Audiocast – Mike Nicholson and Christophe Nerguararian comment on the Q3 2020 results

Audiocast: Mike Nicholson and Christophe Nerguararian comment on the Q3 2020 results

November 3, 2020

Listen to Mike Nicholson, CEO, and Christophe Nerguararian, CFO, commenting on the report and the latest developments from IPC.

Follow the presentation live on www.international-petroleum.com.

Audiocast link: https://ipc.videosync.fi/2020-11-03-q3.

You can also dial-in to listen to the presentation on the following telephone numbers:

Canada/International:….+1 631 913 1422
UK:…+44 333 300 0804
Sweden:…+46 85 664 2651

The PIN code for the dial-in presentation is: 51025953#

 

IPC third quarter 2020 financial results and sustainability report

IPC third quarter 2020 financial results and Sustainability Report

IPC third quarter 2020 financial results and Sustainability Report

November 3, 2020


International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) today released its financial and operating results and related management’s discussion and analysis for the nine months ended September 30, 2020. IPC also announces the release of its first Sustainability Report, which details the Corporation’s environmental, social, and governance (“ESG”) performance.

Business Update
• Forecast 2020 net average production revised upwards to over 41,000 barrels of oil equivalent per day (boepd) from the prior guidance of 37,000 to 40,000 boepd.
• Capital and decommissioning expenditure guidance forecast for full year 2020 unchanged at MUSD 80.
• Continued financial flexibility with access to more than MUSD 100 of spare financial headroom as at the end of Q3 2020.
• First IPC Sustainability Report published.

Q3 2020 Financial and Operational Highlights
• Average net production of approximately 41,800 boepd for Q3 2020 (39% heavy crude oil, 21% light and medium crude oil and 40% natural gas).
• Strong production performance with a faster than forecast production ramp up and good reservoir performance at the major oil assets in Canada. Full year net average daily production now expected to exceed the high end of Q2 guidance.
• Operating costs of USD 12.4 per boe for Q3 2020, in line with Q2 2020 guidance. Full year forecast expected at the lower end of the range of USD 12 to 13 per boe.

Three months ended September 30Nine months ended September 30
USD Thousands2020201920202019
Revenue95,346131,437220,811408,214
Gross profit / (loss)5,55723,487(23,416)109,659
Net result8,8506,330(32,691)65,216
Operating cash flow37,18169,50473,404229,056
Free cash flow22,7669,989(19,229)84,809
EBITDA34,25168,88565,447225,160
Net Debt322,092207,778322,092207,778

•Operating cash flow and free cash flow generation for the third quarter 2020 amounted to MUSD 37.2 and MUSD 22.8 as a result of stronger oil prices and increased production compared to the second quarter 2020.
• Free cash flow yield for Q3 2020 greater than 8%, calculated as the USD 22.8 million free cash flow for Q3 2020 as a percentage of IPC’s USD 280 million market capitalization as at September 30, 2020.
• Net debt decreased from MUSD 341.4 as at June 30, 2020 to MUSD 322.1 as at September 30, 2020.
• At the beginning of Q3 2020, the refinancing of IPC’s RBL credit facilities was successfully concluded. The International RBL facility size was increased to MUSD 140 and the maturity extended to the end of 2024. The Canadian RBL facility was refinanced at MCAD 350 and extended until end May 2022. In addition, in Q2 2020, a MEUR 13 credit facility was secured in France.

Mike Nicholson, IPC’s Chief Executive Officer, commented,

“During the third quarter of 2020, we began to see some positive results from the production curtailments implemented by OPEC+ and other oil producers in response to the collapse in oil demand driven by the Covid-19 pandemic. Those actions managed to flatten the curve of inventory builds towards the end of the second quarter. This in turn led to the oil market moving into deficit during the third quarter with a draw down in inventory levels as the rebalancing process commenced. As a result of the market tightening, average Brent oil prices increased from second quarter levels of around USD 30 per barrel to above USD 40 per barrel during the third quarter.

