to £15.1 million, largely due to the increased overhead resulting from the effect
of a full year expansion of the Group’s Canadian business following the Cenovus acquisition which closed in August 2021.
The deferred tax charge in both years resulted from changes in net deductible temporary differences in Canada. Further details are
provided in the financial statements note 9.
Finance costs
PP&E and E&E
The Group incurred finance costs of £7.9 million (2021: £7.6 million). The increase is largely attributable to the unwinding of discount
on decommissioning provision, which was partially offset by reductions in interest on the H1-2019 loan note facility as the Group
paid interest in cash at 8% in 2022 whereas it had previously paid in kind at 11%, and the gain on the non-current accounts payable
net of the 2021 charge of modifying the associated warrants. Further details are provided in financial statements note 8, note 15
and note 16.
The Group had PP&E assets of £236.5 million (2021: £224.1 million) and intangible E&E assets of £62.1 million (2021: £49.8 million) as
at 31 December 2022.
The increase due to additions and acquisitions of PP&E was offset by various disposals and the depletion charge for the period.
Further details are in note 12 of the financial statements.
Profit, EPS, Net operating income, EBITDA, Adjusted EBITDA
The Group’s profit, EPS, EBITDA, Adjusted EBITDA, and Net operating income are presented in the following table.
Total property, plant and equipment additions in the year of 2022 totaling £75.8 million (2021: £11.2 million) was comprised of work
associated with the Group’s Canadian oil and gas assets as per the table below.
Profit for the year
Basic earnings per share (pence)
Diluted earnings per share (pence)
EBITDA (1)
Adjusted EBITDA (1)
Net operating income (1)
(1) Non-IFRS measure. Refer to Appendix B.
Year Ended 31
December 2022
£’000
Year Ended 31
December 2021
£’000
41,951
3.60
3.43
97,981
97,990
131,732
25,083
2.84
2.60
54,996
30,239
48,587
Land
Seismic
Drilling, completions
Facilities, equipment and pipelines
Other
Total Property, Plant & Equipment
Year Ended 31
December 2022
£’000
Year Ended 31
December 2021
£’000
975
452
58,135
14,862
1,369
75,793
358
321
6,592
3,586
327
11,184
033
034
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS During the year of 2022, i3 invested £58.1 million to drill 31 (20.1 net) wells, 28 (18.3 net) of which were completed in 2022 and 3 (1.8
net) Wapiti wells which were completed in January 2023. Also, i3 tested well locations in the Marten Hills and Gilby area.
During the year of 2022, i3 also invested £14.9 million on equipping and tie-ins of the above drilled wells, except for the Wapiti wells,
which was equipped in 2023. Included in the £14.9 million, were various well and facility electrification projects along with facility
upgrades and pipeline modifications.
An additional £2.8 million was spent on land retention costs, seismic costs and other.
In the year of 2022, i3 drilled a total of 6 (6 net) Glauconite wells in the Open Creek area, 2 (1.3 net) Belly River wells in the Leedale
area, 3 (2 net) Falher/Cardium wells in the Willesden Green area, 10 (4 net) Clearwater wells in the Marten Hills area, 2 (1.99 net)
Montney wells in the south Simonette area, 7 (4.72 net) Cardium wells in the Wapiti area and 1 (0.07 net) Dunvegan well in the
Elmworth area.
During the year of 2022, additions to intangible exploration and evaluation assets totaled £12.4 million.
Canada
UK
Total E&E capital expenditure
Year Ended 31
December 2022
£’000
Year Ended 31
December 2021
£’000
6,677
5,650
12,327
–
1,010
1,010
Borrowings and leases
Dividends
The Group had borrowings and leases of £27.2 million as at 31
December 2022 (2021: £23.9 million). The increase is largely
due to the accretion expense of £3.4 million (2021: £2.8 million)
on the H1-2019 Loan Notes, partially offset by a £0.1 million
reduction in leases which were repaid during the year. Interest
on the H1-2019 Loan Notes is payable at the Group’s option (i) in
cash at a rate of 8% per annum, or (ii) in kind at a rate of 11% per
annum by the issuance of additional H1-2019 LNs. The interest
was paid in cash in 2022 and resulted in an interest expense
of £2.3 million. Prior to 2022 the interest had been paid in kind,
with an interest expense of £3.1 million recorded in 2021.
The H1-2019 loan notes matured on 31 May 2023 and therefore
were reclassified from non-current liabilities to current liabilities
during the year. The notes were redeemed in full on 31 May
2023 following the completion of the new CAD 100 million loan
facility. Further details are provided in note 24 to the
financial statements.
In 2022 The Group declared and paid £17.4 million of dividends
and £15.4 million of dividends, respectively. (2021: declared
and paid £3.4 million). In December 2022 the Group increased
its annual dividend guidance to £24.5 million for 2023, to be
declared and paid monthly throughout the year.
Going concern
The Directors have considered the going concern of the Group
and are satisfied that the Group has sufficient resources to
operate and to meet their commitments as they come due
over the going concern period. The Group continues to closely
monitor its cash balances which stood at £16.6 million as at 31
December 2022. Further details are provided in the Directors
Report and note 2 to the financial statements.
Approval of the Strategic Report
This report was approved by the Board of Directors on
6 June 2023 and signed on its behalf by:
E&E capital expenditure in Canada relates to various Crown land acquisitions and a preliminary appraisal well drilled in the Marten
Hills, Clearwater play. Testing of the well is on-going. E&E capital expenditure in the UK primarily relates to the 13/23c-12 Serenity
appraisal well. Further details about the well results and the impairment conclusions are provided in financial statement note 13.
John Festival
Non-Executive Chairperson
6 June 2023
035
036
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
GOVERNANACE
39 Board of Directors
51
Health, Safety, Environment and
Security Committee Report
41
Corporate Governance Report
53 Reserves Committee Report
48 Audit and Risk Committee Report
54 Remuneration Committee Report
50
Corporate Governance
Committee Report
55 Directors’ Report
037
038
I3 ENERGY PLC I3 ENERGY PLC STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
BOARD OF DIRECTORS
The Directors of the Company who were in office during the year and
up to the date of signing the financial statements were:
Key to committee membership
AR
Audit & Risk Committee
C
Corporate Governance Committee
H
HSES Committee (Chair)
RC
Remuneration Committee
R
Reserves Committee
Committee Chair
John Festival
Non-Executive Chairperson
(Appointed Chairperson of the
Board on 9 September 2022)
Mr. John Festival is a chemical engineer
with 38 years of experience in the
Canadian oil and gas sector, focused
on heavy oil in western Canada and has
an excellent track record of founding,
growing and monetising oil and gas
companies in Canada. He is currently
the CEO of Broadview Energy and was
the President and CEO of BlackPearl
Resources Inc. prior to its acquisition by
International Petroleum in December 2018
in a stock and debt transaction valued at
c. US$715 million. He was previously one
of the founding partners and President
of BlackRock Ventures Inc. which was
sold to Shell Canada for CAD2.4 billion in
2006. He graduated in 1984 with a BSc in
Chemical Engineering from the University
of Saskatchewan.
Majid Shafiq
Chief Executive Officer
Mr. Shafiq has over 31 years of technical
and investment banking experience
focused on the global E&P sector. Prior
to joining i3 as CEO, Majid spent circa
eighteen years in energy investment
banking advising on asset level
acquisitions and divestments, corporate
M&A and equity financings for the private
and public, small to mid-cap oil and gas
sector. During that time, he worked for
Waterous and Co, Tristone Capital Ltd,
Energy Capital LLP and Argentil Capital
Partners LLP. Prior to his investment
banking career, he worked for Mobil
Oil Corporation for 13 years in various
petroleum engineering and commercial
roles in the UK and the Netherlands. Mr.
Shafiq holds a Bachelors degree in Nuclear
Engineering from Manchester University, a
Masters degree in Petroleum Engineering
from Heriot-Watt University and an MBA
from London Business School.
AR
C
R
H
Ryan Heath
President i3 Energy Canada
(Appointed Executive Director on 19
December 2022)
Ryan has over 20 years’ experience in the
Canadian oil and gas sector, building junior
resources companies in the WCSB. Ryan
joined i3 through its acquisition of Toscana
Energy Income Corporation in 2020, where
he was the CEO since 2019.
Prior to Toscana, Ryan was VP Land
& Negotiations at Paredes Energy
Corporation, and throughout his career
has been instrumental in the growth
and development of several public and
private E&P companies, including Striker
Exploration Corp., Hyperion Exploration
Corp., and Severo Energy Corp.
Additionally, Ryan held roles of increasing
Land Management and Business
Development focused responsibilities
with Paramount Energy Trust and NCE
Petrofund Corp.
Ryan graduated from the
University of Calgary with a Bachelor
of Commerce, specialising in Petroleum
Land Management.
Linda Beal
Non-Executive Director
Neill Carson
Non-Executive Director
Richard Ames
Non-Executive Director
Mr. Ames BS MS brings to the Board
over 40 years of broad range experience
with senior executive roles in the oil and
gas industry. His career has included
Vice President roles at TNK-BP, Sidanco
and Amoco with responsibilities over
Information Technology, Oil and Gas
Services, Business Development and Oil
and Gas Exploration. Mr. Ames has held
Board and Advisory Board of Director
positions in Iona, Accenture Russia,
DataSpace and the Kiawah Conservancy.
Mr. Ames graduated from Duke University
with a Bachelor of Science degree in
Geology, and from the University of
Georgia with a Master of Science
degree in Geology.
AR
R
Ms. Beal has over 35 years’ experience
advising international E&P clients and since
2016 has been a board member of various
companies. As a Director of other small
cap natural resources businesses, she
brings corporate governance and financial
expertise and experience as Audit & Risk
Committee Chair. Ms. Beal joined Grant
Thornton in 2013 as a Tax Partner and
was Global Leader for Energy and Natural
Resources, mandated to build its global
energy and natural resources capability.
Previously, she spent 30 years at PwC and
its legacy firm Price Waterhouse in Audit
and Tax, 16 of them as a Partner. Launching
PwC’s Natural Resources Independents
business in the mid-2000s, she focused on
advising international E&P clients across
the AIM, FTSE350, overseas listed and
private sectors.
Ms. Beal graduated in 1982 from the
University of Nottingham with a BSc (Hons)
in Mathematics, thereafter, qualifying
at Price Waterhouse as a Chartered
Accountant in 1985.
RC
Mr. Carson, Bsc (Hons) Combined Geology
& Physics, MSC Geophysics, has 40 years of
management and international project experience
in the oil & gas industry. On completion of his
Bachelors (with First Class Honours) and Master
degrees in the geosciences from Ulster University
and Birmingham University respectively, he joined
Amoco in 1981. During his 14 years with Amoco
he was responsible for numerous exploration
and production projects within the UKCS. Mr.
Carson’s international career widened through
exploration management positions for BP Amoco
in the Netherlands, Bolivia, and Pakistan. As
Performance Unit Leader for BP Pakistan, Mr.
Carson was responsible for the delivery and growth
of approximately 12,000 boepd and capital budgets
in excess of US$50 million. Through his career
with BP Amoco, Mr. Carson executed growth plans
through successful oil and gas discoveries, and
the development and management of commercial
portfolios. He contributed as a select member of
a targeted team to BP’s world-wide new venture
screening initiative in 2003. In early 2004, Mr.
Carson co-founded Ithaca Energy Inc. (‘‘Ithaca’’)
where he served as its President and a Director
from April 2004 and acted as Chief Operating
Officer until late 2007. While at Ithaca, Mr. Carson
was responsible for asset acquisitions, all aspects
of operations and safety, general corporate
strategy, and the drilling of four successful oil wells.
Across his 4 years with Ithaca, the portfolio grew
to 39MMboe of 2P reserves and was on plan to
deliver 8,000 boepd of production. Mr. Carson
founded Iona Energy Inc. (‘‘Iona’’) in late 2007
where he served as Chief Executive Officer until
his departure in mid 2014 to form i3. Responsible
for all aspects of corporate strategy and portfolio
development, he grew Iona to 40MMboe of
2P reserves and saw peak production of 6,700
boepd. Mr. Carson co-founded Quattro Energy ltd
(“Quattro”) where he serves as Executive Chairman.
C
H
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Corporate Governance Report
CORPORATE GOVERNANCE REPORT
Overview of Board Governance
The Group believes that its success is dependent upon sound and effective governance. The Directors recognise
the importance of strong corporate governance and have developed a corporate governance framework and
policies appropriate to the size of the Group. The Board places strong emphasis on health and safety, good financial
discipline, governance, and environmental stewardship. The Group has established clearly defined responsibilities
and accountability, clear delegated authority limits, robust systems and processes and risk management
procedures to safeguard shareholder value.
Business Conduct
i3 has a Code of Business Conduct and Ethics which sets out the behavior it expects of its Directors, management,
employees, contractors, sub-contractors, agents intermediaries and suppliers. i3 has a zero-tolerance policy to
bribery and corruption and is committed to conducting business ethically, with integrity and complying with all
applicable legal requirements.
Our Code of Business Conduct and Ethics addresses anti-bribery and corruption, health and safety, environment,
confidentiality, conflicts of interest, data protection, fair competition, export controls and sanctions compliance,
information technology and internet usage and employment practices.
The Company is respectful of human rights and believe that is it important to embed it in our culture and the way
we do business, treat our employees and engage with our stakeholders.
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Corporate Governance Report
Eligible to Attend
Attended
John Festival
Majid Shafiq
Ryan Heath (1)
Linda Beal
Neill Carson
Richard Ames
10
10
0
10
10
10
10
10
0
10
10
10
(1) Ryan Heath was appointed to the Board on 19 December 2022. There were no Board meetings between his appointment and 31 December
2022.
In addition to the above meetings there were also two meetings of a sub-committee of the Board.
Governance framework
The Board of i3 Energy plc (the “Company”) has adopted the QCA Corporate Governance Code (“the Code”) as
its code of corporate governance. The Code is published by the Quoted Companies Alliance (“QCA”) and is
available at www.theqca.com. The Directors are of the opinion that the recommendations of the QCA code have
been implemented to an appropriate level.
The Company also has policies and procedures guidance which is provided to all Directors and employees for
share dealing, whistleblowing, disclosure and social media policy.
The Code sets out 10 principles that should be applied. These are listed below together with a short explanation
of how the Board applies each of the principles, including where applicable any deviation from those principles:
The Code of Business Conduct and Ethics and the other procedures are updated at least annually and reviewed
by the Corporate Governance Committee or Audit and Risk Committee and approved by the Board annually.
i3 believes in organisational diversity and asserts that discrimination isn’t acceptable, irrespective of age, disability,
gender, ethnicity, faith, race, sexual orientation, or any other factor that makes people different.
The Company maintains a risk register and as part of the Group’s risk management procedures, the risks the Group
is facing are updated by management and are reviewed by the Audit and Risk Committee at least twice per year
and reviewed and approved by the Board annually.
Board agenda and activities during the year
The Board of Directors at the year-end included two Executive Directors and four Non-Executive Directors. The
Board, through the Executive Directors, maintain regular contact with advisors and public relations consultants in
order to ensure that the Board develops an understanding of the views of major shareholders of the Company.
The Board meets regularly throughout the year, for both Committee and Board meetings. During the year to 31
December 2022 the Board met for a total of ten meetings, two sub-committee meetings and passed resolutions in
writing on seven occasions. The Board is responsible for formatting, reviewing, and approving the Group’s strategy,
financial activities and operating performance. Day-to-day management is devolved to the Chief Executive Officer
of the Company, who is charged with consulting the Board on all significant financial and operational matters.
Consequently, decisions are made promptly and following consultation amongst the Directors where necessary
and appropriate.
Regular CEO updates are sent to the Board quarterly, Board agendas with board packs are circulated in advance
of each board meeting detailing the items to be covered at the meeting and any resolutions to be passed. The
Company requires that its Non-Executive Directors meet among themselves to freely consider management’s
strategy and other sensitive issues without the Company’s management or Executives present.
All necessary information is supplied to the Directors on a timely basis to enable them to discharge their duties
effectively, and all Directors have access to independent professional advice, at the Company’s expense, as and
when required.
Board Meetings:
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i3 Energy PLC
Principle One
Business Model and Strategy
The Company’s business plan is to deliver returns to shareholders in the form of dividends and share price growth,
via stable and growing production and reserves expansion. The Company has acquired and developed a portfolio
that is extensive, diverse and produces a mix of gas, oil and NGLs. This diversity helps to mitigate risks to
production and cash flows, which is critical to stability of dividends in normal market conditions. The portfolio also
contains hundreds of drilling locations which allows the Company to continue to grow through the business and
commodity price cycle. During extended periods of low commodity prices when asset prices fall, the Company
takes advantage of opportunities to acquire production and reserves at low multiples and when commodity prices
and asset prices increase the Company pivots towards organic growth via drilling its extensive portfolio of
development drilling locations.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.
The Company has ongoing relationships with its retail shareholders. Institutional shareholders and analysts have
the opportunity to discuss issues and provide feedback at meetings or via telephone conference with the Company.
In addition, all shareholders, when applicable and safe to do so and in consideration of UK Government guidance,
are encouraged to attend the Company’s Annual and General Meetings. Investors also have access to current
information on the Company through its website, www.i3.energy and via Camarco, the Company’s communications
advisor, who is available to answer investor relations enquiries.
Principle Three
Considering wider stakeholder and social responsibilities
The Board recognises that the long-term success of the Company is reliant upon the efforts of the employees of
the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range
of processes and systems to ensure that there is close oversight and contact with its key relationships. The
Company has ongoing relationships with a broad range of its stakeholders and has regular and direct interaction
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with various levels of government and provides these stakeholders with the opportunity to raise issues and provide
feedback to the Company.
The Board is focused on the need to advance the Company’s sustainability strategy, and i3 released its inaugural
2022 Sustainability Report in Q2 of 2022. The Board established a HSES Committee of the Board during 2021 to
provide structured oversight of its programmes. i3 is committed to complying with evolving reporting requirements
and will align with industry and regulatory efforts to decarbonise Western Canadian Sedimentary Basin operations.
Principle Four
Risk Management
In addition to its other roles and responsibilities, the Audit & Risk Committee is responsible to the Board for ensuring
that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant
risks faced by the Company.
A detailed list of the Company’s key risks are listed in the Strategic Report.
The Directors have established procedures for the purpose of providing a system of internal control. An internal
audit function is not considered necessary or practical due to the size of the Company. However, the Audit and
Risk Committee and the Board will continue to monitor the need for an internal audit function. The Non-Executive
Directors work closely with and have regular ongoing dialogue with both the Chief Executive Officer and the Chief
Financial Officer of the Company and have established appropriate reporting and control mechanisms to ensure
the effectiveness of its control systems.
Principle Five
A Well-Functioning Board of Directors
As at the date hereof the Board is comprised of two Executive Directors, Mr. Majid Shafiq and Mr. Ryan Heath,
Chairperson Mr. John Festival and three Non-Executive Directors, Ms. Linda Beal, Mr. Neill Carson and Mr. Richard
Ames. Mr. Graham Heath resigned as a Director and Chief Financial Officer on 28 September 2022 to focus on
personal health issues such that he can pursue other interests. Jason Dranchuk was appointed the new Chief
Financial Officer with a start date in Q2 2023. The Executive Directors have direct responsibility for business
operations, whilst the Chairperson leads and chairs the Board and, along with the Non-Executive Directors, has a
responsibility to bring independent, objective judgement to bear on Board decisions. Biographical details of the
current Directors are set out on the Company’s website under the heading “About Us / Board & Executive”.
Executive and Non-Executive Directors are subject to re-election at each Annual General Meeting.
At the time of this report, the Non-Executive Chairperson of the Board and the Non-Executive Directors held shares
and options to acquire shares in the Company. The Board has considered, in conjunction with its advisors, whether
these have any impact on their independence and have concluded they do not. Apart from these matters and their
Directors’ fees the Non-Executive Directors have no other financial interests in the Company or business
relationships that would interfere with their independent judgement.
The Board meets at least six times per annum. It has established an Audit & Risk Committee, a Corporate
Governance Committee, a Health, Safety, Environmental and Security Committee, a Reserves Committee and a
Remuneration Committee, particulars of which appear hereafter. The Board has agreed that appointments to the
Board are made by the Board as a whole, with recommendations from the Corporate Governance Committee, and
therefore has not created a Nominations Committee. The Board considers the above appropriate given the
Company’s current stage of operations. It shall continue to monitor the need to match resources to its operational
performance and the matter will be kept under review going forward. The Non-Executive Directors are considered
to be independent. The Board notes that the QCA recommends a balance between Executive and Non-Executive
Directors and recommends that there be two independent Non-Executives. The Board shall review further
appointments as scale and complexity grows.
All Directors have access to the advice of the Company’s solicitors. Necessary information is supplied to the
Directors on a timely basis to enable them to discharge their duties effectively, and all Directors have access to
independent professional advice, at the Group’s expense, as and when required.
