RE: Oversold26 Aug 2022 11:13
MORNING COMMENT i3 Energy 2Q Operational and Financial Update i3 Energy announced a quarter of active drilling (7 wells) and solid baseline production of 19,502 boe/d, which compares to our baseline production expectation of 19,600 boe/d. We had anticipated that several of the newly drilled wells would be brought onstream in the quarter; however, in the main they are currently cleaning up and will add significantly to baseline production in the current quarter. Critically, the company’s wells (logs and production) are either meeting or exceeding expectations. The company indicated that in September it will provide an update in respect of the initial production from its newly drilled wells. The company indicated that Serenity (3C net oil: 86.4 mmb) is on track to commence drilling in mid-September. For now, we remain comfortable with our 2022 fullyear production estimate of 21,077 boe/d – which compares to its current production level of circa 20,500 boe/d, according to the company. We reiterate our fair value of 60.6p (Table 1), and, based on indications of good well performance combined with strengthening energy commodity prices we see near-term scope to revise that upwards.