Clearly though, uncertainties remain with the onset of a second wave of Covid-19 infections. The full impact of new localized confinement measures being introduced creates a degree of uncertainty with respect to the pace and magnitude of the recovery in oil demand. For a sustained recovery in oil prices, discipline and compliance on the supply side measures announced by OPEC+ will be essential, particularly when considering the timing of easing of the supply curtailments.

As a result, we believe it is prudent to exercise caution with respect to future capital expenditure and growth plans, and we have no plans to increase our reset 2020 expenditure program. We expect to set a budget for 2021 with a focus on free cash flow generation and debt reduction.

Update of 2020 Business Plan
Given that IPC operates the majority of our assets, during the first half of 2020 we had the financial and operational flexibility to react swiftly to the situation and to positively position IPC to navigate through this period of low commodity prices. We reduced all remaining discretionary 2020 expenditures. In addition, during the second quarter of 2020, we took the decision to temporarily curtail oil production from those fields that were not expected to generate positive cash flows at the low pricing levels we were experiencing.

With the improvement in our business outlook, and in particular the strengthening of Canadian crude oil prices, we took the decision in late Q2 2020, to progressively bring back on stream our oil production from our Suffield Oil asset and our Onion Lake Thermal asset.

Third Quarter Performance
Our average third quarter net production of 41,800 boepd was above our Q2 2020 guidance which gives us average net production of 41,200 boepd for the first nine months of 2020. As a result of this strong recovery in production, we now expect IPC’s full year 2020 average net production to be above 41,000 boepd.

Operating cash flow generation for the third quarter amounted to USD 37.2 million, ahead of our Q2 2020 forecast as a result of stronger oil prices and higher than forecast production. Moreover, as a result of our spending reductions, operational choices and hedging program, IPC generated approximately USD 23 million of free cash flow during the third quarter of 2020, yielding greater than 8%.

Sustainability Reporting
Responsible operatorship and ensuring that we adhere to the highest principles of business conduct have been an integral part of how we do business since the creation of IPC in 2017. Over the past three years, IPC has rapidly grown our business with the completion of three acquisitions in Canada as well as significant investments in our French and Malaysian businesses.

In parallel, we have made a concerted effort to further develop and improve our sustainability strategy. An important part of this journey involves the measurement and transparent reporting of a broad range of ESG metrics. We are very pleased that IPC is today presenting to our stakeholders for the first time, our inaugural Sustainability Report.

The Sustainability Report 2019 details the Corporation’s ESG performance. The Sustainability Report 2019 advances the Corporation’s non-financial disclosures and provides stakeholders with relevant operational and sustainability context in which IPC operates, as well as the Corporation’s management approach and performance with respect to these areas. The report is available on IPC’s website at www.international-petroleum.com.

Highlights of IPC’s sustainability performance for 2019 include:
• Greenhouse gas (“GHG”) emissions stewardship with enhance energy efficiency at IPC’s onshore and offshore facilities avoiding the release of 150,000 t CO2e annually. IPC also restates our target announced at our Capital Markets Day in February 2020 to reduce our net GHG emissions intensity to the global average by the end of 2025, which will represent a 50% reduction relative to the Corporation’s 2019 baseline.
• Workforce drawn 98% from local hiring and composed of 29% women.
• 30% of the workforce at the Onion Lake asset are hired from the First Nations community and USD 14.3 million was spent with First Nation businesses.

In Q3 2020, IPC joined the United Nations Global Compact, a leading global initiative for good corporate citizenship. We support and are committed to upholding the 10 Principles of the UN Global Compact on human rights, labour, environment and anti-corruption, and will report on progress on an annual basis.”

Link to Webcast Presentation

 

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Q3 2020 MD&A (regulatory)
03.11.2020, 794 KB

IPC to release 2020 Third Quarter Financial Results on November 3, 2020

IPC to release 2020 Third Quarter Financial Results on November 3, 2020

IPC to release 2020 Third Quarter Financial Results on November 3, 2020

October 29, 2020

International Petroleum Corporation (IPC) (TSX, Nasdaq Stockholm: IPCO) will publish its financial and operating results and related management’s discussion and analysis for the nine months ended September 30, 2020, on Tuesday, November 3, 2020 at 07:30 CET, followed by an audio cast at 09:00 CET.