Attendance at Board and Committee Meetings
The Company shall report annually on the number of Board meetings held during the year and the attendance
record of individual Directors.
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of six Directors, and, in addition, the Company has employed the outsourced services
of Burness Paull to act as the Company Secretary. The Directors collectively have significant experience in oil and
gas, North Sea production, WCSB production, UK and Canadian listings, growing businesses, transactions, finance
and accounting. The Company believes that the current balance of skills in the Board as a whole, reflects a very
broad range of commercial and professional skills across geographies and industries and each of the Directors has
experience in public markets. The professional experience of each of the Directors is set out on the Company’s
website.
The Board includes one female Director and various nationalities. Diversity will form a part of any future recruitment
consideration if the Board concludes that replacement or additional Directors are required.
The Board shall review annually the appropriateness and opportunity for continuing professional development
whether formal or informal.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committee and individual Directors is undertaken on an ad hoc basis by the
Chairperson, who consults with the other Directors as appropriate regarding effectiveness and performance as well
as the Directors’ continued independence.
The results and recommendations of these internal evaluations of the Board shall identify the key targets and
requirements that are relevant to the Board.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the
Company as a whole and that this will impact their performance of the Company. The Board is very aware that the
tone and culture set by the Board will greatly impact all aspects of Company and employee performance. The
corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers
long-term value to its shareholders and that shareholders have the opportunity to express their views and
expectations to the Company in a manner that encourages open dialogue with the Board. The Company values
open and respectful dialogue with employees, suppliers and other stakeholders and places a high degree of
importance on sound ethical judgement and behaviours to achieve its corporate objectives. The Company provides
a NED liaison, Mr. John Festival, to all staff as part of its Whistleblowing Policy. The Board expects these values
to permeate throughout every aspect of the organisation – employees, relationships, actions. The Directors foster
an open culture which invites feedback and positive constructive challenge. The Company has adopted a code for
Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded
on AIM and in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.
Principle Nine
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company’s activities rests with the Board. The Executive Directors have
day-to-day responsibility for the operational management of the Company’s activities. The Non-Executive Directors
are responsible for bringing independent and objective judgement to Board decisions. There is clear separation of
the roles of the Chief Executive Officer and Non-Executive Chairperson. The Chairperson is responsible for
overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making
and ensuring the Non-Executive Directors are properly briefed on matters.
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Corporate Governance Report
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Corporate Governance Report
The Company operates the following Board committees:
Audit & Risk Committee
Corporate Governance Committee
Health, Safety, Environment and Security Committee
Reserves Committee
Remuneration Committee
The Committee chairs and members have been selected based on the most relevant experience and expertise.
Each Non-Executive Director sits on a minimum of three committees and of these is chair of at least one committee
ensuring that the committees are well qualified with a range of contributions and experience. The roles and
responsibilities and terms of reference for each of the committees are reviewed at least annually to ensure they
remain applicable.
The Chairperson has responsibility for corporate governance matters in the Company and is a committee member
of the Audit and Risk Committee and Corporate Governance Committee.
The Board receives quarterly updates regarding the principal areas of activity of the Company including production
and has unrestricted access to management and employees of the Company. The Board also has the authority to
retain and terminate external legal counsel, consultants, or other advisors to assist it in fulfilling its responsibilities
and to set and pay the respective reasonable compensation of these advisors without consulting or obtaining the
approval of any Officer of the Company. The Company shall provide appropriate funding, as determined by the
Board, for the services of these advisors.
Furthermore, the Chairperson maintains close dialogue with other Directors, both through the forum of Board
meetings and through Non-Executive Director meetings and meetings with the CEO and ad hoc communication
on an individual level.
Audit & Risk Committee
The Audit & Risk Committee meets at a minimum of twice a year. As of the date of this document, the members
of the Audit & Risk Committee are Ms. Linda Beal (Chair), Mr. Richard Ames and Mr. John Festival. Each of the
members of the Audit & Risk Committee are independent. Each of the members of the Audit & Risk Committee
are familiar with accounting principles, financial statements and financial reporting requirements and possess
experience that is relevant to the performance of their duties as members of the Audit & Risk Committee of the
Company.
The Audit & Risk Committee’s primary responsibilities are the planning and reviewing of the Annual Report and
interim statements and accounts and to ensure that internal controls and risk management is maintained. The
Audit & Risk Committee approves the appointment of external auditors and determines their fees and ensures the
auditors’ independence as well as focusing on compliance requirements, accounting standards and review of key
accounting judgements. It is also responsible for monitoring and ensuring an effective system of internal controls
is maintained. The ultimate responsibility for reviewing and approving the annual financial statements and interim
statements remains with the Board.
The full terms of reference for the Audit & Risk Committee are available on the Company’s website.
Corporate Governance Committee
The Corporate Governance Committee meets as required, but at least twice a year. Its members are Ms. Linda
Beal (Chair), Mr. Neill Carson and Mr. John Festival.
The Corporate Governance Committee’s primary purpose is to develop and recommend to the Board guidelines,
policies and procedures relating to corporate governance as well as compliance with AIM and TSX rules.
The HSES Committee assists the Board in conducting business in a manner that promotes a safe, secure, and
healthful workplace for its employees and contractors, protects the environment and ensures that the Company
will continue to be a valued member of the communities in which it operates.
Reserves Committee
The Reserves Committee meets as required, but at least twice a year. Its members are Mr. Neill Carson (Chair),
Mr. Richard Ames and Mr. John Festival. The Chief Executive Officer, the Chief Financial Officer and other
Directors may also attend and speak at meetings of the Reserves Committee.
The Reserves Committee assists the Board in monitoring and reviewing the appointment of an independent
engineering firm retained by the Company to report on the quantity and the value of the Company’s oil and gas
reserves. The Reserves Committee reviews the procedures by which the Company provides information to the
independent engineering firm to be used as the basis of evaluation and audit, ensuring disclosure complies with
applicable laws and regulations, and is also responsible for matters relating to the preparation and public disclosure
of estimates of the Company’s reserves.
Remuneration Committee
The Remuneration Committee meets at least twice a year. Its members are Mr. Richard Ames (Chair) and Ms.
Linda Beal. The Chief Executive Officer, the Chief Financial Officer and other Directors may also attend and speak
at meetings of the Remuneration Committee.
The Company’s policy is to remunerate senior executives fairly in such a manner as to facilitate the recruitment,
retention, and motivation of staff. The Remuneration Committee agrees with the Board a framework for the
remuneration of the Chairperson, the Executive Directors, and the senior management of the Company.
The principal objective of the Committee is to ensure that members of the executive management of the Company
are provided incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded
for their individual contributions to the success of the Company. Non-Executive fees are considered and agreed
by the Board as a whole.
The terms of reference of the Remuneration Committee are available on the Company’s website.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.
The Company has ongoing relationships with its retail shareholders. Institutional shareholders and analysts have
the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders,
when applicable and safe to do so and in consideration of UK Government guidance, are encouraged to attend the
Company’s Annual and General Meetings.
Investors also have access to current information on the Company through its website, www.i3.energy and via
Camarco, the Company’s communication advisor, who is available to answer investor relations enquiries.
Internal controls
The Directors acknowledge their responsibility for the Group’s system of internal controls and for reviewing their
effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability
of financial information for both internal use and external publication. Whilst the Directors are aware that no system
can provide absolute assurance against material misstatement or loss, regular reviews of internal controls are
undertaken to ensure that they are adequate and effective.
The Committee is also responsible for monitoring the overall effectiveness of the Board.
Risk management, uncertainties and treasury policy
Health, Safety, Environment and Security (HSES)
The HSES Committee meets as required, but at least twice a year. Its members are Mr. John Festival (Chair), Mr.
Neill Carson, Mr. Majid Shafiq, Mr. Ian Schafer (COO, i3 Energy Canada Ltd.) and Mr. John Woods (COO, i3
Energy NSL Limited).
Risk assessment and evaluation is an essential part of the Group’s planning and is an important aspect of the
Group’s internal controls system – a crucial activity for achieving its strategic objectives.
There is a process of evaluation of projects, activities, and performance targets wherein the Board regularly reviews
actual progress to that previously forecast. Project milestones and timelines are regularly reviewed.
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Corporate Governance Report
The Group finances its operations through debt, equity, and operating cash flows, and holds its cash as a liquid
resource to fund the obligations of the Group. Decisions regarding the management of these assets are approved
by the Board. Please refer to note 22 for further detail on how the Board manages financial risk.
The principal risks facing the Group are set out in the Strategic Report.
Securities trading
The Board has adopted a Share Dealing Code that applies to Directors, senior management and any employee
who is in possession of material non-public information (“MNPI”). All such persons are prohibited from trading in
the Company’s securities if they are in possession of MNPI. Subject to this condition and trading prohibitions
applying to certain periods, trading can occur provided the relevant individual has received the appropriate
prescribed clearance from the Company’s Nomad.
“John Festival”
John Festival
Non-Executive Chairperson
6 June 2023
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Audit and Risk Committee Report
AUDIT AND RISK COMMITTEE REPORT
The Audit and Risk Committee assists the Board's oversight of the integrity of the financial statements and other
financial reporting and the internal controls and risk management of the Group.
The Audit and Risk Committee comprises Linda Beal (Non-Executive Director and Committee Chairperson),
Richard Ames (Non-Executive Director) and John Festival (Non-Executive Director). All the Committee members
are independent Non-Executive Directors with recent and relevant financial experience in the energy sector. Under
its terms of reference the Audit and Risk Committee meets at least 2 times per annum but generally meets more
often. The Audit and Risk Committee met four times during 2022 with all members in attendance at every meeting
and will meet at least two times during 2023. The Audit and Risk Committee had one meeting with the auditors
during 2022 including sessions without management present. The CEO and key members of the Finance team
attended the majority of the Committee meetings in 2022. The Audit and Risk Committee Chair also speaks
regularly with the Group Finance team and the audit partner outside the formal Committee meetings.
Key responsibilities
The terms of reference of the Audit and Risk Committee were reviewed and updated during the year to reflect best
practices. The principal roles and responsibilities of the Committee include:
• Monitoring the integrity of the interim and annual financial statements and ensuring full compliance with
accounting standards.
• Reviewing key accounting policies, judgements, and estimates.
• Reviewing the disclosures in the interim and annual report and financial statements.
• Overseeing the relationship with the external auditor, appointment and approval of auditor remuneration
and assessment of the auditor’s independence and objectivity.
• Reviewing and monitoring the effectiveness of the Group’s financial reporting, internal control policies,
and procedures for the identification, assessment, and reporting of risk.
• Considering the need for an internal audit function.
2022 meetings
During 2022 the key areas covered by the Committee were:
• Review of the Company’s internal controls including the Finance team structure, responsibilities and
reporting lines, the Company’s Delegation of Authority and the Company’s risk management framework,
management’s assessment of key risks and the risk register all of which were updated following
acquisitions and associated integration of teams and systems.
• Review of the 2021 annual financial statements including review of key accounting judgements and
estimates and discussion with the external auditors their audit findings.
• Review of audit planning and approach for 2022.
• Consideration of the independence of the auditors.
• Review of the 2022 interim financial statements including review of key accounting judgements and
estimates and discussion with the external auditors.
• Consideration of the external auditor’s independence and effectiveness and whether their reappointment
should be recommended.
• Consideration of whether the Company should implement an internal audit function. The Committee
concluded that this was not appropriate in view of the integration of the Finance teams and systems and
additional review procedures implemented following the acquisitions.
• Review of the Committee’s terms of reference and membership.
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i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Audit and Risk Committee Report
2022 Group financial statements key judgements and estimates
An essential element of the integrity of the financial statements lies around the key assumptions and estimates or
judgements to be made. The Audit and Risk Committee reviews key judgements prior to publication of the financial
statements at both the end of the financial year and at the end of the six-month interim period, as well as considering
significant issues throughout the year.
In particular, this includes reviewing any subjective material assumptions within the Group’s activities to enable an
appropriate determination of asset valuation, provisioning and the accounting treatment thereof. The Audit and
Risk Committee reviewed and was satisfied that the judgements exercised by management on material items
contained within the Report and Financial Statements are reasonable.
Key judgements and estimates in the 2022 Group financial statements considered by the Audit and Risk Committee
were:
• Carrying value of intangible exploration and evaluation assets.
• Carrying value of property, plant, and equipment – oil and gas assets.
• Decommissioning provision estimates.
• Recognition and measurement of deferred tax assets.
• Various other financial reporting matters including the IFRS 2 share-based payment charge for employee
stock options granted during the year.
• Going concern.
2023 and beyond
The Audit and Risk Committee, shall continue to work according to its Terms of Reference, and keep under review
the Company’s control and risk management framework and ensure it remains appropriate as the Group’s
business develops.
Linda Beal
Chairperson of the Audit and Risk Committee
6 June 2023
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Corporate Governance Committee Report
CORPORATE GOVERNANCE COMMITTEE REPORT
The Corporate Governance Committee assists the Board in the oversight of Corporate Governance. The primary
purpose is to develop and recommend to the Board guidelines, policies and procedures relating to corporate
governance and compliance with AIM and TSX rules. The Committee is also responsible for monitoring the overall
effectiveness of the Board.
The Corporate Governance Committee’s membership comprises Linda Beal (Non-Executive Director and
Committee Chairperson), Neill Carson (Non-Executive Director) and John Festival (Non-Executive Director).
The Governance Committee met twice during 2022 and will meet at least two times during 2023.
Independence of Non-Executive Directors
The Corporate Governance Committee and the Board are satisfied that each Non-Executive Director serving at
the end of the year remains independent and continues to have sufficient time to discharge their responsibilities to
the Company.
2022 activities
The Corporate Governance Committee oversaw a review by the Executives of the functions, capabilities and
responsibilities in the Group and put forward a recommendation for the roles, responsibilities and membership of
the Board Committees.
The Committee also monitored and reviewed the Companies transactional activities, stakeholder engagement,
ABC Policy, i3 Dealing Code, Whistleblowing Policy, Anti Slavery, Criminal Finances Act, and other various
governance policies which were updated during the year. The Committee also monitored compliance with
Canadian and UK regulatory and legal requirements.
2023 looking forward
The Corporate Governance Committee will continue to monitor and advise on Corporate Governance and pay
particular attention to Board structure, diversity and reviewing and ensuring the Company’s policies and procedures
are reviewed at least annually and implemented as detailed.
Linda Beal
Chairperson of the Corporate Governance Committee
6 June 2023
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i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Health, Safety, Environment and Security Committee Report
• Emergency Response Plans (ERPs).
• Pipeline Operating Manual (POM).
• Pressure Equipment Integrity Management Program Manual (PEIM).
The Company conducted quarterly HSE Committee meetings, monthly safety meetings and quarterly inspections
of at least one active work site in addition to multiple emergency response (ERP) exercises throughout our areas
of operation.
We are very pleased with the safety performance of our personnel throughout the year, with only one recorded lost
time incident requiring medical treatment.
i3 also released its second annual sustainability report published in Q2 2022 which showed progress on GHG
emission reductions from a 2020 baseline and progress towards net zero emissions. The Company made
considerable efforts in 2021 to proactively reduce its GHG emission intensity from 44.8 KgCO2e/boe to 42.6
KgCO2e/boe. I3 continued with efforts to reduce emissions through projects that consist of the installation of solar
powered pneumatic chemical pumps, electrification of single wells that formerly ran on propane and instrument air
conversions. We continue the analysis of our portfolio to identify sites which could be electrified, opportunities to
install effluent pipelines to reduce infield trucking, compressor consolidation and engine conversion projects to
lower emissions.
2023 looking forward
In 2023 we look to continual improvement in HSES procedures and to evaluate HSES performance against industry
standards and strengthen work force engagement, ownership, and delivery of HSES goals. We will continue to
focus on ESG and maintain efforts to reduce GHG emissions.
John Festival
Chairman of the Health, Safety, Environment and Security Committee
6 June 2023
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Health, Safety, Environment and Security Committee Report
HEALTH, SAFETY, ENVIRONMENT AND SECURITY
COMMITTEE REPORT
The Health, Safety Environmental and Security Committee (“HSES”) provides assurance to the Board on
occupational health, safety environmental and security policies. It is primarily focused on ensuring that
effective HSE policies are adopted and applied across the Group. Since Q2 2021, the HSES Committee
has added Environmental, Social and Governance (ESG) assurance into their remit.
The HSES Committee comprises of John Festival (Non-Executive Director and Committee Chairman), Neill
Carson (Non-Executive Director), Majid Shafiq (Executive Director) and the COO’s of i3 Energy Canada Ltd,
Ian Schafer, and i3 Energy North Sea Limited, John Woods.
Safety is the number one core value at i3 Energy plc. We strive to achieve an injury-free workplace by making
safety an integral part of our culture and incorporating it into every aspect of our operations. We empower
employees to take ownership of safety at the local level. The HSES Committee meets quarterly to:
• Oversee our policies, procedures, practices, and strategies relating to health, safety, environment,
security, and climate-related issues to ensure due consideration of risks, opportunities, and potential
performance improvements.
• Review and report to the Board with respect to the consideration and integration of climate-related issues
in the development of our business strategy and financial planning.
• Review our disclosure, reporting and external communication practices pertaining to climate issues,
including assessments of materiality and ESG report development.
• Consider and review the establishment of, and performance against targets, benchmarks, procedures,
and disclosures used to measure progress in absolute terms and relative to peers.
• Review our enterprise risk management program as it relates to identifying, assessing, and managing
related risks and report to our Audit and Risk Committee.
HSES Policy
i3 Energy plc and its subsidiaries (i3 Energy North Sea Limited and i3 Energy Canada Ltd.), together “i3 Energy”,
will conduct business in a manner that promotes a safe, secure, and healthy workplace for our employees and
contractors, while protecting the environment and ensuring that we will continue to be a valued member of the
communities in which we operate and a valued supplier to our customers.
We believe that HSES performance is a primary measure of our company's success, and we apply the following
guiding principles when conducting our day-to-day operations:
• We are compliant, respectful, and ethical; we act with integrity, and we expect the same from our suppliers
and customers.
• We design and operate our sites and processes in a manner that ensures the safety and security of our
employees, contractors, environment, and the communities where i3 Energy operations are located.
• We support our customers and contractors to help ensure that i3 Energy’s products are handled,
transported, and processed in a safe, secure, and environmentally responsible manner.
• We focus on good corporate citizenship, giving due consideration to sustainable use of resources,
reduction of emissions and environmental impacts.
• We set goals and objectives that demonstrate our core values of safety & integrity.
2022 activities
With i3’s growth transitioning from acquisition to capital development the focus remained on implementation of
HSES policies and procedures across the different business units throughout Alberta. As part of this ongoing effort
the Company continues to refine procedures, documentation, and training through our Safety Loss Management
System (SLMS) including:
• Health and Safety Management System (HSMS), including Safe Operating Procedures (SOPs).
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i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Reserves Committee Report
Remuneration Committee Report
RESERVES COMMITTEE REPORT
REMUNERATION COMMITTEE REPORT
The Reserves Committee’s purpose is to assist the Board in monitoring and reviewing the appointment of an
independent engineering firm retained by the Company to report on the quantity and the value of the Company’s
oil and gas reserves. The Reserves Committee reviews the procedures by which the Company provides information
to the independent engineering firm to be used as the basis of evaluation and audit, ensuring disclosure complies
with applicable laws and regulations, and is also responsible for matters relating to the preparation and public
disclosure of estimates of the Company’s reserves.
The Reserves Committee comprises of Neill Carson (Non-Executive Director and Committee Chairman), Richard
Ames (Non-Executive Director) and John Festival (Non-Executive Director). The Reserves Committee met twice
in 2022 and typically meets at least once a year prior to publication of the semi-annual and annual results.
2022 activities
• Reviewed the Company’s procedures for providing information to the qualified reserves auditor who
reported on reserves data.
• Met with management and the qualified reserves auditor to review the reserves data and the auditor's
annual reserves report.
• Reviewed and recommended to the Board (via the Audit and Risk Committee) approval of the content
and filing of the Company’s annual statement of reserves data and other oil and gas information.
2023 looking forward
• Meet with the reserves auditor and review year-end 2023 reserve revisions and booking.
• Make a recommendation to the Board (via the Audit and Risk Committee) regarding the Company’s annual
statement of reserves data and other oil and gas information.
Neill Carson
Chairman of the Reserves Committee
6 June 2023
The Remuneration Committee is a standing Committee of the Board and meets regularly to consider all material
elements of Executive Director remuneration including salary, share schemes, and incentivisation. The
Committee makes recommendations to the Board on the framework for Executive Director remuneration and its
cost. The Remuneration Committee assists the Board in discharging its oversight responsibilities relating to the
attraction, compensation, evaluation and retention of Executive Directors and key senior management
employees, in particular the Chief Executive Officer. The Remuneration Committee aims to ensure that the
Company has the right skills and expertise needed to enable the Company to achieve its goals and strategies
and that fair and competitive compensation is awarded with appropriate performance incentives across the
Company.
