IPC Announces Revised 2020 Expenditure Plans

April 2, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) announces its plans to reduce total forecast 2020 expenditure by between USD 125 and 190 million. IPC’s revised total estimated 2020 capital and decommissioning expenditures account for approximately USD 85 million of the total forecast reduction. IPC’s total forecast 2020 operating costs are revised downwards by between USD 40 and 105 million, depending on production levels and commodity prices.

Mike Nicholson, IPC’s Chief Executive Officer, comments: “Following the extraordinary developments in the world since we released our 2020 budget and production guidance and held our 2020 Capital Markets Day in February, IPC is taking decisive action to reset our 2020 expenditure plans in order to maximise the financial flexibility of the Corporation.

Given that we operate the majority of our assets, IPC has significant 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 range the temporary curtailment of production from those fields that are not expected to generate positive cash flows at these low pricing levels. These proposed production curtailments relate to our oil production, as we currently forecast positive cash flows from our gas production in Canada. We currently expect our 2020 net average production to be in the range of 30,000 to 45,000 barrels of oil equivalent (boe) per day, depending on how commodity prices evolve over the remainder of 2020 and the operational choices that we make to maximise the liquidity position of the Corporation. Operating costs for 2020 are expected to be in the range of USD 12 to 13 per boe.

We retain access to significant financial headroom, with undrawn amounts under existing credit facilities currently at around USD 90 million.

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 Western Canadian Select oil prices are at zero for the remainder of the year, we would expect to utilise around half of our liquidity headroom. This demonstrates the financial resilience of IPC to respond to sustained low oil prices.

The situation around the Covid-19 outbreak continues to evolve in all of our countries of operation. We are focused on protecting the health and safety of our employees, contractors and other stakeholders, while also working to ensure business continuity. The revised expenditure program and changes to operations will commence immediately. The Corporation will continue to monitor the commodity price outlook, as well as the restrictions and potential disruptions relating to the Covid-19 outbreak, and IPC has the ability to make further adjustments to these forecasts as needed.”