Listen to Mike Nicholson, CEO, and Christophe Nerguararian, CFO, commenting on the report and the latest developments from IPC.

Follow the presentation live on www.international-petroleum.com.

webcast link: https://ipc.videosync.fi/2020-11-03-q3.

You can also dial-in to listen to the presentation on the following telephone numbers:

Canada/International:….+1 631 913 1422
UK:…+44 333 300 0804
Sweden:…+46 85 664 2651

The PIN code for the dial-in presentation is: 51025953#

IPC Senior Management Change

IPC Senior Management Change

IPC Senior Management Change

August 21, 2020

International Petroleum Corporation (IPC) (TSX, Nasdaq Stockholm: IPCO) is pleased to announce that William Lundin has been appointed as Chief Operating Officer of IPC, effective as of December 1, 2020.

Mike Nicholson, Chief Executive Officer of IPC comments: “William has worked in the engineering and production operations departments at IPC in Canada and prior to that, worked for BlackPearl Resources Inc. which was acquired by IPC in December 2018. He has developed a deep understanding of IPC’s business, operations and sustainability initiatives. William is also currently a director of ShaMaran Petroleum Corp. He will be a very valuable addition to the IPC corporate management team and his appointment further demonstrates the continuing support of the Lundin family. Daniel Fitzgerald has recently announced his resignation from IPC to accept the COO position with Lundin Energy AB. Daniel has been a key member of the senior management team at IPC since our inception in April 2017 and we wish him continued success at Lundin Energy.“

Audiocast – Mike Nicholson and Christophe Nerguararian comment on the Q2 2020 results

Audiocast: Mike Nicholson and Christophe Nerguararian comment on the Q2 2020 results

August 4, 2020

Listen to Mike Nicholson, CEO, and Christophe Nerguararian, CFO, commenting on the Q2 report and the latest developments from IPC on Tuesday, August 4, 2020 at 09:00 CEST.

Link to audiocast presentation

 

You can also dial-in to listen to the presentation on the following telephone numbers:

Canada/International: +1 631 913 1422
UK: +44 333 300 0804
Sweden: +46 85 664 2651

The PIN code for the dial-in presentation is: 51025953#

IPC Second Quarter 2020 Financial Results and Corporate Update

IPC second quarter 2020 financial results and corporate update

August 4, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) today released its financial and operating results and related management’s discussion and analysis for the six months ended June 30, 2020.

Business Update

• Forecast 2020 net average production revised upwards to 37,000 to 40,000 barrels of oil equivalent per day (boepd) from the previous guidance of 30,000 to 37,000 boepd.
• Capital and decommissioning expenditure guidance marginally increased by MUSD 3 to MUSD 80.
• Financial flexibility strengthened with the refinancing of our International and Canadian Reserve Based Lending (RBL) credit facilities in addition to securing a new MEUR 13 unsecured credit facility in France.
• Assuming average Brent oil prices of USD 35 per barrel and average Western Canadian Select (WCS) oil prices of USD 22 per barrel for the second half of 2020, IPC expects to be free cash flow positive for that period and to have access to more than MUSD 100 of spare financial headroom by year end 2020.

Q2 2020 Financial and Operational Highlights

• Average net production of approximately 35,700 boepd for Q2 2020 (31% heavy crude oil, 22% light and medium crude oil and 47% natural gas).
• Operating costs of USD 10.7 per boe for Q2 2020, slightly ahead of Q1 guidance. Full year forecast retained at USD 12 to 13 per boe.