The Remuneration Committee comprises Richard Ames (Non-Executive Director and Committee Chairman) and
Linda Beal (Non-Executive Director). The Remuneration Committee met two times in 2022 and proposes to meet
at least twice during the next financial year.
The Remuneration Committee is responsible for making recommendations to the Board regarding the framework
for the remuneration of the Executive Directors and other members of executive management. The Remuneration
Committee works within its terms of reference, and its role includes:
• Reviewing and approving the Company's overall compensation philosophy programs.
• Determining and agreeing with the Board, the Remuneration Policy for all Executive Directors and, under
guidance of the Executive Directors, other members of the key senior Management Team.
• Ensuring Executive remuneration packages are appropriate.
• Determining whether annual bonus payments should be made and approving levels for individual
Executive Directors.
• Determining each year whether any awards/grants should be made under the incentive schemes and the
value of such awards.
• Considering any new long-term incentive scheme awards and performance criteria.
• Agreeing Directors’ service contracts and notice periods.
2022 activities
• Approved the level of the 2022 cash bonus.
• Agreed the 2022 Executive salary increases after using benchmarks.
• Approved the vesting of performance awards granted to new hires in 2022.
2023 looking forward
• Proposing and agreeing the remuneration packages for Executive Directors.
• Proposing and agreeing Long-Term Incentive Plan (LTIP) awards for 2023.
• Reviewing and agreeing the bonus to be awarded to Executives in year 2023.
Details of the Directors’ Remuneration are provided in note 10 to the financial statements. The Directors’ interests
are provided in the Directors’ Report.
Richard Ames
Chairman of the Remuneration Committee
6 June 2023
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i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Directors’ Report
DIRECTORS’ REPORT
The Directors are pleased to present this year’s Annual Report together with the audited consolidated financial
statements for the year ended 31 December 2022.
Principal Activities
The principal activities of the Group consist of oil and gas production in Western Canadian Sedimentary Basin and
appraisal and development of oil and gas assets on the UK Continental Shelf. The Company’s wholly-owned
subsidiaries - i3 Energy North Sea Limited and i3 Energy Canada Limited are independent oil and gas companies
with appraisal assets in the UK and producing assets in Canada, respectively. The Company’s principal activity is
that of a listed holding company.
Business Review and Future Developments
The global market for oil and gas remains volatile, however there is a consensus that demand for oil and gas will
remain strong in the near to mid term. The Group business plan is to deliver total shareholder return through
dividends and production growth. The strategy to deliver this is dependent on the prevailing commodity price
environment. During low prices the Group focuses on opportunities to acquire low priced reserves and production
in the M&A market and in a higher price environment the Group pivots to organic growth through exploitation of its
extensive inventory of drill locations. The Group is currently in the drill mode but retains the flexibility to shift towards
M&A if commodity prices decline and remain low for an extended period of time and the Group determines returns
would be higher if capital was deployed in acquisitions rather than in drilling. The business developments during
the year are highlighted in the Strategic Report and the Chairperson and Chief Executive Officer’s Statement.
Results and Dividends
The profit on ordinary activities of the Group after taxation amounted to £42.0 million (2021: £25.1 million). In 2022
The Group declared and paid £17.4 million of dividends and £15.4 million of dividends, respectively. (2021:
declared and paid £3.4 million).
Directors’ Remuneration
The Group remunerates the Directors at levels commensurate with its size and the experience of its Directors. The
Remuneration Committee has reviewed the Directors’ remuneration, after consultation with an external advisor, and
believes the levels uphold these objectives. Details of the Directors’ emoluments and payments made for professional
services rendered are set out in note 10 to the financial statements.
Directors and their interests
The beneficial interests of the Directors in the shares and options of the Company at 31 December are as follows:
Director
Graham Heath
Majid Shafiq
Ryan Heath
Neill Carson
John Festival
Richard Ames
Linda Beal
2022 Shares
2021 Shares
2022 Options
2021 Options
15,505,444
9,537,891
8,255,374
7,666,111
2,602,360
1,539,723
1,305,493
8,550,495
2,951,541
-
7,246,509
199,060
738,951
700,000
1,719,667
2,333,333
1,666,666
150,000
150,000
150,000
183,333
13,802,847
18,517,500
-
1,198,800
1,198,800
1,198,800
788,827
On 27 May 2022, the Company announced that certain of its Directors exercised options over 31,950,581 shares
in the Company.
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Directors’ Report
Share Capital
At 31 December 2022, 1,192,731,373 ordinary shares with a nominal value of £0.0001 each and 5,000 deferred
shares of £10 each were issued and fully paid. Each ordinary share carries one vote and the deferred shares do
not confer any voting rights.
Substantial Shareholders
At 28 April 2023, notification had been received by the Company of the following who had a disclosable interest in
3% or more of the nominal value of the ordinary share capital of the Company:
Polus Capital Management (London)
Premier Miton Investors (London)
Slater Investments (London)
Hargreaves Lansdown Asset Mgt (Bristol)
Interactive Investor (Glasgow)
JP Morgan Securities (London)
AJ Bell Securities
Janus Henderson Investors (London)
19.50%
9.92%
9.21%
5.68%
5.03%
4.96%
3.72%
3.20%
As at 31 May 2023 the Company had not been notified of any other person who had an interest in 3% or more of
the nominal value of the ordinary share capital of the Company.
Corporate Governance
A statement of Corporate Governance is set out above. The Group has adopted the Quoted Companies Alliance
Corporate Governance Code (“the Code”). Details of how the Group complies with the Code, and the reasons for
any non-compliance, are set out above, together with the principles contained within the Code.
Information on the Audit & Risk Committee, Corporate Governance Committee, Reserves Committee, Remuneration
Committee, and Health, Safety, Environment and Security Committee is included in the Corporate Governance section of
the Annual Report.
Environmental Responsibility
The Company is aware of the potential impact that its subsidiaries and investments may have on the environment.
Accordingly, the Group ensures that with regard to the environment, all its companies and associated subsidiaries
at a minimum comply with applicable jurisdictional regulatory guidelines including those of the UK North Sea
Transition Authority (NSTA), the Alberta Energy Regulator, Saskatchewan Energy and Resources, the BC Oil and
Gas Commission and other local regulators. i3 Energy plc is published its first ESG report in 2022 which can be
found at the Company’s website (www.i3.energy). See the HSES Committee Report.
Engagement with employees and stakeholders
The Group is committed to promoting policies that ensure high calibre employees are attracted, motivated and
retained for the ongoing success of the business. Employees and those who seek to work within the Group are
treated equally regardless of sex, marital status, creed, colour, race, or ethnic origin.
The Board is committed to effectively communicating with the stakeholders of the Company. Clear communication
with shareholders and all stakeholders is an important aspect of the role of the Group’s Board and senior
management. In addition to the regulatory forms of communication, including annual and interim reports and
Regulatory News Service releases, enquiries from shareholders are encouraged and i3 aims to deliver a timely
response from either the Company or its representatives.
Details of the Group’s activities can be found at the Company’s website (www.i3.energy).
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i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Directors’ Report
i3 Energy PLC 2022 Annual Report and Financial Statements – Governance
Directors’ Report
In consideration of environmentally sustainable business practices, the Board has approved the adoption electronic
communications as its default method of communication with shareholders going forward for reasons of efficiency
and to reduce the volume of paper used in shareholder mailings.
Insurance and indemnities
The Group maintains insurance in respect of its Directors and Officers against liabilities in relation to the Company
and the Group. The Group maintains insurance in respect of its exploration and development and operational
projects in the North Sea and Canada.
Each of the Directors have signed an Indemnity Deed which provides that the Company indemnifies the Director
or Officer to the maximum extent permitted by law in respect of legal proceedings and any claims made against
that Director or Officer.
Information contained elsewhere in this Annual Report
Information regarding the Group’s key performance indicators, subsequent events, principal risks and uncertainties,
and future developments are set out in the Strategic Report. Information regarding the Group’s financial instruments
and risk management policies are set out in note 22 to the Group Financial Statements.
Statement of Disclosure of Information to the Auditor
As at the date of this report the serving Directors confirm that:
So far as each Director is aware, there is no relevant audit information of which the Group’s auditor is unaware,
and the Directors have taken all the steps that they ought to have taken in order to make themselves aware of any
relevant audit information and to establish that the Group’s auditor is aware of that information.
Auditor
PKF Littlejohn LLP has signified its willingness to act as the Company’s auditor.
Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position
are set out in the Strategic Report in the Chairperson’s and Chief Executive’s Statement and Strategy and KPIs sections.
The financial position of the Group, its net cash position and liabilities are described in the Financial Review. Further
information on the Group’s commitments is provided in note 23 and on the Group’s exposure to financial risks and
management thereof is provided in note 22.
The Group ended the year with cash and cash equivalents of £16.6 million, current assets of £54.6 million, and current
liabilities of £86.7 million. The Group’s debt primarily consisted of the £22.0 million H1-2019 LNs which matured and were
repaid in May 2023. During 2022, the Group generated £101.1 million of cash from operating activities.
The Directors have given careful consideration to the appropriateness of the going concern assumption, including cash
forecasts through the end June 2024, committed capital expenditure, and the principal risks and uncertainties faced by the
Group. The cash flow forecasts reflect the new CAD 100 million loan facility secured in May 2023 and the subsequent
repayment of the H1-2019 LNs, further details of which are provided in note 24 to the financial statements. This assessment
also considered various downside scenarios including a combined downside scenario with an 15% reduction in strip
commodity prices, risks which are partially mitigated by the risk management contracts the Group currently has in place.
Following this review, the Directors are satisfied that the Group has sufficient resources to operate and to meet their
commitments as they come due over the going concern period which considers at least 12 months from the date of approval
of the financial statements. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial
statements for the year ended 31 December 2022.
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with
applicable laws and regulations.
The Directors are required to prepare financial statements for each financial year. The Directors have elected to
prepare the Group Financial Statements in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006. Under Company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of
the profit or loss of the Group for that year.
In preparing the parent Company Financial Statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and accounting estimates that are reasonable and prudent;
• State whether Financial Reporting Standard 101 Reduced Disclosure Framework has been followed, subject
to any material departures disclosed and explained in the Financial Statements; and
• Prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that
the Group will continue in business.
In preparing the Group Financial Statements, International Accounting Standard 1 requires that Directors:
• Properly select and apply accounting policies;
• Present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
• Provide additional disclosures when compliance with the specific requirements in IFRS Standards are
insufficient to enable users to understand the impact of particular transactions, other events and conditions
on the entity's financial position and financial performance; and
• Make an assessment of the company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group. They
are also responsible for safeguarding the assets of the Group, and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Group’s website. The Group is compliant with AIM Rule 16 regarding the Group’s website.
Responsibility Statement
We confirm that to the best of our knowledge:
•
•
•
the financial statements, prepared in accordance with the relevant financial reporting framework, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole;
the Strategic Report includes a fair review of the development and performance of the business and the
position of the Company and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face; and
the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the company’s position, performance,
business model and strategy.
Annual General Meeting
The Annual General Meeting of the Company will be held on 30 June 2023 and will be detailed in the Notice of
Meeting.
This Director’s Report and Responsibility Statement was approved by the Board and was signed on its behalf:
John Festival
Non-Executive Chairperson
6 June 2023
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FINANCIAL
STATEMENTS
61
Independent Auditor’s Report
105 Company Statement of
Financial Position
67
Consolidated Statement of
Comprehensive Income
106 Company Statement of
Changes in Equity
68 Consolidated Statement of
Financial Position
107 Notes To the Company
Financial Statements
69 Consolidated Statement of
Changes in Equity
111
Appendix A: Glossary
70 Consolidated Statement
of Cash Flow
113 Appendix B: Alternate
performance measures
71 Notes To the Group
Financial Statements
117 Corporate Information
i3 Energy PLC 2022 Annual Report and Financial Statement s – Financial Statements
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report to Members of I3 Energy Plc
Opinion
We have audited the financial statements of i3 Energy plc (the ‘parent company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2022 which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Statement of Financial Position, the Consolidated and Parent Company
Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to
the financial statements, including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-adopted international accounting standards. The financial
reporting framework that has been applied in the preparation of the parent company financial statements is United
Kingdom Accounting Standards, including FRS 101 Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice) and as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the parent company’s
affairs as at 31 December 2022 and of the group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment
of the Group’s and parent company’s ability to continue to adopt the going concern basis of accounting included a
review of budgets for the period of 12 months from the date of approval of the financial statements, including
checking the mathematical accuracy of the budgets, discussion of significant assumptions used by management,
and comparing these with current year and post year end performance. We have also reviewed the latest available
post year end management accounts, bank statements, regulatory announcements, board minutes and assessed
any external industry wide factors which might affect the Group and the parent company. As part of our review, we
also reviewed the new financing agreement in place dated 31 May 2023, which offset the Loan Notes outstanding,
and provided further funding to the Group.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group's or parent company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
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Independent Auditor’s Report
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds
for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The
materiality for the Group financial statements was set at £7,052,000 (2021: £5,644,000), with performance
materiality set at £4,231,200 (2021: £3,386,400).
The materiality for the Group financial statements as a whole has been calculated as 4% of net assets, which we
have determined, in our professional judgement, to be one of the principal benchmarks within the financial
statements relevant to members of the Group in assessing financial performance. The benchmark is deemed to
be relevant as the key areas of focus of the Group relate to the value of the producing and exploration assets, as
well as the accompanying decommissioning provision, and the loan notes outstanding. Performance materiality
was set at 60% of headline materiality based on our inherent risk assessment calculation of a publicly traded
company in the oil and gas industry.
The parent company materiality for the financial statements as a whole was set at £1,684,000 (2021: £2,101,000).
The parent company performance materiality was set at £1,010,400 (2021: £1,260,600). The reason being a result
of the key area of focus for the parent company financial statements being the recoverability of loans to subsidiaries.
A separate area materiality for profit and loss items was calculated in order to ensure sufficient appropriate
coverage was obtained in order to provide an opinion. For each component in the scope of our group audit, we
allocated a materiality that was less than our overall Group materiality. We agreed with the Audit Committee that
we would report to them misstatements identified during our audit above £352,600 (2021: £282,200) and £84,200
(2021: £105,050) for the Group and parent company respectively.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial
statements. In particular, we looked at areas involving significant accounting estimates and judgement by the
directors such as the impairment of intangible assets and the assumptions used in calculating the fair value of
financial assets. and considered future events that are inherently uncertain We also addressed the risk of
management override of internal controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
The Group holds three companies that are consolidated within these financial statements, two based in the UK and
one based in Canada. We identified three significant components, being the parent company, i3 North Sea Ltd and
i3 Canada Ltd, which were subject to a full scope audit by a team with relevant sector experience from the PKF
London office. No component auditors were engaged.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our scope addressed this matter
Carrying Value of Property, plant & equipment
(“PPE”) (Note 12)
As at 31 December 2022, the carrying value of the
producing assets in relation to the Group’s projects in
Canada are £236m.
As per IAS 36 requirements, management are
required to assess the producing assets for indicators
of impairment on an annual basis.
This is considered to be a key audit matter due to the
in
judgement and estimates
significant
involved
Our work in this area included:
• Verifying the inputs into the impairment indicators
assessment, including the reserves, pricing indices
and forecasts.
• A review of the competent persons report (“CPR”)
in place assess their scope of work, including an
evaluation of their competence, capabilities and
independence and confirming the reserves thereto;
• A review of the operator statements throughout the
period to ensure the production levels are in line
with managements forecasts;
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i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Independent Auditor’s Report
Key Audit Matter
How our scope addressed this matter
Independent Auditor’s Report
Other information
assessing whether any impairment indicators exist at
the year end, and in quantifying any such impairment.
Whilst the oil prices have remained strong in the
current year, the recent and historic volatile nature of
long-term oil prices give rise to an increased risk,
especially in the circumstances of the company being
its key source of revenue.
This is also the key balance in the financial statements
and therefore considered to be a key audit matter.
• A review of management’s internal production
forecasts to the CPR in place and assessing the
appropriateness of any differences which arise;
• A review of managements assessment on the
impact of market conditions on the carrying value
of assets;
• Discussions with internal valuation experts to
independently develop a reasonable range of
discount rates for the Western Canadian
Sedimentary Basin (“WCSB”) assets and
compared those to the discount rate applied by
management;
• An assessment of any further management
assumptions by reference to third party
information, our knowledge of the Group and
industry and also budgeted and forecast
performance; and
• An assessment of whether management’s
presentation and disclosures relating to estimation
uncertainty are adequate.
consider Management’s
of
We
impairment is reasonable in concluding no impairment
is required to be recognised at year-end.
assessment
Carrying Value of Exploration Assets (note 13)
Our work in this area included:
The Group holds intangible assets of £61m as at 31
December 2022, which includes £55.5m of capitalised
exploration costs in respect of the Serenity field held
within i3 Energy North Sea Limited.
During the year the 13/23c-12 Serenity appraisal well
was drilled to a total vertical depth of 5,630 ft below
sea level. The targeted Lower Cretaceous Captain
sand, which contained hydrocarbons in the 13/23c-10
well discovered in October 2019, was not present at
this location. Over 100 ft of other Captain sands in
various sequences were found but were water wet,
resulting in the well being plugged and abandoned.
This therefore triggered an impairment indicator under
IFRS 6, and therefore management prepared a value
in use calculation, in the absence of a fair value less
cost to sell as a result of there being no active market,
in order to assess the recoverable amount against the
carrying value.
This is considered to be a key audit matter due to the
significant
in
judgement and estimates
preparing said value in use calculation, particularly as
a result of the asset still being in its exploration stage,
therefore there is an increased risk of overstatement
of the exploration asset.
involved
• Reviewing management’s value in use calculations
and challenging the key inputs into the model
including but not limited forecasted oil prices,
discount rates, capital and operational expenditure
and decommissioning costs;
• Obtained both corroborative and contradictory
audit evidence in respect of the key areas of
judgement and estimation uncertainty within the
value in use calculation;
• Engagement of the PKF internal valuations team
to perform an independent assessment of the
discount rate applied within the calculation to
ensure its reasonableness
• Substantive testing of a sample of exploration and
evaluation expenditures to assess their eligibility
for capitalisation under IFRS 6 by corroborating to
original source documentation; and
• Confirming that i3 Energy North Sea Limited holds
good title to the relevant licence areas;
consider Management’s
We
of
impairment is reasonable in concluding no impairment
is required to be recognised at year-end.
assessment
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report. Our opinion on the Group and parent company financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation
of the Group and parent company financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the Group and parent company financial statements, the directors are responsible for assessing the
Group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Independent Auditor’s Report
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the Group and parent company and the sector in which they operate to identify
laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management, industry research, and application
of cumulative audit knowledge and experience of the sector.
• We determined the principal laws and regulations relevant to the Group and parent company in this
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Independent Auditor’s Report
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
6 June 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
AIM Rules
regard to be those arising from:
- Companies Act 2006
- Canada Business Corporations Act
-
- Canada Oil & Gas Drilling and Production Regulations
-
-
-
Securities Law
Anti Money Laundering Legislation
Local tax laws and regulations
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the Group and parent company with those laws and regulations. These
procedures included, but were not limited to:
-
-
-
- Discussion with management;
A review of the Board minutes throughout the year and post year end
A review of the RNS announcements;
A review of general ledger transactions; and
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, and the impairment assessments undertaken for both the producing assets held
within i3 Canada and the exploration asset within i3 Energy North Sea Limited. We obtained both
corroborative and contradictory evidence in respect of the key inputs into the assessment made, applying
professional scepticism throughout.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the
financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
065
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Notes
Year Ended 31
December 2022
Year Ended 31
December 2021
Revenue
Production costs
Loss on risk management contracts
Depreciation and depletion
Gross profit
Administrative expenses
Acquisition costs
(Loss) / gain on bargain purchase and asset dispositions
Operating profit
Finance costs
Profit before tax
Tax charge
Profit for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Earnings per share
Earnings per share – basic
Earnings per share - diluted
All operations are continuing.
The accompanying notes form an integral part of these financial statements.
6
18
12
7
4
8
9
11
11
£’000
208,436
(76,418)
(18,990)
(34,339)
78,689
(15,038)
-
(9)
63,642
(7,865)
55,777
(13,826)
41,951
£’000
86,763
(37,945)
(5,485)
(21,643)
21,690
(13,094)
(256)
25,013
33,353
(7,609)
25,744
(661)
25,083
6,688
6,688
1,511
1,511
48,639
26,594
Pence
3.60
3.43
Pence
2.84
2.60
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
Notes 31 December 2022 31 December 2021
£’000
£’000
Non-current assets
Property, plant & equipment
Exploration and evaluation assets
Other non-current assets
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Risk management contracts
Inventory
Total current assets
Current liabilities
Trade and other payables
Risk management contracts
Borrowings and leases
Decommissioning provision
Total current liabilities
Net current (liabilities) / assets
Non-current liabilities
Non-current accounts payable
Borrowings and leases
Decommissioning provision
Deferred tax liability
Total non-current liabilities
Net assets
Capital and reserves
Ordinary shares
Deferred shares
Share premium
Share-based payment reserve
Warrants – LNs
Foreign currency translation reserve
Retained earnings
Shareholders’ funds
12
13
14
18
15
18
16
17
15
16
17
9
19
19
19
20
16
236,465
62,060
74
298,599
16,560
34,843
1,111
2,099
54,613
(55,846)
(381)
(27,241)
(3,190)
(86,658)
(32,045)
-
-
(90,141)
(11,667)
(101,808)
224,080
49,819
74
273,973
15,335
25,503
814
665
42,317
(19,709)
(925)
(69)
(2,368)
(23,071)
19,246
(557)
(23,855)
(123,155)
(7,486)
(155,053)
164,746
138,166
119
50
48,646
6,311
2,045
8,052
99,523
164,746
113
50
44,203
9,102
2,045
1,364
81,289
138,166
The accompanying notes form an integral part of these financial statements.
