IPC 2018 third quarter financial results

November 6, 2018

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 (MD&A) for the three and nine months ended September 30, 2018.

Financial and Operational Highlights
• Average net production of 35,200 barrels of oil equivalent (boe) per day (boepd) for the third quarter of 2018 at the high end of the guidance range; strong performance from all assets.
• Full year 2018 average production expected to be at or above the high end of the guidance range of 32,500 to 34,000 boepd.
• Successfully executed the enhanced gas optimization program and commenced oil drilling in Canada.
• Progressing plans for a third phase of infill drilling in Malaysia in 2019.
• Progressing plans for Vert La Gravelle and Villeperdue West developments in France in 2019.
• Operating costs per boe of USD 12.0 for the third quarter of 2018 in line with guidance.
• Full year 2018 capital expenditure guidance maintained at USD 44.0 million.
• Significant free cash flow generation with net debt reduced by over USD 140 million since completion of the acquisition of the Suffield assets to USD 213 million as at September 30, 2018.
• Announced the proposed acquisition of BlackPearl Resources Inc. (BlackPearl) in October 2018.

Three months ended September 30   Nine months ended September 30
USD Thousands 2018 2017   2018 2017
Revenue 106,746 47,926 342,545 148,354
Gross profit 37,060 7,256 120,553 35,287
Net result 26,487 2,172 74,298 13,746
Operating cash flow 67,949 28,893 220,696 101,212
EBITDA 66,240 26,440 206,009 95,876

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

“We are very pleased to announce our third quarter results for 2018.

During the third quarter of 2018, our assets delivered average daily net production of 35,200 boepd, at the high end of our revised 2018 guidance for the quarter. We expect our full year 2018 average production to be at or above the guidance range of 32,500 to 34,000 boepd. Operating costs per boe in the third quarter of 2018 were in line with guidance at USD 12.0. Our full year 2018 guidance of operating costs per boe of USD 12.6 is maintained.

We delivered a strong financial performance during the third quarter of 2018, generating operating cash flow of USD 68 million. This allowed IPC to continue to fund our expenditure program and reduce net debt from USD 255 million at the end of the second quarter to USD 213 million by the end of the third quarter. Operating cash flow for the first nine months of 2018 was in excess of USD 220 million and net debt reduction has been in excess of USD 140 million since completion of the Suffield acquisition in early January 2018.

In Malaysia, following two successful infill drilling campaigns on the Bertam field in 2016 and 2018, we continue to progress plans for a third campaign with up to three wells in 2019. We maintained an exceptional facility uptime performance of greater than ninety-nine percent in the third quarter of 2018.

In Canada, we commenced the first oil drilling campaign in the Suffield assets since 2014. In addition, the immediate focus for the Suffield assets is on gas optimization activities. Gas production in Canada for the third quarter of 2018 was above the high end of CMD guidance with exceptional performance from the first phase of gas optimization activity. IPC has commenced preparations for the second phase of gas optimization in the fourth quarter of 2018.

In October 2018, IPC announced that it has agreed to the transformational acquisition of BlackPearl in an all-share transaction. The transaction combines the highly free cash flow generative short cycle reserve base of IPC with the strategic long life reserve and contingent resource base of BlackPearl, creating a company with the combined financial strength to accelerate value creation from the enlarged portfolio. IPC’s 2P reserve base will more than double and the total reserve and contingent resource base will increase by more than six times to in excess of one billion barrels of oil equivalent. Reserves life is extended by seven years and production is expected to increase by around 50% in the short term. In addition, a high calibre team of industry professionals with a long track record of value creation will join IPC. The BlackPearl transaction remains subject to shareholder approvals of both IPC and BlackPearl and certain regulatory approvals, with completion expected in December 2018.”

 

Link to Webcast Presentation

 

Icon Q3 2018 MD&A (regulatory)

06.11.2018, 436.14 KB

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Q3 2018