Three months ended June 30 Six months ended June 30
USD Thousands20202019 20202019
Revenue44,929129,357125,465276,777
Gross profit / (loss)(16,537)39,287(28,973)86,172
Net result(1,472)25,744(41,541)58,886
Operating cash flow14,74276,49636,223159,552
Free cash flow71722,756(41,995)74,820
EBITDA12,18774,60031,196156,275
Net Debt341,367239,322341,367239,322

• Operating cash flow generation for the second quarter 2020 amounted to MUSD 14.7, ahead of our latest forecast as a result of oil prices strengthening through June 2020. Moreover, as a result of our spending reductions, operational choices made and our hedging program, IPC was free cash flow neutral during Q2 2020.
• Net debt increased from MUSD 302.5 as at March 31, 2020 to MUSD 341.4 as at June 30, 2020.
• Refinancing of IPC’s RBL credit facilities has been successfully concluded. The International RBL facility size has been increased from MUSD 125 to MUSD 140 and the maturity extended by two and a half years to the end of 2024. The Canadian RBL facility has been refinanced at MCAD 350 and extended until end May 2022. In addition, in early May 2020 and as previously disclosed, a MEUR 13 credit facility was secured in France.

Mike Nicholson, IPC’s Chief Executive Officer, commented,

“The second quarter of 2020 is certainly one that all of us are relieved to see is behind us. The global Covid-19 outbreak and the resulting confinement measures placed on the world’s population led to a collapse in world oil demand, inventories approaching breaking point, and an unprecedented level of volatility and commodity price weakness.

Thankfully though, we have seen encouraging steps taken by OPEC+ and other oil producers that have removed significant supply, helping to deal with the massive demand destruction. Those actions have helped to flatten the curve of inventory builds and have set us on a course expected to rebalance markets in the second half of 2020 and into 2021.

With governments now progressively easing the restrictions that have been imposed to contain the pandemic, together with the enormous financial and fiscal stimulus packages that have been announced, prospects for a rebalancing of the oil market have improved and IPC has started to plan for a recovery in both demand and prices. Clearly though, uncertainties remain around a potential second wave of infections and the impact that could have will determine the pace and magnitude of recovery in oil demand. A recovery in oil prices is likely to take some time, and discipline and compliance on the supply side measures announced by OPEC+ will also be essential.

Update of 2020 Business Plan
Given that IPC operates the majority of our assets, we had the financial and operational flexibility to react swiftly to the situation and to positively position the Corporation to navigate through this period of extremely low commodity prices. All remaining discretionary 2020 expenditures were deferred or cancelled. In addition, during the second quarter of 2020, we took the decision to temporarily curtail production from those fields that were not expected to generate positive cash flows at the low pricing levels we were experiencing. These production curtailments related to a portion of our oil production. Our Canadian gas production was not curtailed as we continue to forecast positive cash flows.

In our latest Q1 2020 guidance, we revised our forecast 2020 net average production to be in the range of 30,000 to 37,000 boepd, estimated operating costs for 2020 to be in the range of USD 12 to 13 per boe, and reductions in total forecast 2020 expenditure of between MUSD 175 and 190 as compared to 2020 Capital Markets Day (CMD) estimates.

The upper end of our Q1 2020 production guidance assumed that curtailments implemented in Canada to the end of June 2020 continued through to the end of the year, with the lower end of the range assuming full curtailment of our Canadian oil production in the second half of 2020.

Given the improvement in our business outlook with strengthening oil prices, and in particular the strengthening in Canadian crude oil pricing, we have taken the decision to progressively bring back on stream our oil production from our Suffield Oil asset and our Onion Lake Thermal asset. In addition, in France, the temporary suspension of operations at the Total-operated Grandpuits refinery was lifted in early June and production from our Paris Basin assets has recovered to pre-curtailment levels.

As a result, we now forecast our 2020 net average production to be above the upper end of our previous guidance with a new range of 37,000 to 40,000 boepd.

Following these revisions, IPC’s estimated 2020 capital and decommissioning expenditures are marginally increased by MUSD 3 to MUSD 80 and IPC’s forecast 2020 unit operating costs are unchanged at USD 12 to 13 per boe.

Maximizing Financial Flexibility
During the second quarter of 2020, we have been working closely with our International and Canadian banking partners to maximize our financial flexibility.

We are pleased to report that we have successfully concluded our discussions with our international banking partners to increase and extend the maturity of our existing RBL facility. Our facility size is increased by MUSD 15 to MUSD 140 and the maturity is extended by two and a half years to the end of 2024. The facility size does not commence amortization until the second half of 2022 and is fully available.