The consolidated financial statements of i3 Energy plc, company number 10699593, were approved by the Board of Directors
and authorised for issue on 6 June 2023. Signed on behalf of the Board of Directors by:
Majid Shafiq, Director
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flow
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOW
Notes Ordinary
shares
Share
premium
Deferred
shares
Share-
based
payment
reserve
Warrants
- LN
Foreign
currency
translation
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 31 December 2020
70
61,605
50
6,337
9,714
(147)
(4,433)
73,196
Total comprehensive income for the year
Capital reduction
Transactions with owners:
Issue of share capital
Exercise of options
Exercise of warrants
Share-based payment expense
Dividends declared in 2021
Balance at 31 December 2021
Total comprehensive income for the year
Transactions with owners:
Exercise of options
Share-based payment expense
Dividends declared in 2022
19
19
20
20
20
19
20
20
19
–
–
–
(64,056)
36
37,970
2
5
–
–
112
8,572
–
–
113
44,203
–
6
–
–
–
4,443
–
–
–
–
–
–
–
–
–
50
–
–
–
–
–
–
–
–
–
–
–
–
(452)
(7,669)
3,217
–
–
–
1,511
25,083
26,594
–
64,056
–
–
–
–
–
–
–
–
–
–
38,006
114
456
3,217
(3,417)
(3,417)
9,102
2,045
1,364
81,289
138,166
–
(3,883)
1,092
–
–
–
–
–
6,688
41,951
48,639
–
–
(6,324)
(5,758)
–
1,092
–
(17,393)
(17,393)
Balance at 31 December 2022
119
48,646
50
6,311
2,045
8,052
99,523
164,746
The accompanying notes form an integral part of these financial statements.
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Ordinary shares
Represents the nominal value of shares issued
Share premium account
Amount subscribed for share capital in excess of nominal value
Deferred shares
Represents the nominal value of shares issued, the shares have full capital distribution (including on wind
up) rights and do not confer any voting or dividend rights, or any of redemption
Share-based payment reserve
Represents the accumulated balance of share-based payment charges recognised in respect of share
options granted by the Company less transfers to retained deficit in respect of options exercised or
cancelled/lapsed
Warrants – LNs
Represents the accumulated balance of share-based payment charges recognised in respect of
warrants granted by the Company in respect to warrants granted to the loan note holders
Foreign currency translation
reserve
Exchange differences arising on consolidating the assets and liabilities of the Group’s non-Pound Sterling
functional currency operations (including comparatives) recognised through the Consolidated Statement of
Other Comprehensive Income.
Retained earnings
Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income
Note: The issued share capital comprises of both ordinary and deferred shares and the consolidated nominal value exceeds
the required minimum issued capital of £50,000.
OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Depreciation and depletion
Loss / (gain) on bargain purchase and asset dispositions
Finance costs
Unrealised (gain) / loss on risk management contracts
Non-cash other income
Unrealised FX loss
Share-based payments expense – employees (including NEDs)
Operating cash flows before movements in working capital:
(Increase) in trade and other receivables
Increase in trade and other payables
(Increase) in inventory
Net cash from operating activities
INVESTING ACTIVITIES
Acquisitions
Expenditures on property, plant & equipment
Disposal of property, plant & equipment
Expenditures on exploration and evaluation assets
Expenditure on decommissioning oil and gas assets
Tax credit for R&D expenditure
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds on issue of ordinary shares, net of issue costs
Interest and other finance charges paid
Exercise of warrants and options
Employee tax on exercised share options
Lease payments
Dividends paid
Net cash (used in) / from financing activities
Effect of exchange rate changes on cash
Net Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
CASH AND CASH EQUIVALENTS, END OF YEAR
Notes
Year ended 31
December 2022
Year ended 31
December 2021
£’000
£’000
55,777
25,744
12
4
8
18
7
7
17
9
19
8
16
19
34,339
9
7,865
(858)
(215)
113
1,092
(8,378)
12,782
(1,434)
101,092
(531)
(64,374)
621
(13,842)
(437)
–
21,643
(25,013)
7,609
111
–
(154)
3,217
(15,297)
6,862
(283)
24,439
(37,079)
(9,465)
529
(3,317)
(648)
487
(78,563)
(49,493)
–
(2,330)
635
(6,432)
(74)
(15,353)
(23,554)
2,250
1,225
15,335
16,560
38,125
(448)
–
–
(30)
(3,417)
34,230
(19)
9,157
6,178
15,335
Included within cash and cash equivalents is £354 thousand of restricted cash, which relates to guarantees for product marketing.
Non-current accounts payables reconciliation is show in note 15 and the debt reconciliation is shown in note 16.
The accompanying notes form an integral part of these financial statements.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
NOTES TO THE GROUP FINANCIAL STATEMENTS
1
General information
i3 Energy plc (“the Company”) is a Public Company, limited by shares, registered in England and Wales under the
Companies Act 2006 with registered number 10699593. The Company’s ordinary shares are traded on the Toronto
Stock Exchange and the AIM Market operated by the London Stock Exchange. The address of the Company’s
registered office is New Kings Court, Tollgate, Chandler’s Ford, Eastleigh, Hampshire, SO53 3LG.
The Company and its subsidiaries (together, “the Group”) principal activities consist of oil and gas production in
Western Canadian Sedimentary Basin and of the appraisal of oil and gas assets on the UK Continental Shelf.
2
Basis of preparation
The financial statements of i3 Energy plc have been prepared in accordance with UK-adopted international
accounting standards in accordance with the requirements of the Companies Act 2006 and in accordance with the
requirements of the AIM rules.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the
financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The financial information is presented in Pounds Sterling (£, GBP), which is the Company’s functional currency,
and rounded to the nearest thousand unless otherwise stated. The functional currency of the Company’s UK
subsidiary, i3 Energy North Sea Limited, is GBP, and the functional currency of its Canadian subsidiary, i3 Energy
Canada Limited, is CAD. A summary of period-average and period-end exchange rates is presented in the table
below:
Period-average GBP:CAD exchange rate
Period-end GBP:CAD exchange rate
Year ended 31
December 2022
Year ended 31
December 2021
1.6073
1.6283
1.7246
1.7166
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied unless otherwise stated.
Basis of Consolidation
The consolidated financial statements consolidate the audited financial statements of i3 Energy plc and the financial
statements of its subsidiary undertakings made up to 31 December 2022.
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses, and
cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company
and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the financial statements. The use of this basis
of accounting takes into consideration the Group’s current and forecast financing position, additional details of
which are provided in the going concern section of the Directors’ Report.
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
3
Significant accounting policies
Financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash held on current account or on short-term deposits at
variable interest rates with original maturity periods of up to three months. Any interest earned is accrued monthly
and classified as interest income within finance income.
Trade and other receivables
Trade and other receivables are initially recognised at fair value when related amounts are invoiced then carried at
this amount less any impairment of these receivables using the expected credit loss model. A provision for
impairment is made when there is objective evidence (such as the probability of insolvency or significant financial
difficulties of the debtor) that the Company will not be able to collect all of the amounts due under the original terms
of the invoice. The carrying amount of receivables is reduced through use of an allowance account. Impaired debts
are derecognised when they are assessed as uncollectible.
Trade and other payables
These financial liabilities are all non-interest bearing and are initially recognised at the fair value of the consideration
payable.
Loan Notes
These financial liabilities are all interest bearing and are initially recognised at amortised cost and include the
transaction costs directly related to the issuance. The transaction costs are amortised using the effective interest
rate method over the life of the Loan Notes.
Financial liabilities at Fair Value Through Profit or Loss (“FVTPL”)
Financial liabilities at FVTPL comprise of the Group’s risk management contracts and non-current accounts
payable. Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration
that may be paid by an acquirer as part of a business combination to which IFRS 3 applies, (ii) held for trading, or
(iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if:
•
•
•
it has been incurred principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Company manages
together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration that may be paid by an
acquirer as part of a business combination may be designated as at FVTPL upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is
managed, and its performance is evaluated on a fair value basis, in accordance with the Company’s
documented risk management or investment strategy, and information about the grouping is provided
internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IFRS Financial Instruments:
Recognition and Measurement permits the entire combined contract (asset or liability) to be designated
as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised
in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial
liability and is included in the ‘other gains and losses’ line item in the consolidated statement of comprehensive
income.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statemen ts
3 Significant accounting policies - continued
3 Significant accounting policies - continued
Risk management contracts
Financial risk management contracts are measured and recognised in accordance with the Group’s accounting
policy for financial liabilities at FVTPL as described above. Physical risk management contracts represent physical
delivery sales contracts in the ordinary course of business and are therefore not recorded at fair value in the
consolidated financial statements. Settlements on these physical risk management contracts are recognised within
realised gains or losses on risk management contracts at the time of settlement.
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives
when their risks and characteristics are not closely related to those of the host contracts and the host contracts are
not measured at FVTPL.
Leases
Lease liabilities are initially measured at the present value of lease payments unpaid at the commencement date.
Lease payments are discounted using the incremental borrowing rate (being the rate that the lessee would have
to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with
similar terms and conditions) unless the rate implicit in the lease is available. The Group currently uses the rate
implicit in the lease as the discount rate for all leases. For the purposes of measuring the lease liability, lease
payments comprise fixed payments.
Right-of-use assets are measured at cost, which comprises the initial measurement of the lease liability, plus any
lease payments made prior to lease commencement, initial direct costs incurred and the estimated cost of
restoration or decommissioning, less any lease incentives received. The right-of-use assets is depreciated on a
straight-line basis over their expected useful lives. Right-of-use assets are subject to an impairment test if events
and circumstances indicate that the carrying value may exceed the recoverable amount.
Lease repayments made are allocated to capital repayment and interest so as to produce a constant periodic rate
of interest on the remaining lease liability balance.
Right-of-use assets are presented within property, plant, and equipment. Lease liabilities are presented within
borrowings and leases. In the cash flow statement, lease repayments (both the principal and interest portion) are
presented within cash used in financing activities, except for payments for leases of short-term and low-value
assets and variable lease payments, which are presented within cash flows from operating activities.
Leases of low-value items (such as office equipment) and short-term leases (where the lease term is 12 months or
less) are expensed on a straight-line basis to the consolidated statement of comprehensive income.
Inventory
Inventories comprise oil and gas in tanks and field parts and supplies, all of which are stated at the lower of
production cost (including royalties, depletion and amortisation of plant, property, and equipment), and net
realisable value. Net realisable value is the estimated selling price in the ordinary course of business less marketing
costs. The cost of inventory is expensed in the period in which the related revenue is recognised.
Equity
Equity instruments issued by the Company are usually recorded at the proceeds received, net of direct issue costs,
and allocated between called up share capital and share premium accounts as appropriate.
Foreign currency
Transactions denominated in currencies other than functional currency are translated at the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated
at the rate of exchange ruling at the balance sheet date. All differences that arise are recorded in the consolidated
statement of comprehensive income. The functional currency of the Company is GBP, and the Group results and
financial position are presented in GBP.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that
period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in a separate component of equity (attributed to
non
controlling interests as appropriate).
‑
Taxation
Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity respectively.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising
from differences between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profit will be available against which deductible temporary
differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled. Deferred tax assets and liabilities are not discounted.
Intangible assets – Exploration and evaluation expenditures (E&E)
Development expenditure
Expenditure on the construction, installation, and completion of infrastructure facilities such as platforms, pipelines
and the drilling of development wells, including service, is capitalised initially within intangible fixed assets and
when the well has formally commenced commercial production, then it is transferred to property, plant and
equipment and is depreciated from the commencement of production as described in the accounting policy for
property, plant and equipment.
Drilling costs and intangible licences
The Group applies the successful efforts method of accounting for oil and gas assets, having regard to the
requirements of IFRS 6 ‘Exploration for and Evaluation of Mineral Resources’. Costs incurred prior to obtaining the
legal rights to explore an area are expensed immediately to the consolidated statement of comprehensive income.
Expenditure incurred on the acquisition of a licence interest is initially capitalised within intangible assets on a field-
by-field basis. Costs are held, unamortised, within Petroleum mineral leases until such time as the exploration
phase of the field area is complete or commercial reserves have been discovered. The cost of the licence is
subsequently transferred into property, plant and equipment and depreciated over its estimated useful economic
life.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
3 Significant accounting policies - continued
3 Significant accounting policies - continued
Exploration expenditure incurred in the process of determining exploration targets is capitalised initially within
intangible assets as drilling costs. Drilling costs are initially capitalised on a well-by-well basis until the success or
otherwise has been established. Drilling costs are written off on completion of a well unless the results indicate that
hydrocarbon reserves exist and there is a reasonable prospect that these reserves are commercially viable. Drilling
costs are subsequently transferred into ‘Drilling expenditure’ within property, plant and equipment and depreciated
over their estimated useful economic life.
Impairment
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. This includes
consideration of the IFRS 6 impairment indicators for any intangible exploration and evaluation expenditure capitalised
as intangible assets. Examples of indicators of impairment include whether:
(a) the period for which the entity has the right to explore in the specific area has expired during the period or will
expire in the near future and is not expected to be renewed.
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither
budgeted nor planned.
(c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially
viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area.
(d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by
sale.
If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate
of the asset’s recoverable amount, which is the higher of its fair value less costs to sell and its value in use. Any
impairment identified is recorded in the consolidated statement of comprehensive income.
Property, plant and equipment
Oil and gas assets - cost
Oil and gas assets are accumulated generally on a cost generating unit (CGU) basis and represent the cost of
developing the commercial reserves discovered and bringing them into production, together with the intangible
exploration and evaluation asset expenditures incurred in finding commercial reserves transferred from intangible
exploration and evaluation assets. The cost of oil and gas properties also includes the cost of directly attributable
overheads, borrowing costs capitalised and the cost of recognising provision for future restoration and
decommissioning.
Oil and gas assets - depreciation and depletion
Oil properties, including certain related pipelines, are depreciated using a unit-of-production method. The cost of
producing wells is amortised over proved plus probable reserves. Licence acquisition, common facilities and future
decommissioning costs are amortised over total proved plus probable reserves. The unit-of-production rate for the
depreciation of common facilities takes into account expenditures incurred to date, together with estimated future
capital expenditure expected to be incurred relating to as yet undeveloped reserves expected to be processed
through these common facilities.
Oil and gas assets - impairment
An impairment test is performed whenever events and circumstances arising during the development or production
phase indicate that the carrying value of an oil and gas property may exceed its recoverable amount.
The carrying value is compared against the expected recoverable amount of the asset, generally by reference to
the present value of the future net cash flows expected to be derived from production of commercial reserves. The
cash-generating unit applied for impairment test purposes is generally the field, except that a number of field
interests may be grouped as a single cash-generating unit where the cash inflows of each field are interdependent.
Any impairment identified is charged to the statement of comprehensive income. Where conditions giving rise to
impairment subsequently being reversed, the effect of the impairment charge is also reversed as a credit to the
statement of comprehensive income, net of any depletion that would have been charged since the impairment.
Non-oil and gas assets
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses. Depreciation is provided on all property, plant, and equipment to write off the cost less estimated residual
value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:
• Office equipment – 20% or straight line over the life of the equipment, whichever is the lesser
•
Field equipment – between 5% and 25%
All assets are subject to annual impairment reviews where indicators of impairment are present.
Property, plant, and equipment – disposals
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
Decommissioning provision
Liabilities for decommissioning costs are recognised when the Group has an obligation to plug and abandon a well,
dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a reliable
estimate of that liability can be made. Where an obligation exists for a new facility or item of plant, such as oil
production or transportation facilities, this liability will be recognised on construction or installation. Similarly, where
an obligation exists for a well, this liability is recognised when it is drilled. An obligation for decommissioning may
also crystallise during the period of operation of a well, facility or item of plant through a change in legislation or
through a decision to terminate operations; an obligation may also arise in cases where an asset has been sold
but the subsequent owner is no longer able to fulfil its decommissioning obligations, for example due to bankruptcy.
The amount recognised is the present value of the estimated future expenditure determined in accordance with
local conditions and requirements. The provision for the costs of decommissioning wells, production facilities and
pipelines at the end of their economic lives is estimated using existing technology, at future prices, depending on
the expected timing of the activity, and discounted using a risk-free rate.
An amount equivalent to the decommissioning provision is recognised as part of the corresponding intangible asset
(in the case of an exploration or appraisal well) or property, plant, and equipment. The decommissioning portion of
the property, plant and equipment is subsequently depreciated at the same rate as the rest of the asset. Other than
the unwinding of discount on or utilisation of the provision, any change in the present value of the estimated
expenditure is reflected as an adjustment to the provision and the corresponding asset where that asset is
generating or is expected to generate future economic benefits. If government assistance is obtained to reduce the
liability, the carrying value of the decommissioning provision and the corresponding E&E or PP&E asset are
reduced by the estimated amount of the extinguished liability.
Joint operations
The majority of the Group’s exploration and production activities are conducted jointly with others and, accordingly,
these consolidated financial statements reflect only the Group’s interest in such activities.
Revenue
Revenue from contracts with customers is recognised, net of royalties, when or as the Group satisfies a
performance obligation by transferring control of a promised good or service to a customer. The transfer of control
of oil, natural gas, natural gas liquids and petroleum, and other items usually coincides with title passing to the
customer and the customer taking physical possession. The Group principally satisfies its performance obligations
at a point in time; the amounts of revenue recognised relating to performance obligations satisfied over time are
not significant.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
3 Significant accounting policies - continued
When, or as, a performance obligation is satisfied, the Group recognises as revenue the amount of the transaction
price that is allocated to that performance obligation. The transaction price is the amount of consideration to which
the Group expects to be entitled. The transaction price is allocated to the performance obligations in the contract
based on standalone selling prices of the goods or services promised.
Contracts for the sale of commodities are typically priced by reference to quoted prices. Revenue from term
commodity contracts is recognised based on the contractual pricing provisions for each delivery. Certain of these
contracts have pricing terms based on prices at a point in time after delivery has been made. Revenue from such
contracts is initially recognised based on relevant prices at the time of delivery and subsequently adjusted as
appropriate. All revenue from these contracts, both that recognised at the time of delivery and that from post-
delivery price adjustments, is disclosed as revenue from contracts with customers.
Royalty income is recognised as it accrues in accordance with the terms of the overriding royalty agreements.
Processing income is recognised at the time the services are rendered.
Finance income
Finance income consists of bank interest on cash and cash equivalents which is recognised as accruing on a
straight-line basis, over the period of the deposit.
Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting
conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Company’s estimate of equity instruments that will eventually vest.
At each balance sheet date, the Company revises its estimate of the number of equity instruments expected to
vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with
a corresponding adjustment to equity reserves. When non-employee share options or warrants are exercised, the
initial fair value ascribed to the instruments and recorded as a reserve is reclassified to share premium.
Business combinations
Acquisitions of business are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition‑date fair values
of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the
equity interest issued by the Group in exchange for control of the acquiree. Acquisition‑related costs are recognised
in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their fair value
at the acquisition date.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling
interests in the acquiree, and the fair value of the acquirers previously held equity interest in the acquiree (if any)
over the net of the acquisition‑date amounts of the identifiable assets acquired, and the liabilities assumed. If, after
reassessment, the net of the acquisition‑date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree and
the fair value of the acquirers previously held interest in the acquiree (if any), the excess is recognised immediately
in profit or loss as a bargain purchase gain.
Segmental reporting
In the opinion of the Board of Directors, being the Chief Operating Decision Maker, the Group has one class of
business, being the exploration for, and the development and production of, oil and has reserves and other related
activities. The Group’s primary reporting format is determined to be the geographical segment according to the
location of the oil and gas asset, currently Canada and UK / Corporate.
3 Significant accounting policies - continued
Changes in accounting standards
The standards which applied for the first time this year have been adopted and have not had a material impact.
Standards which are in issue but not yet effective:
At the date of authorisation of these financial statements, the following Standards and Interpretation, which have
not yet been applied in these financial statements, were in issue but not yet effective. The Group does not anticipate
they will have a material impact.