In Canada, we also successfully concluded discussions with our banking partners. Our primary Canadian RBL facility, previously sized at MCAD 375 was refinanced at MCAD 350 and the maturity was extended by one year to end of May 2022. This new facility was concluded without having to access any of the financial support packages that were previously announced by the Canadian Federal Government, through Export Development Canada (EDC). Further, the leverage ratio was removed from the extended Canadian RBL facility and we are required to hedge a minimum of 30% of forecast production in Canada for the period from October 1, 2020 to June 30, 2021.

As previously disclosed in May 2020, IPC gained access to an unsecured French Government backed loan of MEUR 13. This unsecured loan carries the lowest margin of our loan portfolio and does not have any financial covenants.

Our overall cost of funding will increase slightly following the conclusion and extension of our finance facilities. Our weighted average cost of debt for the second half of 2020 is expected to increase to approximately 4.5%, an increase of around 1% compared with the first half of 2020 under the previous facilities but in line with the weighted average cost of debt of 2019.

In summary, during the second quarter of 2020, we have been able to increase the size of our available credit facilities by more than MUSD 10 whilst extending their maturities and removing any leverage ratio. This demonstrates the strong support we have been able to maintain from our banking partners.

Furthermore, IPC has decided to extend our Canadian oil price hedging program through the remainder of 2020 in order to lock in additional positive cash flow as we restore some of our curtailed production at our Suffield and Onion Lake properties. During June and July 2020, we have put in place additional oil hedges and have now hedged close to two thirds of our forecast Canadian oil production for the third quarter of 2020 and close to half of our forecast Canadian oil production for the fourth quarter of 2020 at WCS prices averaging USD 28 and 25 per barrel respectively.

Having refinanced and extended the maturities of both our Canadian and International credit facilities in June and July 2020, we have now MUSD 90 of undrawn financial headroom. Assuming average second half 2020 Brent oil prices of USD 35 per barrel and average second half 2020 WCS oil prices of USD 22 per barrel, we expect to be free cash flow positive for the second half of 2020 and assuming the Granite credit facility is refinanced before the end of 2020, we project year end financial headroom in excess of MUSD 100. This represents a significant improvement from our first quarter guidance where we forecasted using up to 40% of that available headroom had commodity prices remained weak. This demonstrates that IPC has managed to preserve our financial resilience through this period of extreme volatility.

Second Quarter Performance
During the second quarter of 2020, our assets delivered average daily net production of 35,700 boepd, in line with our Q1 2020 guidance. Our operating costs per boe for the second quarter of 2020 was USD 10.7, slightly ahead of our Q1 2020 guidance.

Operating cash flow generation for the second quarter amounted to MUSD 14.7, ahead of our Q1 forecast as a result of oil prices strengthening through June. Moreover, as a result of our spending reductions, operational choices made and our hedging program, IPC was free cash flow neutral during the second quarter of 2020.

Capital and decommissioning expenditures during the second quarter of 2020 of MUSD 8.4 was in line with forecast and reflects the implementation of our expenditure reduction program previously announced.

Net debt increased during the second quarter of 2020 by MUSD 39 to MUSD 341. The increase was driven by non-cash exchange rate movements as a result of the Canadian dollar strengthening against the US dollar during the quarter (MUSD 10) as well as negative working capital movements (MUSD 29).”

 

Link to Webcast Presentation

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Q2 2020 MD&A (regulatory)
04.08.2020, 480 KB

 

IPC to release 2020 Second Quarter Financial Results on 4 August 2020

IPC to release 2020 Second Quarter Financial Results on 4 August 2020

IPC to release 2020 Second Quarter Financial Results on 4 August 2020

July 30, 2020

International Petroleum Corporation (IPC) (TSX, Nasdaq Stockholm: IPCO) will publish its financial and operating results and related management’s discussion and analysis for the six months ended June 30, 2020, on Tuesday, August 4, 2020 at 07:30 CET, followed by an audio cast at 09:00 CET.