Standard
Interpretation
Description
Effective date for annual
accounting period beginning on or
after
IAS 1
IAS 8
IAS 12
Amendments – Presentation of Financial Statements and IFRS
Practice Statement 2: Disclosure of Accounting Policies
Amendments – Accounting Policies, Changes in Accounting
Estimates and Errors – Definition of Accounting Estimates
Amendments – Income Tax – Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
1 January 2023
1 January 2023
1 January 2023
IFRS 16
Amendments – Lease Liability in a Sale and Leaseback
TBC
The Group has not early adopted any of the above standards and intends to adopt them when they become
effective.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements using accounting policies consistent with IFRS requires the Directors to
make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of income and expenses. The preparation of financial statements
also requires the Directors to exercise judgement in the process of applying the accounting policies. Changes in
estimates, assumptions and judgements can have a significant impact on the financial statements.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised prospectively from the period in which the estimates are revised.
Critical Accounting Judgements
The following are critical judgements, apart from those involving estimations (which are presented separately
below), that the Directors have made in the process of applying the Group’s accounting policies and that have the
most significant effect on the amounts recognises in the financial statements.
Carrying value of intangible exploration and evaluation assets
At 31 December 2022, the Group held oil and gas E&E assets of £62.1 million (2021: £49.8 million), note 13. The
carrying value of E&E assets are assessed for impairment when there is an indication that the asset may be
impaired. In making this judgement the Management considers the indicators of impairment in the intangible
exploration and evaluation asset accounting policies set out above. For its UK assets, management has considered
the well result at the 13/23c-12 Serenity appraisal well to represent an indicator of impairment and has made an
estimate of the asset’s recoverable amount. Further discussion is provided in note 13.
For its Canada assets, management has considered the recency of the land purchases, budgeted spend, the plans
to further appraise the Clearwater play and the fact that there is no observable data which would suggest that the
carrying value of Clearwater play exceeds that of its value from successful development or sale, and have
concluded that no indicators of impairment are present.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
3 Significant accounting policies - continued
Carrying value of property, plant and equipment – oil and gas assets
At 31 December 2022, the Group held oil and gas PP&E assets of £236.5 million (2021: £224.1 million), note 12.
These assets are subject to an annual impairment assessment under IAS 36 ‘Impairment of assets’ whereby
management is first required to consider if there are any indicators of impairment, and if so, management is then
required to estimate the asset’s recoverable amounts. The judgement over indicators of impairment considers
several internal and external factors, including changes in estimated commercial reserves, changes in oil prices,
and changes in expected future operating and capital expenditure, decommissioning expenditure, the NPV10 of
2P reserves per the 31 December 2022 independent competent person’s report, and increases in cost of capital
which may indicate a higher discount rate is likely required in assessing the asset’s recoverable amount. There is
also judgement in defining the Group’s cash-generating units, which is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. After
considering the above, Management has concluded that there were no indicators of impairment of oil and gas
PP&E assets as at 31 December 2022.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period
that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are discussed below.
Estimated future cash flows for intangible exploration and evaluation assets for impairment testing
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the
asset’s recoverable amount, which is the higher of its fair value less costs to sell and its value in use. As discussed in
note 13, management considered the results of the 13/23c-12 Serenity appraisal well to represent an indicator of
impairment and has made an estimate of the asset’s recoverable amount based on value in use using a discounted
cash flow model of a one well development of the Serenity field. A one well development is dependent on access to
infrastructure at neighbouring fields which may not become available to the Group.
The discounted cash flow model required management to make assumptions about future production profiles, Brent
pricing, capital, operating and abandonment costs, and the discount rate applied. The most difficult, subjective, or
complex assumptions include the Brent pricing and the discount rate applied. The Brent pricing assumption ranges
from $80-$95 over the life of a one well development of the Serenity field and is based on an average of price decks
obtained from the Group’s brokers, advisors, and the Group’s reserves engineers. The discount rate of 10% is based
on the risk profile of similar assets in the UKCS. Management has considered several downside scenarios on these
assumptions. Decreasing the Brent pricing assumption by 5% or increasing the discount rate to 13% would not have
resulted in an impairment individually but would have resulted in an impairment if aggregated. It is reasonably possible
that changes to these assumptions within the next financial year could require a material adjustment to the Group’s
intangible exploration and evaluation assets.
Commercial hydrocarbon reserves estimates
Commercial hydrocarbon reserves are those that can be economically extracted from the Group’s oil and gas
assets. These estimates are based on information compiled by independent qualified persons, GLJ Ltd., as at 31
December 2022 and 31 December 2021 and consider a number of factors, including assumptions about future
commodity prices, production rates, operating costs, exchange rates, and various geological and geophysical
technical factors to model reservoir size, quality, and extractability. Reserve estimates may change from period to
period. Changes to reserves estimates may have a material impact on the depletion charge for oil and gas PP&E
assets, the decommissioning provision, the carrying value of deferred tax assets, and the Group’s conclusions
around indicators of impairment for oil and gas PP&E assets. The reserve reports are available at https://i3.energy/.
The Group estimates it commenced the year with 154.1 MMboe of proved plus probable reserves. A 2.0 MMboe
increase/decrease to this estimate would have decreased/increased the oil and gas depletion charge for the period
by £458 thousand, respectively.
3 Significant accounting policies - continued
Decommissioning costs
At 31 December 2022 the Group had recorded a decommissioning provision of £93.3 million (2021: £125.5 million).
In estimating the amount of the provision, Management makes various assumptions around costs, time to
abandonment and inflation rates, which are discounted at long term government bond rates, see note 17.
The most difficult, subjective, or complex assumptions include the inflation rate and the discount rate, which have
been selected based on market rates published by the Bank of Canada. A 0.5% increase/decrease in the inflation
rate would have increased/decreased the decommissioning provision by £12.4 million and £10.5 million,
respectively. A 0.5% increase/decrease in the discount rate would have decreased/increased the decommissioning
provision by £10.3 million and £12.3 million, respectively.
Recognition and measurement of deferred tax assets
At 31 December 2022, the Group held deferred tax liabilities of £11.7 million (2021: £7.5 million) which result from
temporary differences at the Group’s Canadian operations. This liability has been reduced by certain deferred tax
assets from deductible temporary differences at the Group’s Canadian operations. In accordance with IAS 12
‘Income Taxes’, deferred tax assets shall be recognised for all deductible temporary differences to the extent that
it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.
The Group has generated positive cash flows and profits from its Canadian operations in 2022 and expects to
continue to do so in the future. Management has applied judgement in determining the extent to which it is probable
that taxable profits will be available based on estimates of future profits, which include estimates of commercial
reserves, oil, gas and NGL prices, operating and capital expenditure, and decommissioning expenditure. If future
taxable profits differ from these estimates, the deferred tax asset associated with these deductible temporary
differences could be derecognised and result in a deferred tax charge to the consolidated statement of
comprehensive income.
4
(Loss) / gain on bargain purchase and asset dispositions
The gain on bargain purchase and asset dispositions as per the consolidated statement of comprehensive income
is as follows:
Gain on bargain purchase
(Loss) / gain on asset dispositions
(Loss) / gain on bargain purchase and asset dispositions
2022
£’000
–
(9)
(9)
2021
£’000
24,262
751
25,013
The loss in 2022 relates to purchase price adjustments on asset dispositions completed in the prior year.
5
Segmental reporting
The Chief Operating Decision Maker (CODM) is the Board of Directors. They consider that the Group operates as two
segments, as follows:
• UK / Corporate - That of Corporate activities in the UK and oil and gas exploration, appraisal and
development on the UKCS.
• Canada – That of oil and gas production in the WCSB.
Such components are identified on the basis of internal reports that the Board reviews regularly.
The following is an analysis of the Group’s revenue and results by reportable segment in 2022:
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
5 Segmental reporting - continued
5 Segmental reporting - continued
Revenue
Production costs
Loss on risk management contracts
Depreciation and depletion
Gross (loss) / profit
Administrative expenses
Acquisition costs
(Loss) on bargain purchase and asset dispositions
Operating (loss) / profit
Finance costs
(Loss) / profit before tax
Tax (charge) / credit for the year
(Loss) / profit for the year
UK / Corporate
£’000
–
–
–
(4)
(4)
(6,821)
–
–
(6,825)
(5,179)
(12,004)
–
(12,004)
Canada
£’000
208,436
(76,418)
(18,990)
(34,335)
78,693
(8,217)
–
(9)
70,467
(2,686)
67,781
(13,826)
53,955
The following is an analysis of the Group’s revenue and results by reportable segment in 2021:
Revenue
Production costs
Loss on risk management contracts
Depreciation and depletion
Gross (loss) / profit
Administrative expenses
Acquisition costs
Gain on bargain purchase and asset dispositions
Operating (loss) / profit
Finance costs
(Loss) / profit before tax
Tax (charge) / credit for the year
(Loss) / profit for the year
UK / Corporate
£’000
–
–
–
(4)
(4)
(7,059)
–
–
(7,063)
(5,930)
(12,993)
487
(12,506)
Canada
£’000
86,763
(37,945)
(5,485)
(21,639)
21,694
(6,035)
(256)
25,013
40,416
(1,679)
38,737
(1,148)
37,589
Total
£’000
208,436
(76,418)
(18,990)
(34,339)
78,689
(15,038)
-
(9)
63,642
(7,865)
55,777
(13,826)
41,951
Total
£’000
86,763
(37,945)
(5,485)
(21,643)
21,690
(13,094)
(256)
25,013
33,353
(7,609)
25,744
(661)
25,083
The following is an analysis of the Group’s assets and liabilities by reportable segment as at 31 December 2021 and
the capital expenditure for the year then ended:
Total assets
Total liabilities
Capital expenditure – E&E
Capital expenditure – PP&E
6
Revenue
UK / Corporate
£’000
50,129
(25,733)
1,010
–
Canada
£’000
266,161
(152,391)
–
11,184
Total
£’000
316,290
(178,124)
1,010
11,184
All revenue is derived from contracts with customers and is comprised of the sale of oil and gas and processing
income, net of royalties, as follows:
Oil and condensate
Natural gas liquids
Natural gas
Royalty interest
Oil and gas sales
Royalties
Revenue from the sale of oil and gas
Processing income
Other operating income
Total revenue
2022
£’000
113,003
40,142
77,656
4,890
235,691
(33,536)
202,155
5,995
286
208,436
2021
£’000
40,829
19,107
34,134
1,951
96,021
(12,094)
83,927
2,605
231
86,763
All revenue is from the Group’s Canadian operations. Revenue from the sale of oil and natural gas liquids is
recognised at the point in time when title transfers to the purchaser. Processing income is recognised at the time
the service is rendered.
During the year ended 31 December 2022, three (2021: four) customers individually totalled more than 10% of total
revenues, totalling 81% (2021: 79%) in aggregate and 35%, 25%, and 21%, individually (2021: 25%, 20%, 19%,
and 15%).
7
Administrative expenses
The following is an analysis of the Group’s assets and liabilities by reportable segment as at 31 December 2022 and
the capital expenditure for the year then ended:
Total assets
Total liabilities
Capital expenditure – E&E
Capital expenditure – PP&E
UK / Corporate
£’000
57,500
(30,166)
5,650
–
Canada
£’000
295,712
(158,300)
6,677
75,793
Total
£’000
353,212
(188,466)
12,327
75,793
Directors’ fees
Employee costs*
Professional fees**
Other
Realised FX loss
Unrealised FX loss / (gain)
Total administrative expenses
2022
£’000
323
9,982
1,830
2,285
505
113
2021
£’000
300
8,503
1,728
2,448
269
(154)
15,038
13,094
081
i3 Energy PLC
76
i3 Energy PLC
77
082
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
7 Administrative expenses - continued
* Group staff costs comprised:
Wages, salaries, and benefits
Social security costs
Other pension costs
Share-based payments expense – employees (including NEDs)
Total staff costs
Capitalised salaries and overhead recoveries
Charge to the profit or loss
2022
£’000
11,602
1,189
304
1,092
14,187
(4,205)
9,982
2021
£’000
6,027
336
254
3,217
9,834
(1,331)
8,503
i3 Energy plc had an average of two staff during the year ended 31 December 2022 (2021: Nil) and paid £1,050
thousand of wages, salaries and benefits and £137 thousand of social security costs (2021: Nil). The Non-
Executive Directors of the Group are not considered staff, and their remuneration is disclosed in note 10.
The average number of persons employed by the Group, including Executive Directors, was:
Average number of persons employed
2022 Number
2021 Number
Operations
Corporate and administration
Total
31
25
56
29
18
47
** Included within professional fees are fees payable to the Company’s auditor and its associates for the following:
Audit services
The audit of the Company’s annual accounts
The audit of the Company’s subsidiaries
Total audit fees
Advisory on certain employment matters
Procedures related to the Group’s interim financial statements
Total
8
Finance costs
Accretion of loan notes (note 16)
PIK interest expense on loan notes (note 16)
Cash interest expense on loan notes (note 16)
Stock-based compensation – warrants (note 20)
Unwinding of discount on decommissioning provision (note 17)
Bank charges and interest on creditors
(Gain) / loss on financial instrument at FVTPL (note 15)
Total finance costs
2022
£’000
130
–
130
1
3
134
2022
£’000
3,386
–
2,309
–
2,667
21
(518)
7,865
2021
£’000
120
–
120
–
–
120
2021
£’000
2,824
3,144
–
451
1,539
374
(723)
7,609
9
Taxation
Taxation credit
The below table reconciles the tax charge for the year to the profit before tax per the consolidated statement of
comprehensive income.
Profit before income tax
Rate of Corporate Tax in Canada
Expected tax charge
Effects of:
Interest and other not deductible for SCT or EPL
Permanent differences
Foreign tax rate difference
Change in estimated pool balances
Derecognition of deferred tax asset
R&D tax credit received
Total income tax charge
2022
£’000
55,777
23%
12,829
1,993
1,213
(5,041)
22
2,810
–
13,826
2021
£’000
* Restated
25,744
23%
5,921
620
(3,804)
(2,208)
179
440
(487)
661
* Canada is the only jurisdiction where the Group produces oil and gas, generates taxable income, and records a
current and deferred tax charge. As such, the Group elected to change the tax rate in reconciliation of the tax
charge to 23% in 2022, the combined corporate rate of taxation in Canada. The comparative period has been
restated on the same basis. The total income tax charge was unimpacted in both periods, with the only changes
being to the ‘Expected tax charge’ and the ‘Foreign tax rate difference’ lines in the reconciliation above. The
difference on foreign tax rate results from the difference between 65% overall tax rate in the UK and the 23% tax
rate used in the reconciliation.
Of which:
Current tax charge / (credit)
Deferred tax charge
Total income tax charge
2022
£’000
10,002
3,824
13,826
2021
£’000
(487)
1,148
661
The current tax charge of £10,002 thousand in 2022 resulted from taxable income in the Group’s Canadian
subsidiary, i3 Energy Canada Limited, which is payable in the first half of 2023. The current tax credit of £487
thousand in 2021 resulted from the receipt of R&D tax refunds in the UK in respect of the 2019 fiscal year.
In 2022 the Energy Profits Levy (EPL) was introduced at a rate of 25% with effect from 26 May 2022. This, along
with the Ring Fence Corporation Tax (RFCT) at 30% and the Supplementary Charge (SCT) of 10% brings the
overall tax rate in the UK to 65%. The EPL increased to a rate of 35% effective 1 January 2023 which will bring the
overall tax rate in the UK to 75%. The EPL will remain in effect until 31 March 2028. The Group will not be impacted
by the increase until such time as taxable profits are generated in the UK. The combined corporate rate of taxation
in Canada remained unchanged at 23%.
083
i3 Energy PLC
78
i3 Energy PLC
79
084
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial S tatements
9 Taxation - continued
Deferred tax
The components of the net deferred tax asset and the movement during the year is summarised as follows:
At 31
December 2021
Acquired
during the year
Recognised
in income
FX movement At 31 December
2022
£’000
£’000
£’000
£’000
£’000
UK:
Deferred tax assets:
Losses
Valuation allowance
Deferred tax liabilities:
PP&E
Net deferred tax asset
Canada:
Deferred tax assets:
Decommissioning provision
Losses
Risk management contracts
Other
Valuation allowance
Deferred tax liabilities:
PP&E
Net deferred tax liability
28,711
(8,782)
(19,929)
–
28,870
2,416
25
207
(5,639)
(33,365)
(7,486)
Net deferred tax asset / (liability)
(7,486)
–
–
–
–
–
–
–
–
–
–
–
–
8,809
(6,341)
(2,468)
–
(9,088)
(2,579)
(197)
16
1,788
6,236
(3,824)
–
–
–
–
37,520
(15,123)
(22,397)
–
1,684
21,466
163
4
11
–
(168)
234
(329)
(4,180)
(1,890)
(357)
(29,019)
(11,667)
(3,824)
(357)
(11,667)
A deferred tax asset has not been recognised in respect of tax losses and allowances in the UK due to uncertainty
over the availability of future taxable profits in the UK to offset these losses against.
The Group recognised a net deferred tax liability through a deferred tax charge of £3,824 thousand for changes in
net deductible temporary differences in the year and £357 thousand for FX movements during the year. The
deferred tax liability has been partially offset by a deferred tax asset which has been recognised in Canada to the
extent that the Group anticipates probable future taxable profits to against which the assets can be utilised.
Notes To the Group Financial Statements
9 Taxation - continued
The Group’s estimated tax pools are summarised in the following table. The non-capital tax loss pools in Canada
expire over a period of 20 years. All other tax pools do not expire.
31 December 2021
£’000
29,325
49,819
79,144
3,107
7,519
56,391
11,991
10,503
833
90,344
Total
£’000
4,827
3,966
3,341
295
295
223
304
UK:
Taxable losses
Mineral extraction allowances
Total
Canada:
Canadian exploration expense (CEE, deductible at 100% p.a.)
Canadian development expense (CDE, deductible at 30% p.a.)
Canadian oil and gas property expense (COGPE, deductible at 10% p.a.)
Undepreciated capital cost (UCC, deductible at 25% p.a.)
Non-capital losses (NCL, deductible at 100% p.a.)
Other (deductible at various rates p.a.)
Total
10 Directors’ remuneration
31 December 2022
£’000
38,927
52,466
91,393
1,623
37,870
58,478
18,867
–
1,019
117,857
2022
Executive Directors
Majid Shafiq
Graham Heath
Ryan Heath
Non-Executive Directors
Neill Carson
Richard Ames
Linda Beal
John Festival
Total
2021
Executive Directors
Majid Shafiq
Graham Heath
Non-Executive Directors
Neill Carson
Richard Ames
Linda Beal
John Festival
Total
Salary / Fees
Bonus
Share based
payments
£’000
£’000
£’000
487
702
295
68
68
106
81
833
668
535
–
–
–
–
3,507
2,596
2,511
227
227
117
223
1,807
2,036
9,408
13,251
Salary / Fees
Bonus
Share based
payments
384
319
60
60
120
60
438
358
–
–
–
–
1,003
796
252
156
51
51
45
13
568
Total
1,074
833
111
111
165
73
2,367
085
i3 Energy PLC
80
i3 Energy PLC
81
086
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
10 Directors’ remuneration- continued
12
Property, plant, and equipment
Share based payments represent the difference between the exercise price and the market value of i3 shares on
the date of exercise, multiplied by the number of options exercised.
Included in Graham Heath Salary / Fees is a one-time compensation for loss of office payment of £417 thousand.
During the year the Company contributed £2 thousand to i3’s CEO’s pension scheme (2021 - £2 thousand).
11
Earnings per share
From continuing operations
Basic earnings or loss per share is calculated as profit/(loss) for the year, adjusted to exclude any costs of servicing
equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings or loss per share amounts are calculated by dividing losses or profits for the year attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the
year, plus the weighted average number of shares that would be issued on the conversion of dilutive potential
ordinary shares into ordinary shares.
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purposes of basic and diluted earnings per share
being net profit attributable to owners of i3 Energy (£’000)
41,951
25,083
Year Ended 31
December 2022
Year Ended 31
December 2021
Weighted average number of shares
Weighted average number of Ordinary Shares – basic
1,164,210,976
883,664,352
Effect of dilutive potential ordinary shares:
Share options
Warrants
51,089,073
49,369,708
9,048,113
32,758,752
Weighted average number of Ordinary Shares – diluted
1,224,348,162
965,792,812
Basic earnings per share (pence)
Diluted earnings per share (pence)
3.60
3.43
2.84
2.60
In 2021, prior to the BHGE warrant repricing on 17 May 2021, these instruments were anti-dilutive as their exercise
price exceed the average market price of the Ordinary Shares over this period. Concurrent with their repricing the
BHGE warrants were immediately exercised for ordinary shares. The BHGE shares were therefore included in the
basic weighted average number of Ordinary Shares from 17 May 2021 but were not further included in the effect
of dilutive potential ordinary shares.
Cost
As at 1 January 2021
Acquisitions
Additions
Disposals
Changes to decommissioning estimates (note 17)
113,193
108
122,762
11,184
(8,242)
7,603
Decommissioning settlements under SRP and ASCP (note 17)
(324)
Oil and gas assets
Right of use
assets
Other fixed assets
Total
–
–
–
–
–
1
109
–
–
(28)
–
–
(88)
7
–
(6)
22
–
50
–
–
–
–
72
–
21
–
–
–
88
3
184
(19)
113,323
122,762
11,234
(8,242)
7,603
(324)
3,858
250,214
1,653
75,814
(1,414)
(40,233)
(731)
–
12,595
297,898
(4,814)
3,857
250,033
1,653
75,793
(1,386)
(40,233)
(731)
–
12,585
297,714
(4,789)
(21,611)
(27)
(5)
(21,643)
481
(158)
–
–
–
–
481
(158)
(26,077)
(33)
(24)
(26,134)
(34,301)
(17)
(21)
(34,339)
–
–
(968)
(61,346)
223,956
236,368
12
42
(4)
–
76
–
–
(42)
12
–
–
(972)
(87)
(61,433)
48
97
224,080
236,465
Exchange movement
As at 31 December 2021
Acquisitions
Additions
Disposals
Changes to decommissioning estimates (note 17)
Decommissioning settlements under SRP and ASCP (note 17)
Transfer between asset classes
Exchange movement
As at 31 December 2022
Accumulated depreciation and depletion
As at 1 January 2021
Charge for the year
Disposals
Exchange movement
As at 31 December 2021
Charge for the year
Disposals
Transfer between asset classes
Exchange movement
As at 31 December 2022
Carrying amount at 31 December 2021
Carrying amount at 31 December 2022
087
i3 Energy PLC
82
i3 Energy PLC
83
088
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
13
Exploration and evaluation assets (Intangible)
15
Trade and other payables
At start of year
Additions
Exchange movement
At end of year
Year Ended 31
December 2022
£’000
49,819
12,327
(86)
62,060
Year Ended 31
December 2021
£’000
48,809
1,010
–
49,819
Included within E&E assets is the Group’s UK P.2358 Licence, which commenced its four-year second term on 30
September 2020 and contains the Serenity discovery and the Liberator West and Minor High prospective areas.
In March 2022 the Group announced it had agreed farm-in terms with Europa Oil & Gas Limited (“Europa”) for a
25% working interest (“WI”) in Block 13/23c North (Licence P.2358) which contains the Serenity discovery. Under
the terms of the farmout, Europa will fund 46.25% of the cost of the upcoming Serenity appraisal well up to a gross
capped well cost of £15 million. Any well costs exceeding £15 million will be funded by the companies in proportion
to their respective working interests. The Farm-In Agreement (“FIA”) was signed in April 2022 and following the
fulfilment of all conditions precedent in the FIA, the transaction closed in August 2022. Following this farm-out, i3
retains a 75% WI in Block 13/23c North (Licence P.2358) and a 100% WI in Block 13/23c South (Licence P.2358),
which contains the Minos High Prospect and Liberator discovery.
In September 2022, the 13/23c-12 Serenity appraisal well was spud and drilled to a total vertical depth of 5,630 ft
below sea level. The targeted Lower Cretaceous Captain sand, which contained hydrocarbons in the 13/23c-10
well discovered in October 2019, was not present at this location. Over 100 ft of other Captain sands in various
sequences were found but were water wet. The well was plugged and abandoned. Management considers the well
result to represent an indicator of impairment and has made an estimate of the asset’s recoverable amount based
of management’s best estimate of value in use using a discounted cash flow model of a one well development of
the Serenity field. The estimated recoverable amount exceeded the carrying amount of the Group’s UK E&E assets
as at 31 December 2022, and accordingly no impairment was recognised. Further discussion is provided in note
2.
Also included within E&E assets are costs associated with land purchases and a preliminary appraisal well in the
Clearwater play in Canada.
14
Trade and other receivables
Trade and accrued receivables
Joint venture receivables
Prepayments & other receivables
Total trade and other receivables
31 December 2022
£’000
31 December 2021
£’000
26,770
5,563
2,510
34,843
21,982
1,483
2,038
25,503
Trade and accrued receivables are all due within one year.
Joint venture receivables represent amounts due from operating partners for operating and capital activity in
Canada and the UK.
The fair value of trade and other receivables is the same as their carrying values as stated above and they do not
contain any impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above. The Group does not hold any collateral as security.
Trade creditors
Sales tax payable
Accruals
Dividends payable
Joint venture payables
Income taxes payable
Total trade and other payables
31 December 2022
£’000
15,383
378
26,909
2,040
1,263
9,873
55,846
31 December 2021
£’000
5,169
65
13,565
–
910
–
19,709
The average credit period taken for trade purchases is 60 days. No interest is charged on the trade payables. The
carrying values of trade and other payables are considered to be a reasonable approximation of the fair value and are
considered by the Directors as payable within one year.
Joint venture payables represent amounts due to operating partners for operating and capital activity in Canada.
Non-current accounts payable
On 2 July 2019 the Group agreed with Baker Hughes, a GE Company, and GE Oil & Gas Limited (collectively referred
to as “BHGE” hereafter) that £3,000 thousand of oilfield service and oilfield equipment contract payments will not
become payable until such time as i3 has received its first sales revenues from Liberator Phase I. This payable was
previously recorded as a non-current accounts payable.
On 17 May 2021, i3 announced that it had successfully restructured legacy contracts and agreements for equipment,
oil field services, and warrants with BHGE. In summary, the remainder of a £5.8 million contract for subsea trees and
wellheads was cancelled, 5,277,045 warrants had an exercise price reduction to £0.0001 per share (the “Warrant
Shares”), and an outstanding contingent payment for £3.0 million (“Deferred Payment Invoice Balance”, or “DPIB”) in
oil field services and equipment that becomes payable at such time as the Group receives consideration from any sale
or farm-down of its Serenity or Liberator assets will be reduced by the exercise value of the Warrant Shares, the market
value of the Warrant Shares from time to time, all dividends received by BHGE associated with the Warrant Shares,
and certain payments to be made to BHGE. The purpose of this restructuring was to enable i3 to become a dividend
payer, as certain conditions of the abovementioned contracts prevented it from reducing its share premium account –
a required step in order for i3 to effect dividend distributions to its shareholders. The incremental fair value of the
modified warrants was expensed in 2021 (note 8).
In Q4 2022, the Group received consideration from the Serenity farm-in in excess of the DPIB amount and the
repayment was triggered. The repayment amount of £1,270 thousand was calculated as the £3.0 million payable
amount, less the exercise value of the Warrant Shares of £1 thousand, less cash payments of £487 thousand made in
2021 against the DPIB balance, less the Market Value of the Warrant Shares of £1,161 thousand, which totals the
5,277,045 Warrant Shares as at the repayment date share price of 22.00p/share, less £81 thousand of dividends paid
on the Warrant Shares. The repayment amount was settled in cash in 2022 and the liability was extinguished. The
increase in i3’s share price from 13.35p/share from 31 December 2021 to 22.00p/share at the repayment date resulted
in a non-cash gain in the value of the Warrant Share which has been recorded in the consolidated statement of
comprehensive income within Finance Costs.
089
i3 Energy PLC
84
i3 Energy PLC
85
090
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
15 Trade and other payables- continued
A reconciliation of the balance is as follows:
At start of year
Exercise value of the Warrant Shares
Cash payments made during the year
Non-cash change in market value of the Warrant Shares (note 8)
At end of year
Of which:
Current, within trade accounts payable
Non-current
Total
16 Borrowings
H1-2019 loan note facility
Year Ended 31
December 2022
£’000
1,789
(1)
(1,270)
(518)
–
Year Ended 31
December 2021
£’000
3,000
(1)
(487)
(723)
1,789
31 December 2022
£’000
31 December 2021
£’000
–
–
–
1,232
557
1,789
In May 2019, the Company completed a £22 million H1-2019 loan note facility (“H1-2019 LN”). The H1-2019 LNs
have a term of 4 years, maturing on 31 May 2023 and bearing interest, payable on a quarterly basis at the Group’s
option (i) in cash at a rate of 8% per annum, or (ii) in kind at a rate of 11% per annum by the issuance of additional
H1-2019 LNs. The Group elected to pay all interest in kind prior to 2022, and in cash for all four quarters in 2022.
The noteholders were granted warrants (“H1-2019 LN Warrants”) in the notional amount of £1 for each £1 of loan
notes issued, with H1-2019 Warrants being issued proportionately across three series. The H1-2019 LN Warrants
vested on the issue date and expire 4 years thereafter and can be exercised through either/or a combination of a
cash payment and/or surrender of H1-2019 LNs plus accrued interest equal to the aggregate notional amount of
the H1-2019 LN Warrants being exercised. Each H1-2019 LN Warrant gives the holder the right to convert the
notional amount into such number of shares as is derived by dividing the notional amount by the exercise price.
The following table outlines the terms of the warrants as at their issuance date.
Notional
amount of
warrants (£)
Exercise
price upon
issuance
(£/share)
Shares to be
issued upon
exercise of
warrants
Share price at
issuance (£)
Time to
maturity
(years)
Value
(£/share)
Tranche 1
7,333,333
0.4070
18,018,018
Tranche 2
7,333,333
0.4810
15,246,015
Tranche 3
7,333,333
0.5550
13,213,213
0.39
0.39
0.39
4
4
4
0.2557
0.2435
0.2313
Total fair value of the Tranche 1, Tranche 2 and Tranche 3 warrants on issuance was £11,375 thousand and was
bifurcated from the debt contract and classified as equity. The H1-2019 LNs are comprised of the following
components: the debt contract, the conversion feature, the interest rate payment option and the early conversion
feature (at the Group’s option). At inception the debt component was recorded at an estimated fair value of £10,625
thousand. The debt balance is unwound using the effective interest rate method to the principal value at maturity
with a corresponding non-cash accretion charge to earnings.
16 Borrowings – continued
Interest expense and accretion expense to 31 December 2022 was £2,309 thousand and £3,386 thousand
respectively.
Borrowings reconciliation
At 31 December 2020
Increase through interest (non-cash)
Accretion expense (non-cash)
Lease payments (cash)
Exchange movement (non-cash)
At 31 December 2021
Increase through interest (non-cash)
Accretion expense (non-cash)
Lease and interest payments (cash)
Exchange movement (non-cash)
At 31 December 2022
The classification as at 31 December 2022 is as follows:
Of which:
Current
Non-current
At 31 December 2022
The classification as at 31 December 2021 is as follows:
Of which:
Current
Non-current
At 31 December 2021
H1-2019 LN
£’000
17,887
3,144
2,824
–
–
23,855
2,309
3,386
(2,309)
–
27,241
Leases
£’000
99
2
–
(30)
(2)
69
1
–
(74)
4
–
H1-2019 LN
£’000
Leases
£’000
27,241
–
27,241
–
–
–
H1-2019 LN
£’000
Leases
£’000
–
23,855
23,855
69
–
–
Total
£’000
17,986
3,146
2,824
(30)
(2)
23,924
2,310
3,386
(2,383)
4
27,241
Total
£’000
27,241
–
27,241
Total
£’000
69
23,855
23,924
91
i3 Energy PLC
86
i3 Energy PLC
87
92
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
17 Decommissioning provision
18 Risk management contracts
At start of year
Liabilities assumed through acquisitions
Liabilities incurred
Liabilities disposed
Liabilities settled
Liabilities settled under SRP and ASCP
Change in estimates
Unwinding of discount (Note 8)
Exchange movement
At end of year
Of which:
Current
Non-current
Total
A summary of the key estimates and assumptions are as follows:
Undiscounted / uninflated cash flows (CAD, thousands)
Inflation rate
Discount rate
Timing of cash flows
Year Ended 31
December 2022
£’000
125,523
348
1,369
(213)
(2,190)
(731)
(40,233)
2,667
6,791
93,331
Year Ended 31
December 2021
£’000
66,783
56,350
312
(7,984)
(670)
(324)
7,603
1,539
1,914
125,523
31 December 2022
£’000
3,190
90,141
93,331
31 December 2021
£’000
2,368
123,155
125,523
31 December 2022
31 December 2021
206,613
2.09%
3.28%
207,371
1.82%
1.68%
1-50 years
1-50 years
Liabilities settled reflect work undertaken in the period. This includes wells decommissioned under Alberta’s Site
Rehabilitation Program (“SRP”) and Saskatchewan’s Accelerated Site Closure Program (“ASCP”) whereby certain
costs of settling the Group’s liabilities were borne by the Government of Canada. Where liabilities were settled
through the SRP and ASCP a corresponding decrease to the decommissioning asset was recorded. The change
in estimate for the year ended 31 December 2022 was primarily driven by changes in market interest and inflation
rates as published by the Bank of Canada. The inflation and discount rates have been pinpointed as a key source
of estimation uncertainty and are further discussed in note 2.
The Group enters risk management contracts to hedge a portion of the Group’s exposure to fluctuations in
prevailing commodity prices for oil, gas, and natural gas liquids. The Group’s physical commodity contracts
represent physical delivery sales contracts in the ordinary course of business and are therefore not recorded at fair
value in the consolidated financial statements. The Group’s financial risk management contracts have not been
designated as hedging instruments in a hedge relationship under IFRS 9 and are carried at fair value through profit
and loss. The financial risk management contracts are classified as Level 2 in the fair value hierarchy as defined
by IFRS 13 ‘Fair value measurements’ (note 22).
The principal terms of the risk management contracts held as at 31 December 2022 are presented in the table
below.
Type
Effective date Termination date Total Volume
AECO 5A Financial Swaps
AECO 5A Physical Swaps
AECO 5A Physical Swaps
AECO 5A Financial Swaps
AECO 5A Physical Swaps
AECO 5A Physical Swaps
AECO 7A Physical Collar
AECO 7A Financial Collar
AECO 7A Financial Collar
1 Nov 2022
1 Nov 2022
1 Jan 2023
1 Jan 2023
1 Jan 2023
1 Feb 2023
1 Jan 2023
1 Jan 2023
1 Jan 2023
31 Mar 2023 10,000 GJ/Day
31 Mar 2023
5,000 GJ/Day
31 Jan 2023
2,500 GJ/Day
31 Mar 2023
5,000 GJ/Day
31 Mar 2023
5,000 GJ/Day
28 Feb 2023
2,500 GJ/Day
Avg. Price
CAD 4.1500 / GJ
CAD 4.3800 / GJ
CAD 5.1500 / GJ
CAD 4.3800 / GJ
CAD 4.7500 / GJ
CAD 5.1300 / GJ
31 Mar 2023
2,500 GJ/Day
CAD 6.0000-9.4000 / GJ
31 Mar 2023
5,000 GJ/Day
CAD 6.5000-9.3300 / GJ
31 Mar 2023
5,000 GJ/Day
CAD 5.0000-11.2000 / GJ
WTI Physical Swaps
WTI Financial Swaps
WTI Physical Swaps
WTI Physical Swaps
WTI Physical Swaps
WTI Physical Collar
WTI Physical Collar
WTI Physical Collar
WTI Financial Collar
WTI Financial Collar
WTI Financial Collar
WTI Financial Collar
WTI Financial Collar
WTI Physical Collar
WTI Financial Collar
WTI Financial Collar
1 Jan 2023
31 Jan 2023
250 bbl/Day
CAD 100.00 / bbl
1 Jan 2023
31 Mar 2023
250 bbl/Day
CAD 106.00 / bbl
1 Feb 2023
28 Feb 2023
250 bbl/Day
CAD 100.00 / bbl
1 Mar 2023
31 Mar 2023
250 bbl/Day
CAD 109.53 / bbl
1 Jan 2023
30 Jun 2023
150 bbl/Day
CAD 114.20 / bbl
1 Jan 2023
30 Jun 2023
150 bbl/Day
CAD 100.00-129.50 / bbl
1 Jan 2023
30 Jun 2023
250 bbl/Day
CAD 100.00-129.00 / bbl
1 Apr 2023
30 Jun 2023
250 bbl/Day
CAD 100.00-131.25 / bbl
1 Apr 2023
30 Jun 2023
250 bbl/Day
CAD 100.00-132.25 / bbl
1 Jan 2023
31 Mar 2023
300 bbl/Day
CAD 100.00-120.00 / bbl
1 Jan 2023
31 Mar 2023
200 bbl/Day
CAD 100.00-121.50 / bbl
1 Jan 2023
31 Mar 2023
300 bbl/Day
CAD 100.00-125.25 / bbl
1 Jan 2023
31 Mar 2023
300 bbl/Day
CAD 100.00-121.40 / bbl
1 Jan 2023
31 Mar 2023
300 bbl/Day
CAD 100.00-126.75 / bbl
1 Apr 2023
30 Apr 2023
300 bbl/Day
CAD 100.00-120.75 / bbl
1 Apr 2023
30 Jun 2023
250 bbl/Day
CAD 100.00-118.20 / bbl
WTI Purchased Put Option
1 Apr 2023
30 Jun 2023
1,000 bbl/Day
CAD 100.00 / bbl
WTI Financial Swaps
1 Apr 2023
30 Jun 2023
250 bbl/Day
CAD 112.00 / bbl
Conway Financial Collar
1 Jan 2023
31 Mar 2023
250 bbl/Day
USD 1.0000-1.2500 / gal
Conway Financial Collar
1 Jan 2023
31 Mar 2023
250 bbl/Day
USD 1.0000-1.2100 / gal
93
i3 Energy PLC
88
i3 Energy PLC
89
94
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Fina ncial Statements
18 Risk management contracts - continued
19 Authorised, issued, and called-up share capital - continued
The Group’s losses on risk management contracts arose due to commodity price increases in 2021 and 2022 which
resulted in the Group settling its hedge positions at lower prices than could have otherwise been achieved at
prevailing market prices. These losses are presented in the following table.
Unrealised (gain) / loss on risk management contracts
Realised loss on risk management contracts
Total
2022
£’000
(858)
19,848
18,990
2021
£’000
111
5,374
5,485
The carrying value of the Group’s risk management contracts are present in the following table.
Current asset
Current liability
Net current asset / (liability)
31 December 2022
£’000
1,111
(381)
730
31 December 2021
£’000
814
(925)
(111)
19 Authorised, issued and called-up share capital
Issuance
date
Ordinary
shares
Deferred
shares
Nominal
value per
Share
Ordinary
shares
Deferred
shares
Share
premium
before
share
issuance
costs
Share
issuance
costs
Share
premium
after
Share
issuance
costs
At 31 December 2020
Shares
Shares
700,054,815
5,000
Issued on exercise of 0.01 pence H1-2019
warrants
Various
40,140,172
Issued on exercise of 0.01 pence options
Various
15,303,960
Issued on exercise of 5 pence options
Various
1,700,000
Issued on exercise of 0.01 pence BHGE
warrants
Capital reduction *
4 Jun 21
6 Jul 21
5,277,045
–
Issued at 11 pence/share
27 Jul 21
363,700,000
Issued on exercise of 11 pence EMI options
1 Oct 21
250,000
–
–
–
–
–
–
–
£
–
0.0001
0.0001
0.0001
0.0001
–
0.0001
0.0001
£’000
£’000
£’000
£’000
£’000
70
4
2
–
1
–
36
–
50
–
–
–
–
–
–
64,804
(3,199)
61,605
7,669
–
85
903
–
–
–
–
7,669
–
85
903
(67,255)
3,199
(64,056)
39,970
(2,000)
37,970
27
–
27
At 31 December 2021
1,126,425,992
5,000
–
113
50
46,203
(2,000)
44,203
Issued on exercise of 5 pence options
6 Jun 22
40,860,277
Issued on exercise of 6.1 pence options
6 Jun 22
7,994,653
Issued on exercise of 11 pence options
6 Jun 22
17,450,451
–
–
–
0.0001
0.0001
0.0001
4
1
1
–
–
–
2,038
487
1,918
–
–
–
2,038
487
1,918
At 31 December 2022
1,192,731,373
5,000
–
119
50
50,646
(2,000)
48,646
* On 6 July 2021 the Registrar of Companies registered the cancellation of i3’s share premium account. The £64.1
million balance of the Group’s share premium net of share issuance costs was accordingly transferred to retained
earnings. This created distributable reserves and enabled the Company to become dividend paying.
The ordinary shares confer the right to vote at general meetings of the Company, to a repayment of capital in the
event of liquidation or winding up and certain other rights as set out in the Company’s articles of association.
The deferred shares do not confer any voting rights at general meetings of the Company and do confer a right to
a repayment of capital in the event of liquidation or winding up, they do not confer any dividend rights or any of
redemption.
On 6 June 2022, 66,305,381 ordinary shares were admitted to trading following the exercise of employee share
options. Further details are provided in note 20.