Listen to Mike Nicholson, CEO, and Christophe Nerguararian, CFO, commenting on the report and the latest developments from IPC.

Follow the presentation live, webcast link: https://ipc.videosync.fi/2020-08-04-q2.

You can also dial-in to listen to the presentation on the following telephone numbers:

Canada/International: +1 631 913 1422
UK: +44 333 300 0804
Sweden: +46 85 664 2651

The PIN code for the dial-in presentation is: 51025953#

Audiocast – Mike Nicholson and Christophe Nerguararian comment on the Q1 2020 results

Audiocast: Mike Nicholson and Christophe Nerguararian comment on the Q1 2020 results

May 6, 2020

Listen to Mike Nicholson, CEO, and Christophe Nerguararian, CFO, commenting on the Q1 report and the latest developments from IPC on Wednesday, May 6, 2020 at 09:00 CEST.

Follow the presentation live on www.international-petroleum.com.

You can also dial-in to listen to the presentation on the following telephone numbers:

Canada/International: +1 631 913 1422
UK: +44 333 300 0804
Sweden: +46 85 664 2651

The PIN code for the dial-in presentation is: 51025953#

Link to audiocast presentation

IPC First Quarter 2020 Financial Results and Corporate Update

IPC First Quarter 2020 Financial Results and Corporate Update

IPC First Quarter 2020 Financial Results and Corporate Update

May 6, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) today released its financial and operating results and related management’s discussion and analysis for the three months ended March 31, 2020.

Corporate Update

  • In the April 2, 2020 press release, IPC revised its forecast 2020 net average production to be in the range of 30,000 to 45,000 barrels of oil equivalent (boe) per day (boepd), estimated operating costs for 2020 to be in the range of USD 12 to 13 per boe, and reductions in total forecast 2020 expenditure of between USD 125 and 190 million as compared to estimates announced at IPC’s Capital Markets Day (CMD) in February 2020.
  • Operational decisions that IPC has subsequently made allow it to revise the forecast 2020 expenditure reductions to between USD 175 and 190 million as compared to CMD estimates. This comprises USD 85 million in reduced capital and decommissioning expenditures and USD 90 to 105 million in reduced operating costs. As a result, IPC’s forecast 2020 net average production guidance range is 30,000 to 37,000 boepd. IPC’s estimated 2020 capital and decommissioning expenditures are USD 77 million and IPC’s forecast 2020 operating costs are in the range of USD 140 to 155 million, resulting in estimated 2020 unit operating costs in the range of USD 12 to 13 per boe.
  • Financial headroom under the current terms of IPC’s existing and new credit facilities has increased to in excess of USD 100 million.
  • Assuming average 2020 Brent oil prices of USD 25 per barrel and assuming Western Canadian Select (WCS) oil prices are at zero for the remainder of the year, IPC expects to utilize less than 40% of its existing financial headroom.
  • In March 2020, IPC announced the completion of the acquisition of Granite Oil Corp. (the Granite Acquisition), comprising light oil proved plus probable reserves of 14.0 million barrels of oil equivalent (MMboe) and 6.2 MMboe of contingent resources (best estimate, unrisked) as at December 31, 2019.

Q1 2020 Financial and Operational Highlights

  • Average net production of approximately 46,000 boepd for Q1 2020 (43% heavy crude oil, 20% light and medium crude oil and 37% natural gas).
  • First quarter 2020 operating costs per boe of USD 12.5, slightly ahead of Q1 2020 guidance.
  • In connection with IPC’s revised 2020 business plan, operational activities and capital expenditures have been reduced, deferred or cancelled in each region in response to the low oil price environment.
Three months ended March 31
USD Thousands20202019
Revenue80,536147,420
Gross profit(12,436)46,885
Net result(40,069)33,142
Operating cash flow21,48183,056
Free cash flow(42,712)52,064
EBITDA19,00981,675
Net Debt302,473256,962
  • Net debt increased from USD 291 million as at December 31, 2019 (including the cost of the Granite Acquisition) to USD 302.5 million as at March 31, 2020.
  • Operating cash flow generation for Q1 2020 amounted to USD 21.5 million, below the original CMD guidance as a result of the weakness in commodity prices towards the end of Q1 2020. This coincided with two cargo liftings in Malaysia in March 2020 when Brent prices averaged USD 32 per bbl and the falling commodity prices also impacted the revenues in France where pricing is based on one month forward Brent prices.
  • Under the previously announced share repurchase program, IPC repurchased for USD 17.6 million and cancelled approximately 4.4 million IPC shares during Q1 2020, in addition to the 3.9 million IPC shares cancelled in 2019. In order to conserve liquidity, IPC has suspended further share repurchases under the program.

Mike Nicholson, IPC’s Chief Executive Officer, commented,
“Given the extraordinary market situation that the oil and gas business is facing in response to the global Covid-19 outbreak, the resulting collapse in world oil demand, and the initial breakdown in co-operation among the OPEC+ group in dealing with the supply challenge, we have witnessed an unprecedented level of volatility and commodity price weakness during 2020. As a result of this, IPC announced on April 2, 2020 that we are taking decisive action to reset our 2020 expenditure plans in order to maximize the financial flexibility of the Corporation.

Since that announcement, we have seen encouraging steps taken by OPEC+, G20 nations and oil producers that we are confident should remove significant supply, helping to deal with the massive demand destruction that we have witnessed as well as the inevitable inventory build. We expect that these actions should flatten the curve of inventory builds and set a course to rebalance markets in the second half of 2020 and into 2021. Clearly though, the magnitude and pace of the recovery in oil demand will be critical in reducing the uncertainty around when oil prices will recover.

Reset of 2020 CMD Business Plan
Given that IPC operates the majority of our assets, IPC has the financial and operational flexibility to react swiftly to recent events and to positively prepare the Corporation to navigate through this period of extremely low commodity prices. All remaining discretionary 2020 expenditures have been deferred or cancelled and we have built into our forecast production range the temporary curtailment of production from those fields that are not expected to generate positive cash flows at these low pricing levels. These production curtailments relate to a portion of our oil production. Our Canadian gas production is not curtailed as we currently forecast positive cash flows.

In our April 2, 2020 announcement, we revised our forecast 2020 net average production to be in the range of 30,000 to 45,000 boepd, estimated operating costs for 2020 to be in the range of USD 12 to 13 per boe, and reductions in total forecast 2020 expenditure of between USD 125 and 190 million as compared to 2020 CMD estimates.

Operational decisions that we have subsequently made allow us to revise our forecast 2020 expenditure reductions to between USD 175 and 190 million as compared to CMD estimates. This comprises USD 85 million in reduced capital and decommissioning expenditures and USD 90 to 105 million in reduced operating costs. As a result, our forecast 2020 net average production guidance range is 30,000 to 37,000 boepd. IPC’s estimated 2020 capital and decommissioning expenditures are USD 77 million and IPC’s forecast 2020 operating costs are in the range of USD 140 to 155 million, resulting in estimated 2020 unit operating costs in the range of USD 12 to 13 per boe. The upper end of our revised production guidance assumes that the curtailments in Canada to the end of June 2020 continue through to the end of the year, with the lower end of the range assuming full curtailment of our Canadian oil production in the second half of 2020. We retain the flexibility to ramp production back up during the second half of 2020 should market conditions improve.

Maximizing Financial Flexibility
Having reset our 2020 business plan, we have also been very active in engaging with our banks to ensure that we can maximize our financial flexibility. As at the end of the first quarter 2020, we had available liquidity headroom of around USD 90 million under our existing international and Canadian credit facilities. We commenced discussions with our international banking partners to potentially extend the maturity of and increase our existing reserves-based lending (RBL) credit facility as we do not believe that this was fully maximized under previous conditions. In parallel, we have been exploring IPC’s ability to access some of the special financial assistance packages being offered by the government authorities in France.

I am very pleased to report a positive outcome on the latter. We have been able to secure a EUR 13 million credit facility from a French financial institution under this program. The credit facility has an initial term of 12 months and is extendable by IPC for up to a further five years. The credit facility is unsecured and is on less expensive terms than IPC’s existing credit facilities.