£17.4. million of dividends were declared in 2022 as follows:
Declaration date
Ex-Dividend date
Record date
Payment date
9 February 2022
17 February 2022
18 February 2022
11 March 2022
9 March 2022
17 March 2022
18 March 2022
8 April 2022
6 April 2022
11 May 2022
8 June 2022
6 July 2022
14 April 2022
19 April 2022
6 May 2022
19 May 2022
20 May 2022
10 June 2022
16 June 2022
17 June 2022
8 July 2022
14 July 2022
15 July 2022
5 August 2022
3 August 2022
11 August 2022
12 August 2022
2 September 2022
7 September 2022
14 September 2022 15 September 2022
7 October 2022
5 October 2022
13 October 2022
14 October 2022
4 November 2022
2 November 2022
10 November 2022 11 November 2022
2 December 2022
22 December 2022
5 January 2023
6 January 2023
27 January 2023
Total
£3.4 million of dividends were declared in 2021 as follows:
Declaration date
Ex-Dividend date
Record date
Payment date
8 July 2021
15 July 2021
16 July 2021
6 August 2021
27 September 2021
7 October 2021
8 October 2021
29 October 2021
Total
Dividend per
share
(pence)
0.1050
0.1050
0.1050
0.1425
0.1425
0.1425
0.1425
0.1425
0.1425
0.1425
0.1710
Total Dividend
£’000
1,183
1,183
1,183
1,604
1,700
1,700
1,700
1,700
1,700
1,700
2,040
17,393
Dividend per
share
Total Dividend
(pence)
0.16
0.20
£’000
1,163
2,254
3,417
95
i3 Energy PLC
90
i3 Energy PLC
91
96
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
20
Share-based payments
20 Share-based payments - continued
During the year the Group had share based payment expense of £1,092 thousand (2021: £3,668 thousand).
Employee and NED share options
During the year the Group had share based payment expense relating to the issuance of share options of £1,092
thousand (2021: £3,217 thousand). Details on the employee and NED share options outstanding during the period
are as follows:
Number of options Weighted average
exercise price
Weighted average
contractual life
At 31 December 2020
Issued – 10 January 2021
Issued – 10 January 2021
Issued – 30 July 2021
Issued – 16 December 2021
Exercised during the year
Forfeited during the year
At 31 December 2021
5p options exercised during the period
6.1p options exercised during the period
11p options exercised during the period
Granted during the period
Forfeited during the period
At 31 December 2022
16,157,614
13,166,358
75,184,252
57,121,402
1,625,000
(17,003,960)
(2,290,291)
143,960,375
(67,006,794)
(12,454,359)
(35,085,877)
2,700,000
(708,390)
31,404,955
(pence)
0.01
6.10
5.00
11.00
11.00
0.51
7.62
7.48
5.00
6.10
11.00
24.10
11.00
10.72
3.85
10.00
10.00
10.00
10.00
3.98
9.75
9.22
8.54
8.54
9.09
10.00
8.84
7.93
In May 2022, i3 employees and directors elected to exercise options over an aggregate 114,547,030 ordinary
shares of i3 Energy plc. The Company primarily settled in ordinary shares only the post-tax in-the-money value of
the options (based on c28 pence per share), which resulted in the issuance of 66,305,381 ordinary shares which
were admitted to trading on 6 June 2022. £635 thousand in proceeds was collected from employees who elected
not to settle their strike price through a reduction in ordinary shares received. £6,324 thousand in employment tax
was settled by the Company with the relevant taxation authorities on behalf of the employees which has been
recorded within equity as a deduction from retained earnings. £6 thousand was recorded as an increase to the
ordinary shares account, which represents the number of ordinary shares issued multiplied by their nominal value
of £0.001 per share. £4,443 thousand was recorded as an increase to the share premium account, which
represents the number of ordinary shares issued multiplied by the excess in the respective strike prices over the
nominal value of the shares. £3,883 thousand has been recorded as a decrease to the share-based payment
reserve, which represents the strike price settled through surrendered shares.
Throughout 2022, the Company issued options over a total of 2,700,000 ordinary to new employees of i3 Canada.
The options were issued in accordance with the rules of the Company's Employee Share Option Plan at exercise
prices equal to the market price of i3 shares at the date of the grants, which ranged from 21.55 pence to 29.40
pence per share. One-third of the options will vest on each of the 12-month, 24-month, and 36-month anniversaries
of the employment start dates. The fair values were calculated using the Black Scholes model with inputs for stock
price and exercise price ranging from 21.55 pence to 29.40 pence per share, time to maturity of 10 years, volatility
ranging from 100% to 104%, the Risk-Free Interest rate ranging from 1.90% to 3.15%, and a dividend yield ranging
from 6% to 8%. The resulting fair value of £278 thousand will be expensed over the expected vesting period.
On 10 January 2021, the Company issued options over a total of 75,184,252 ordinary shares as described in the
Gain-related Readmission document released on 11 August 2020. The options were issued in accordance with the
rules of the Company's Employee Share Option Plan at an exercise price of 5.00 pence per share. Of the options
issued to employees of i3 Canada. One-third of the options vested immediately, with a further one-third vesting in
July 2021 if production exits at or above 9,000 boepd, and 100 per cent will vest if there is an addition of 5,000
boepd or, alternatively, 25 MMboe 2P reserves. Of the options issued to employees of i3 North Sea Limited, one-
third of the options vested immediately, with a further one-third vesting at the spud of the next Serenity / Liberator
appraisal well, and 100 per cent will vest upon a third-party reserve auditor attributing 25 MMbbls 2P post drilling
of a Serenity / Liberator appraisal well. The options will otherwise fully vest on the third anniversary. Of the options
issued to the Executive and Non-Executive Directors and one corporate employee, one-third of the options vested
immediately, with a further one-third vesting upon the earlier of spud of the next Serenity or Liberator appraisal
well; and July 2021 production exits being at or above 9,000 boepd, and 100% will vest upon the earlier of a third-
party reserve auditor attributing 25 MMbbls 2P post drilling of a Serenity or Liberator appraisal well and the addition
of 5,000 boepd or 25 MMboe 2P reserves. The fair value was calculated using the Black Scholes model with inputs
for stock price of 6.10 pence, exercise price of 5.00 pence, time to maturity of 10 years, volatility of 114%, the Risk-
Free Interest rate of 0.360%, and a dividend yield of 11%. The resulting fair value of £1,384 thousand will be
expensed over the expected vesting period.
On 10 January 2021, the Company also issued options over a total of 13,166,358 ordinary shares to key staff that
joined its Canadian subsidiary, i3 Energy Canada Ltd., following the acquisition of Gain's oil & gas assets. The
options were issued in accordance with the rules of the Company's Employee Share Option Plan at an exercise
price of 6.10 pence per share, the closing price on 8 January 2021. The fair value was calculated using the Black
Scholes model with inputs for share price of 6.10 pence, exercise price of 6.10 pence, time to maturity of 10 years,
volatility of 114%, the Risk-Free Interest rate of 0.360%, and a dividend yield of 11%. The options contain the same
vesting conditions as the 5.00 pence options for employees of i3 Canada as described in the paragraph above.
The resulting fair value of £240 thousand will be expensed over the expected vesting period.
On 30 July 2021, the Company issued options over a total of 53,705,491 ordinary shares to i3 staff and board and
has additionally issued 1,750,000 options to incoming staff and conditionally allocated 3,750,000 for additional
hires as part of the Acquisition. A total of 57,121,402 options were ultimately issued. The options were issued in
accordance with the rules of the Company's Employee Share Option Plan at an exercise price of 11.00 pence per
share. Of the options issued to employees of i3 Canada, one-third of the options vested immediately, with a further
one-third vesting if production of 20,000 boepd is achieved prior to July 2022 (substantially funded from internally
generated cash flow); and 100 per cent will vest upon the addition of 9,250 boepd or 50 MMboe 2P reserves. Of
the options issued to employees of i3 North Sea Limited, one-third of the options vested immediately, with a further
one-third vesting at spud of the earlier of a second appraisal well or first development well at either Serenity or
Liberator, and 100 per cent will vest upon the addition of 2,500 boepd of European production. Of the options
issued to the Executive and Non-Executive Directors and one corporate employee, one-third of the options vested
immediately, with a further one-third vesting (i) at spud of the earlier of a second appraisal well or first development
well at either Serenity or Liberator; or (ii) if production of 20,000 boepd is achieved prior to July 2022 (substantially
funded from internally generated cash flow), whichever is first to occur, and 100 per cent will vest upon (i) the
addition of 2,500 boepd of European production; or (ii) the addition of 9,250 boepd or 50 MMboe 2P reserves,
whichever is first to occur. The fair value was calculated using the Black Scholes model with inputs for stock price
of 10.95 pence, exercise price of 11.00 pence, time to maturity of 10 years, volatility of 110%, the Risk-Free Interest
rate of 0.647%, and a dividend yield of 6%. The resulting fair value of £3,202 thousand will be expensed over the
expected vesting period.
On 16 December 2021, the Company issued options over a total of 1,625,000 to new employees of i3 Canada.
The vesting conditions mirror those of the 30 July 2021 grant described above, except for the first one-third of
options vesting on the 6-month employment anniversary rather than immediately.
In addition, to incentivise the UK and Canadian offices of the Enlarged Group to work as one team and assist each
other as required going forward, if one of the offices satisfies one of the early vesting criteria for the options
described above then the equivalent vesting criteria for the other office shall be deemed 20 per cent satisfied (and
a further 6.67%. of the options held by employees in the other office would vest immediately).
All options issued on 10 January 2021, 30 July 2021, and 16 December 2021 will otherwise fully vest on the third
anniversary of their grant dates.
3,579,348 outstanding employee share options as at 31 December 2022 were fully vested and exercisable.
97
i3 Energy PLC
92
i3 Energy PLC
93
98
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
20 Share-based payments - continued
Warrants
During the year the Group did not incur a share based payment expense relating to the modification and issuance
of warrants (2021: £451 thousand). Details on the warrants outstanding during the period are as follows:
Number of warrants Weighted average
exercise price
Weighted average
contractual life
At 31 December 2020
BHGE warrants modified – 17 May 2021
BHGE warrants modified – 17 May 2021
BHGE warrants exercised – 17 May 2021
58,694,348
(5,277,045)
5,277,045
(5,277,045)
H1-2019 LN warrants exercised throughout the year
(40,140,172)
At 31 December 2021
Expired in the period
At 31 December 2022
13,277,131
(4,225,204)
9,051,927
(pence)
5.27
56.85
0.01
0.01
0.01
15.07
47.34
0.01
1.98
0.34
0.34
0.30
1.34
1.85
NA
0.42
On 17 May 2021, i3 announced that it had successfully restructured legacy contracts and agreements for
equipment, oil field services, and warrants with BHGE. This resulted in the exchange of 5,277,045 warrants with
a strike price of 56.85 pence for Ordinary Shares with a nominal value of 0.01 pence. Further details are provided
in Note 15.
EMI options
The Company operates an Employee Management Incentive (EMI) share option scheme. Grants were made on
14 April 2016 and 6 December 2016. The scheme is based on eligible employees being granted EMI options. The
right to exercise the option is at the employee’s discretion for a ten-year period from the date of issuance.
250,000 options were exercised on 1 October 2021 at a price of £0.11 per share. 250,000 options remain
outstanding and were exercisable at both 31 December 2022 and 2021 at a price of £0.11 per share. If the options
remain unexercised after a period of ten years from the date of grant the options expire. Employees who leave i3
Energy have 60 days to exercise the Options prior to them being forfeited. The options outstanding at 31 December
2022 have a weighted average exercise price of £0.11 and a weighted average remaining contractual life of 3.93
years.
21 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Remuneration of Key Management Personnel
Directors of the Group are considered to be Key Management Personnel. The remuneration of the Directors is set
out in note 10.
Ultimate parent
There is no ultimate controlling party of the Group.
22
Financial instruments, financial and capital risk management
Financial instruments
Fair value measurements
The Group carries risk management contracts, and prior to its redemption in Q4 2022, non-current accounts
payable at FVTPL. The fair value of the risk management contracts is determined by discounting at a risk-free rate
the difference between the contracted prices and the published forward curves at the reporting date. The fair value
of non-current accounts payable was determined by subtracting the value of the Warrant Shares, being the
5,277,045 Warrant Shares multiplied by the higher of (i) the quoted price of one i3 share at the reporting date, and
(ii) the 5-day volume weighted average value of one i3 share during the 5-day dealing period to 17 September
2021, from the remaining Deferred Payment Invoice Balance. The risk management contracts and non-current
accounts payable are classified as Level 2 valuations within the fair value hierarchy as defined by IFRS 13 Fair
Value Measurement which is as follows:
•
•
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived
from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the
asset or liability that are not based on observable market data (unobservable inputs).
There were no financial assets or liabilities measured at Level 1 or 3 or reclassified between Levels 1, 2 or 3 during
the year.
The fair value of the Group’s financial assets and liabilities approximate to their carrying amounts at the reporting
date. The following tables combine information about the Group’s classes of financial instruments and their fair
value and carrying amounts at the reporting date.
As at 31 December 2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Risk management contracts (Level 2)
Total
Financial liabilities
Trade and other payables
Risk management contracts (Level 2)
Borrowings and leases
Total
Carried at FVTPL Carried at amortised
cost
–
–
1,111
1,111
–
381
–
381
16,560
34,843
–
51,403
55,846
–
27,241
83,087
99
i3 Energy PLC
94
i3 Energy PLC
95
100
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
22 Financial instruments, financial and capital risk management - continued
22 Financial instruments, financial and capital risk management - continued
As at 31 December 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Risk management contracts (Level 2)
Total
Financial liabilities
Trade and other payables
Risk management contracts (Level 2)
Borrowings and leases
Non-current accounts payable (Level 2)
Total
Financial risk management
Financial risk factors
Carried at FVTPL Carried at amortised
cost
–
–
814
814
1,232
925
–
557
2,714
15,335
25,792
–
41,127
17,746
–
23,924
–
41,670
The Group considers that it is not exposed to major concentrations of credit risk.
The Group holds cash as a liquid resource to fund its obligations. The Group’s cash balances are held in Sterling
Canadian Dollar, and US Dollar. The Group’s strategy for managing cash is to maximise interest income whilst
ensuring its availability to match the profile of the Group’s expenditure. This is achieved by regular monitoring of
interest rates and monthly review of expenditure forecasts.
c
Liquidity risk
The Group relies upon debt and equity funding, and cash flow from its Canadian operations to finance operations.
The Directors are confident that adequate liquidity will be forthcoming with which to finance operations. Controls
over expenditure are carefully managed.
The Group ensures that its liquidity is maintained by a management process which includes projecting cash flows
and considering the level of liquid assets in relation thereto, monitoring Balance Sheet liquidity and maintaining
funding sources and back-up facilities.
The Group’s expected cash flows for its financial liabilities are presented in the following table and includes
undiscounted principal and expected interest payments.
The Group’s activities expose it to a variety of financial risks; market risk (including foreign currency risk and price
risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by the Board of Directors under policies approved at Board meetings. The Board
frequently discusses principles for overall risk management including policies for specific areas such as foreign
exchange.
a Market risk
i
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to
the UK pound sterling and the Canadian dollar and US dollar. Foreign exchange risk arises from recognised
monetary assets and liabilities (USD and CAD bank accounts) where they may be denominated in a currency that
is not the local functional currency. The Group mitigates is foreign exchange exposure by holding monetary assets
and liabilities primarily in the local functional currency. All of the monetary assets and liabilities held by the Group’s
Canadian operations were held in CAD, the functional currency, and therefore there is no foreign exchange
exposure in the Canadian operations. The UK operations did not hold significant monetary assets or liabilities in
currencies other than UK pound sterling as at 31 December 2022.
The Group is also exposed to exchange differences on translation of its foreign operations in Canada, which
resulted in a gain of £6,529 thousand for the year ended 31 December 2022 (2021: £1,511 thousand). A 10%
strengthening of GBP against CAD as at 31 December 2022 would have resulted in a loss on translation of £7,073
thousand (2021: £8,876 thousand), and a 10% weakening of GBP to CAD would have resulted in a gain of £23,152
thousand (2021: £14,222 thousand). Profit after tax would not be impacted.
b Credit risk
Credit risk arises from cash and cash equivalents and trade receivables from the sale of hydrocarbons. It is Group
policy to assess the credit risk of new customers.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
The Group will only keep its holdings of cash with institutions which have a minimum credit rating of ‘A’. The Group
sells hydrocarbons to reputable purchasers and are settled the month following their sale. Long-term deposits for
decommissioning provisions are lodged with government bodies. The carrying value of cash and cash equivalents
and trade and other receivables represents the Group’s maximum exposure to credit risk at year end.
Trade and other payables
H1 2019 LNs
H1 2019 cash and PIK interest **
At 31 December 2022
Trade and other payables
Non-current payable *
H1 2019 LNs
H1 2019 PIK interest **
Leases
6 Months
6-12 months
1-2 years
2+ years
£’000
55,846
22,000
7,204
85,050
£’000
£’000
£’000
–
–
–
–
–
–
–
–
–
–
–
–
6 Months
6-12 months
1-2 years
2+ years
£’000
18,970
–
–
–
11
£’000
740
–
–
–
6
£’000
–
557
22,000
9,680
–
£’000
–
–
–
–
–
–
Total
£’000
55,846
22,000
7,204
85,050
Total
£’000
19,710
557
22,000
9,680
17
51,964
At 31 December 2021
18,981
746
32,237
* The non-current payable was repayable at such time as i3 has received consideration from any sale or farm-down
of its Serenity or Liberator assets (see note 15). This was achieved in 2022 and the full balance was repaid within the
year.
** The H1 2019 LNs have an early redemption option and the interest can be paid in either cash or in kind (see
note 16). The table assumes no early redemption and that the remaining interest is paid in cash, with the accrued
PIK interest repaid at maturity.
d Commodity price risk
Commodity price risk in the Group primarily arises from price fluctuations in markets for the Group’s oil, gas and
NGL products. Commodity prices can be volatile and may be impacted by various supply and demand factors
which are outside the Group’s control. Fluctuations in commodity prices could have a significant impact on future
results of operations, cash flow generation, and development opportunities.
The Group manages commodity price risks by entering a variety of risk management contracts. Further details of
risk management contracts at 31 December 2022 are provided in note 18, and of risk management contracts
entered after the reporting period are provided in note 24.
101
i3 Energy PLC
96
i3 Energy PLC
97
102
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Group Financial Statements
Notes To the Group Financial Statements
22 Financial instruments, financial and capital risk management - continued
24 Events after the reporting period - continued
The following table illustrates the impact on the Group’s profit before tax and equity due to reasonably possible
changes in commodity prices and their impact on the fair value of financial instruments, with all other variables held
constant.
Decrease in
commodity price /
increase in profit
before loss and
equity
Increase in
commodity price /
(decrease) in profit
before loss and
equity
£’000
141
700
140
£’000
(141)
(700)
(140)
Change in WTI – CAD 5.00 / bbl
Change in AECO – CAD 0.50 / GJ
Change in Conway – USD 5.00 / bbl
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to position as a going concern
and to continue its development and production activities. The capital structure of the Group consists of borrowings
and leases of £27,241 thousand at 31 December 2022 (2021: £23,924 thousand) (note 16), has capital, defined
as the total equity and reserves of the Group of £164,746 thousand (2021: £138,166 thousand) and cash and
equivalents of £16,560 thousand (2021: £15,335 thousand).
The Group monitors its level of cash resources available against future planned exploration and evaluation activities
and may issue new shares in order to raise further funds from time to time.
23 Commitments
At 31 December 2022
Operating
Transportation
Total
1 year
£’000
388
1,720
2,108
2-3 years
4-5 years
5+ years
£’000
–
1,423
1,423
£’000
£’000
–
225
225
–
18
18
Total
£’000
388
3,386
3,774
Transportation commitments relate to take-or-pay pipeline capacity in Alberta.
The Group did not have any capital commitments as at 31 December 2022 or 2021.
24
Events after the reporting period
After 31 December 2022 i3 entered into various risk management contracts, as summarised below.
Type
Effective date
Termination date
Total Volume
Avg. Price
NYMEX Physical Basis
Differential
WTI Financial Swaps
WTI Physical Swaps
WTI Financial Swaps
1 Apr 2023
31 Oct 2023
10,000 MMBtu/Day
(USD 1.4625 /
MMBtu)
1 Jul 2023
1 Jul 2023
31 Dec 2023
500 bbl/Day
CAD 100.20 / bbl
31 Dec 2023
500 bbl/Day
CAD 100.30 / bbl
1 Jul 2023
31 Dec 2023
500 bbl/Day
CAD 102.80 / bbl
In early-2023 the Company has declared dividends as summarised in the following table:
Declaration date
Ex-Dividend date
Record date
Payment date
Dividend per
share
Total Dividend
12 January 2023
19 January 2023
20 January 2023
10 February 2023
8 February 2023
16 February 2023
17 February 2023
10 March 2023
15 March 2023
23 March 2023
24 March 2023
14 April 2023
12 April 2023
17 May 2023
Total
20 April 2023
21 April 2023
12 May 2023
25 May 2023
26 May 2023
16 June 2023
(pence)
0.1710
0.1710
0.1710
0.1710
0.1710
£’000
2,040
2,040
2,040
2,040
2,055
10,215
On 4 January 2023 the Group issued a total of 116,667 Ordinary Shares of 0.01 pence each following the exercise
of options by an employee, at an exercise price of £0.11 per Ordinary Share. The Ordinary Shares were
subsequently admitted for trading on AIM.