In Canada, we have also commenced discussions with our banking partners. Our primary Canadian RBL facility is currently sized at CAD 375 million and we have drawn CAD 297 million at the end of the first quarter. Whilst our RBL redetermination discussions are not expected to be completed until later in Q2 2020, we have been encouraged by the financial support package that has been announced by the Canadian Federal Government, through Export Development Canada (EDC). This program aims to support the oil and gas sector by maintaining liquidity during the crisis, through the form of guarantees provided by EDC in respect of RBL facilities. Our CAD 42.5 million facility assumed as part of the Granite Acquisition is not up for review until the year end. This is currently drawn at CAD 40 million.

In addition, IPC has the benefit of a hedging program in Canada in place through to the end of June 2020, that is expected to provide a minimum average realized WCS price of approximately USD 16 per bbl on our curtailed oil production levels in Canada during Q2 2020.

We retain access to financial headroom under the current terms of our existing and new credit facilities available to us in excess of USD 100 million. Taken together with our operational choices and updated hedging program, we expect to be able to fully fund our revised 2020 expenditure program from cash flows and current borrowing capacity. Assuming average 2020 Brent oil prices of USD 25 per barrel and assuming WCS oil prices are at zero for the remainder of the year, we expect to utilize less than 40% of our existing liquidity headroom. This demonstrates the financial resilience of IPC to respond to sustained low oil prices.

Q1 2020 Performance
During Q1 2020, our assets delivered average daily net production of 46,000 boepd, in line with our original CMD Q1 2020 guidance. Our operating costs per boe for Q1 2020 was USD 12.5, slightly below our original CMD Q1 2020 guidance.

Operating cash flow generation for the first quarter amounted to USD 21.5 million, below our original CMD guidance as a result of the weakness in commodity prices towards the end of Q1 2020. This coincided with two cargo liftings in Malaysia in March 2020 when Brent prices averaged USD 32 per bbl and the falling commodity prices also impacted the revenues in France where pricing is based on one month forward Brent prices.

Capital expenditure during Q1 2020 of USD 56 million was around USD 6 million below forecast as we began implementation of our expenditure reduction program.

Net debt increased from the 2019 year end level of USD 291 million (including the cost of the Granite Acquisition) to USD 302.5 million as at March 31, 2020 which also includes the funding of USD 17 million of share repurchases under the share repurchase program in Q1 2020.”

Link to Webcast Presentation

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Q1 2020 MD&A (regulatory)
06.05.2020, 296 KB

IPC announces 2020 Annual General Meeting voting results

IPC announces 2020 Annual General Meeting voting results

IPC announces 2020 Annual General Meeting voting results

May 5, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) is pleased to announce the voting results from the Corporation’s 2020 Annual General Meeting of Shareholders (the 2020 AGM) held on May 5, 2020 in Toronto, Ontario.

Number of Directors
The number of Directors of the Corporation was set at seven.

Votes For% ForVotes Against% Against
61,956,50299.99%8,5020.01%

Election of Directors
The seven nominees listed in the Corporation’s management information circular dated March 25, 2020 were elected as Directors of the Corporation to hold office for the ensuing year.

NomineeVotes For% ForVotes Withheld% Withheld
Mike Nicholson61,957,96899.99%7,0350.01%
C. Ashley Heppenstall61,267,78798.87%697,2161.13%
Donald K. Charter61,905,35099.90%59,6530.10%
Chris Bruijnzeels61,945,09199.97%19,9120.03%
Torstein Sanness61,693,87699.56%271,1270.44%
Daniella Dimitrov61,950,66299.98%14,3410.02%
Harry Lundin61,955,44199.98%9,5620.02%

The Directors appointed C. Ashley Heppenstall as Chairman of the Board.

Appointment of Auditor
PricewaterhouseCoopers SA was appointed as auditor of the Corporation for the ensuing year and the Directors of the Corporation were authorized to fix the remuneration of the auditor.

Votes For% ForVotes Withheld% Withheld
62,123,78799.73%168,9350.27%