On 3 April 2023 the Group announced the reserves of i3 Energy Canada Limited as of 31 December 2022.
Highlights include Company Interest PDP reserves of 49MMboe, 1P reserves of 93MMboe, and 2P reserves of
181MMboe. Further details can be found on the Company’s website at www.i3.energy.
On 19 April 2023, the Company issued options over a total of 3,000,000 Ordinary Shares to Jason Dranchuk, the
CFO and a Person Discharging Managerial Responsibilities of the Company. The options were issued in
accordance with the rules of the Company’s Employee Share Option Plan at an exercise price of 20.00 pence per
share. One-third of the options vest upon achieving production of 26,000 boepd, one-third upon the addition of
5,000 boepd vs acquisitions, and one-third upon the addition of 25 MMbbl of 2P reserves. The options will otherwise
vest as to one-third on the first, second, and third anniversary of the grant date, to the extent the award has not
otherwise vested in accordance with the above provisions.
On 25 April 2023 the Group issued a total of 9,051,927 Ordinary Shares of 0.01 pence each following the exercise
of Warrants by certain of its loan noteholders. The Ordinary Shares were subsequently admitted for trading on AIM.
Following the exercise there were no more warrants outstanding.
On 31 May 2023 the Group announced the successful redemption of the Company’s outstanding £22 million H1-
2019 Loan Notes (the “Loan Notes”), due 31 May 31 2023, and the establishment of a CAD 100 million debt facility,
which will provide i3 greater financial flexibility and enhanced credit capacity to further execute its ongoing business
plan. The Company and i3 Energy Canada Ltd. have signed agreements with Trafigura Canada Ltd., a subsidiary
of Trafigura Pte Ltd., a market leader in the global commodities industry, for a CAD100 million loan facility (the
"Facility") and an associated commercial contract related to i3 Energy Canada Ltd.'s oil production. The Facility
has a three-year term, with interest payable monthly at 9.521% per annum, calculated on the outstanding portion
of the loan. The Facility carries no penalty if repaid early and amortises monthly on a straight-line basis, which
aligns with the Company's conservative approach to debt management. Advances under the Facility can be repaid
either with cash or by way of set-off against deliveries of crude oil under the commercial contract which has a
minimum term of three years. The documentation establishing the Facility includes the option for a CAD75 million
advance which has been fully drawn by the Company and a CAD25 million accordion facility amount, which can
be made available during the Facility's three-year term. The Facility is secured by a first lien against substantially
all the assets and shares of i3 Energy Canada Ltd., permitting maximum financing flexibility for the rest of the
Company's international portfolio. The Company will utilize a portion of proceeds from the initial advance to redeem
the outstanding Loan Notes. The balance of the proceeds will be available for general corporate purposes of the
Company and of i3 Energy Canada Ltd., including working capital requirements, acceleration of organic growth
(from i3's proven portfolio of development drilling locations) and to fund accretive acquisition opportunities.
103
i3 Energy PLC
98
i3 Energy PLC
99
104
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
COMPANY STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENT OF CHANGES IN EQUITY
Notes
31 December 2022
4
4
5
6
£’000
324
74,708
75
75,107
1,666
90
1,756
(2,654)
(2,654)
(898)
31 December 2021
£’000
324
99,861
75
100,260
66
140
206
(131)
(131)
75
74,209
100,335
119
50
48,646
6,307
2,045
17,042
74,209
113
50
44,203
9,098
2,045
44,826
100,335
Notes
Ordinary
shares
Share
premium
Deferred
shares
Warrants -
LNs
Retained
earnings
Total
Share-
based
payment
reserve
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 31 December 2020
70
61,605
50
6,333
9,714
(10,869)
66,903
Total comprehensive loss for the year
Capital reduction
Transactions with owners:
Issue of share capital
Exercise of options
Exercise of warrants
Share-based payment expense
Dividends declared
–
–
–
(64,056)
36
37,970
2
5
–
–
112
8,572
–
–
Balance at 31 December 2021
113
44,203
Total comprehensive loss for the year
Transactions with owners:
Exercise of options
Share-based payment expense
Dividends declared
–
6
–
–
–
4,443
–
–
–
–
–
–
–
–
–
50
–
–
–
–
–
–
–
–
–
–
–
–
(452)
(7,669)
3,217
–
–
–
(4,944)
(4,944)
64,056
–
–
–
–
–
38,006
114
456
3,217
(3,417)
(3,417)
9,098
2,045
44,826
100,335
–
(3,883)
1,092
–
–
–
–
–
(4,067)
(4,067)
(6,324)
(5,758)
–
1,092
(17,393)
(17,393)
Balance at 31 December 2022
119
48,646
50
6,307
2,045
17,042
74,209
The accompanying notes form an integral part of these financial statements.
Assets
Non-current assets
Investment in subsidiary
Loans to subsidiaries
Other non-current asset
Total non-current
Current assets
Cash at bank and in hand
Trade and other receivables
Total current assets
Current liabilities
Trade and other payables
Total current liabilities
Net current (liabilities) / assets
Net assets
Capital and reserves
Ordinary shares
Deferred shares
Share premium
Share-based payment reserve
Warrants – LNs
Retained earnings
Shareholders’ funds
Company number 10699593
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting
the Parent Company Statement of Comprehensive Income. The loss for the Company for the year was £4,067
thousand (2021 - £4,944 thousand).
The accompanying notes form an integral part of these financial statements.
Signed on behalf of the Board of Directors by:
Majid Shafiq, Director
6 June 2023
105
i3 Energy PLC
100
i3 Energy PLC
101
106
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Company Financial Statements
3
Significant accounting policies
The Company’s accounting policies are aligned with the Group accounting policies as set out within the Group financial
statements, with the addition of the following:
Investments
Investments in subsidiary undertakings are stated at cost less any provision for impairment in value, prior to their
elimination on consolidation.
Critical accounting judgements and key sources of estimation uncertainty
Refer to note 3 of the Group financial statements for a description of critical accounting judgements and key sources
of estimation uncertainty. There were no further key sources of estimation uncertainty identified for the Company.
The following is the critical judgement that the Directors have made in the process of applying the Company’s
accounting policies and that have the most significant effect on the amounts recognised in the Company financial
statements.
Carrying value of loans to subsidiaries
At 31 December 2022, the Company held loans to subsidiaries of £74.7 million (2021: £99.9 million), note 4. The
carrying value of loans to subsidiaries are assessed for impairment when circumstances suggest that the carrying
amount may exceed its recoverable value. In making this assessment, Management has considered the underlying
assets of its subsidiaries, which for i3 Energy North Sea Limited primarily consists of intangible E&E assets and for
i3 Canada Limited primarily consists of oil and gas PP&E assets. The recoverability of both intangible E&E assets
and oil and gas PP&E assets have been identified as a critical accounting judgement by the Group, and following
detailed assessments by Management, no indicators of impairment have been identified for oil and gas PP&E
assets at 31 December 2022, but indicators existed for the Group’s E&E assets in the North Sea. The same cash
flow model used to determine the recoverable amount for the E&E assets was used to estimate the expected
lifetime credit loss on the balances due from i3 Energy North Sea Limited, and as the cash flows that the Company
expects to receive exceed the cash flows that are due to the Company under the contract, management has
concluded that there is no impairment. Further details are in note 3 and note 13 to the Group financial statements.
Accordingly, through the expected recoverability of these E&E and PP&E assets, management expects the Group
to recover the carrying value of its loans to subsidiaries.
i3 Energy PLC 2022 Annual Report and Financial Statement s – Financial Statements
Notes To the Company Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1
Summary of significant accounting policies
General Information and Authorisation of Financial Statements
i3 Energy plc (“the Company”) is a Public Company, limited by shares, registered in England and Wales under the
Companies Act 2006 with registered number 10699593. The Company’s ordinary shares are traded on the Toronto
Stock Exchange and the AIM Market operated by the London Stock Exchange. The address of the Company’s
registered office is New Kings Court, Tollgate, Chandler’s Ford, Eastleigh, Hampshire, SO53 3LG.
The Company’s principal activity is that of a listed holding company and the ultimate parent of the i3 Energy plc
Group, whose principal activities consist of the development and production of oil and gas on the UK Continental
Shelf (UKCS) and the Western Canadian Sedimentary Basin (WCSB).
2
Basis of preparation
The Company meets the definition of a qualifying entity under FRS 100, and as such these financial statements have
been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). The
financial statements have been prepared under the historical cost convention.
The financial information is presented in Pounds Sterling (£, GBP), which is the Company’s functional and presentation
currency, and rounded to the nearest thousand unless otherwise stated.
The Company has taken advantage of the exemption provided by Section 408 of the Companies Act 2006 not to publish
its individual income statement and related notes, and has also taken advantage of the following disclosure exemptions
under FRS 101:
•
•
•
•
•
•
•
•
•
•
paragraphs 45(b) and 46 to 52 of IFRS 2 ‘Share-based Payment’ (details of the number and weighted average
exercise prices of share options, and how the fair value of goods or services received was determined), as
equivalent disclosures are included within the consolidated financial statements;
paragraphs 62, B64(d), B64(e). B64(g), B64(h), B64 (j) to B64(m), B64(n)(ii), B64(o)(ii), B64(p), B64(q)(ii), B66
and B67 of IFRS 3 ‘Business Combinations’ as equivalent disclosures are included within the consolidated
financial statements;
all requirements of IFRS 7 ‘Financial Instruments: Disclosures’, as equivalent disclosures are included in the
consolidated financial statements;
paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ – the requirement to disclose comparative
information in respect of:
paragraph 79(a)(iv) of IAS 1 (a reconciliation of the number of shares outstanding at the beginning and end of
the period);
paragraph 73(e) of IAS 16 ‘Property, Plant and Equipment’ (reconciliations between the carrying amount at
the beginning and end of the period); and
paragraph 118(e) of IAS 38 ‘Intangible Assets’ (reconciliations between the carrying amount at the beginning
and end of the period);
IAS 7 ‘Statement of Cash Flows’;
paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ (the
requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued
but is not yet effective); and
paragraph 17 of IAS 24 ‘Related Party Disclosures’ (key management compensation), and the other
requirements of that standard to disclose related party transactions entered into between two or more members
of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
i3 Energy PLC
102
107
i3 Energy PLC
108
103
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Notes To the Company Financial Statements
Notes To the Company Financial Statements
4
Investment in subsidiaries
6
Trade and other payables
At 31 December 2022 the Company held 100% of the share capital of the following directly owned subsidiaries:
Company
Place of Business
Registered Office
Ownership held
Nature of business
i3 Energy North Sea
Limited
England and Wales
New Kings Court
100%
Tollgate
Chandler’s Ford
Eastleigh,
Hampshire
SO53 3LG
Exploration &
Production
i3 Energy Canada
Limited
Canada
500,207 9th Avenue SW
Calgary, AB T2P 1K3
100%
Exploration &
Production
As at 31 December 2021
Additions
As at 31 December 2022
Total
£’000
324
–
324
For the year ended 31 December 2022, i3 Energy North Sea Limited was entitled to exemption from audit under
section 479A of the Companies Act 2006.
As at 31 December 2022 the Company had total net funds receivable from subsidiaries of £74,708 thousand (2021
- £99,861 thousand). Included within these balances are management service fees of £1,479 thousand (2021 -
£861 thousand) for administrative services provided to i3 Energy Canada Limited.
5
Trade and other receivables
VAT receivable
Prepayments & other receivables
Total trade and other receivables
Other receivables are all due within one year.
31 December 2022
£’000
2
88
90
31 December 2021
£’000
25
115
140
The fair value of other receivables is the same as their carrying values as stated above.
Other receivables do not contain any impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above. The Company does not hold any collateral as security.
Trade creditors
Dividends payable
Accruals
Total trade and other payables
31 December 2022
£’000
46
2,040
568
2,654
31 December 2021
£’000
1,123
–
171
1,294
The average credit period taken for trade purchases is 30 days. No interest is charged on the trade payables. The
carrying values of trade and other payables are considered to be a reasonable approximation of the fair value and are
considered by the Directors as payable within one year.
7
Disclosures included in the Group Financial Statements
Certain information relevant to the Company Financial Statements is included in the notes to the Group financial
statements. These include:
• Note 2 – Basis of preparation
• Note 3 – Significant accounting policies
• Note 4 – (Loss) / gain on bargain purchase and asset dispositions
• Note 7 – Administrative expenses
• Note 19 – Authorised, issued, and called-up share capital
• Note 20 – Share-based payments
• Note 22 – Financial instruments and capital risk management
• Note 24 – Events after the reporting period
109
i3 Energy PLC
104
i3 Energy PLC
105
110
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statement s – Financial Statements
Appendix A: Glossary
APPENDIX A: GLOSSARY
1P
2P
AER
AIM
APM
ARO
ASCP
bbl
bbl/d
BHGE
BOE
Proved reserves
Proved plus probable reserves
Alberta Energy Regulator
The AIM Market of the London Stock Exchange
Alternate Performance Measure
Asset Retirement Obligation
Saskatchewan’s Accelerated Site Closure Program
Barrel
Barrels per day
Baker Hughes, a GE Company, and GE Oil & Gas Limited
Barrels of Oil Equivalent
boepd, boe/d
Barrels of Oil Equivalent Per Day
CAD
Canadian Dollars
Cenovus, CVE
Cenovus Energy Inc.
Cenovus Acquisition Date 20 August 2021
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Appendix A: Glossary
GBP
GJ
British Pounds Sterling
Gigaloule
Gross wells
Wells participated in by i3
Group, i3
i3 Canada
IAS
IFRIC
IFRS
IP30
mcf
mcf/d
MMboe
MMBtu
NGL
NED
i3 Energy plc, together with its subsidiaries
i3 Energy Canada Limited
International Accounting Standard
International Financial Reporting Interpretations Committee
International Financial Reporting Standard
Average daily production of a well over its initial 30-day production period
Thousand cubic feet
Thousand cubic feet per day
Million Barrels of Oil Equivalent
Metric Million British Thermal Unit
Natural gas liquids
Non-Executive Director
Cenovus Assets
Certain petroleum and infrastructure assets acquired from Cenovus
Net wells
Gross wells multiplied by i3’s working interest
CEO
CFO
the Code
Company
CPR
E&E
EPL
ERP
Europa
FCF
FIA
FVTPL
Gain
gal
Chief Executive Officer
Chief Financial Officer
QCA Corporate Governance Code
i3 Energy plc
Competent person’s report
Exploration and evaluation
Energy Profits Levy
Emergency Response Plan
Europa Oil & Gas Limited
Free cash flow
Farm-In Agreement
Fair Value through Profit or Loss
Gain Energy Ltd.
Gallon
i3 Energy PLC
107
NOI
NPV 10
NSTA
NTM
PDP
PIK
PP&E
QCA
RFCT
SCT
SRP
Net Operating Income
Net Present Value, discounted at 10%
UK North Sea Transition Authority
Next Twelve Months
Proved, developed, producing reserves
Payment in kind
Property, plant and equipment
Quoted Companies Alliance
Ring Fence Corporation Tax
Supplementary Charge
Alberta’s Site Rehabilitation Program
Toscana
Toscana Energy Income Corporation
TSX
UKCS
Toronto Stock Exchange
UK Continental Shelf
USD (US$)
United States Dollar
WI
Working Interest
111
112
i3 Energy PLC
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Appendix B: Alternate performance measures
APPENDIX B: ALTERNATE PERFORMANCE MEASURES
The Group uses Alternate Performance Measures (“APMs”), commonly referred to as non-IFRS measures, when
assessing and discussing the Group’s financial performance and financial position. APMs are not defined under
IFRS and are not considered to be a substitute for or superior to IFRS measures. Other companies may not
calculate similarly defined or described measures, and therefore their comparability may be limited. The Group
continually monitors the selection and definitions of its APMs, which may change in future reporting periods.
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before depreciation and depletion, financial costs, and tax. Adjusted EBITDA is
defined as EBITDA before gain on bargain purchase and acquisition costs. Management believes that EBITDA
provides useful information into the operating performance of the Group, is commonly used within the oil and gas
sector, and assists our management and investors by increasing comparability from period to period. Adjusted
EBITDA removes the gain or loss on bargain purchase and asset dispositions and the related acquisition costs
which management does not consider to be representative of the underlying operations of the Group.
A reconciliation of profit as reported under IFRS to EBITDA and Adjusted EBITDA is provided below.
Profit for the year
Depreciation and depletion
Finance costs
Tax
EBITDA
Acquisition costs
Loss / (gain) on bargain purchase and asset dispositions
Adjusted EBITDA
2022
£’000
41,951
34,339
7,865
13,826
97,981
–
9
97,990
2021
£’000
25,083
21,643
7,609
661
54,996
256
(25,013)
30,239
Net operating income
Net operating income is defined as gross profit before depreciation and depletion, gains or losses on risk
management contracts, and other operating income, which equals revenue from the sale of oil and gas and
processing income, less production costs. Management believes that net operating income is a useful
supplementary measure as it provides investors with information on operating margins before non-cash
depreciation and depletion charges and gains or losses on risk management contracts.
A reconciliation of gross profit as reported under IFRS to net operating income is provided below.
Gross profit
Depreciation and depletion
Loss on risk management contracts
Other operating income
Net operating income
2022
£’000
78,689
34,339
18,990
(286)
131,732
2021
£’000
* Restated
21,690
21,643
5,485
(231)
48,587
* In 2022 management changed the definition of net operating income to exclude other operating income. Other
operating income arises on an ad-hoc basis and isn’t considered representative of the underlying field operations
and field income of the Group. The comparative period has been restated on a consistent basis.
i3 Energy PLC 2022 Annual Report and Financial Statements – Financial Statements
Appendix B: Alternate performance measure s
Acquisitions & Capex
Acquisitions & Capex is defined as cash expenditures on acquisitions, PP&E, and E&E. Management believes that
Acquisition & Capex is a useful supplementary measure as it provides investors with information on cash capital
investment during the period.
A reconciliation of the various line items per the statement of cash flows to Acquisitions & Capex is provided below.
Acquisitions
Expenditures on property, plant & equipment
Expenditures on exploration and evaluation assets
Acquisitions & Capex
2022
£’000
531
64,374
13,842
78,747
2021
£’000
37,079
9,465
3,317
49,861
Free cash flow (FCF)
FCF is defined as cash from / (used in) operating activities less cash capital expenditures on PP&E and E&E.
Management believes that FCF provides useful information to management and investors about the Group’s ability
to pay dividends.
A reconciliation of cash from / (used in) operating activities to FCF is provided below.
Net cash from operating activities
Expenditures on property, plant & equipment
Expenditures on exploration and evaluation assets
FCF
Net debt
2022
£’000
101,092
(64,374)
(13,842)
22,876
2021
£’000
24,439
(9,465)
(3,317)
11,657
Net debt is defined as borrowings and leases and trade and other payables, less cash and cash equivalents and
trade and other receivables. Management believes that net debt is a meaningful measure to monitor the liquidity
position of the Group.
A reconciliation of the various line items per the statement of financial position to net debt is provided below.
Borrowings and leases
Trade and other payables
Cash and cash equivalents
Trade and other receivables
Net debt
2022
£’000
27,241
55,846
(16,560)
(34,843)
31,684
2021
£’000
23,924
19,709
(15,335)
(25,503)
2,795
113
i3 Energy PLC
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114
i3 Energy PLC
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC
Notes:
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC CORPORATE
INFORMATION
Registered number
10699593
Directors
John Festival
Non-Executive Director and
Non-Executive Chairman
Linda Janice Beal
Non-Executive Director
(Interim Non-Executive
Interim Chairperson until
8 September 2022)
Majid Shafiq
Chief Executive Officer
Graham Andrew Heath
Chief Financial Officer
(Retired from i3’s Board
28 September 2022)
Ryan Heath
President, i3 Energy Canada Limited
(Joined i3’s Board 19 December 2022)
Richard Millington Ames
Non-Executive Director
Neill Ashley Carson
Non-Executive Director
Company Secretary
Burness Paull LLP
Registered Office
New Kings Court
Tollgate
Chandler’s Ford
Eastleigh, Hampshire
United Kingdom
S053 3LG
Independent Auditor
PKF Littlejohn LLP
(Registered Auditor)
15 Westferry Circus
Canary Wharf
London E14 4HD United Kingdom
Solicitors
Burness Paull LLP
50 Lothian Road
Festival Square
Edinburgh
EH3 9WJ
Nominated Advisor
and Broker
WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Brokers
Tennyson Securities
23 Floor 20 Fenchurch Street
London
EC3M 3BY
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Principal Bankers
National Westminster Bank
Company Website
www.i3.energy
Company Telephone Number
+44 (0) 1224 945 980
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSI3 ENERGY PLC I3 ENERGY PLC