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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.“

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

 

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 to release 2020 First Quarter Financial Results on May 6, 2020

IPC to release 2020 First Quarter Financial Results on May 6

IPC to release 2020 First Quarter Financial Results on May 6, 2020

May 1, 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 three months ended March 31, 2020, on Wednesday, May 6, 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.

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 Announces Completion of Acquisition of Light Oil Assets in Southern Alberta

IPC Announces Completion of Acquisition of Light Oil Assets in Southern Alberta

March 6, 2020

International Petroleum Corp. (“IPC”) (TSX, Nasdaq Stockholm: IPCO) is pleased to announce the closing of the previously announced acquisition of Granite Oil Corp. (“Granite”) (TSX:GXO; OTCQX:GXOCF) (the “Acquisition”). The Acquisition includes total proved plus probable (“2P”) reserves of 14.0 million barrels of oil equivalent (MMboe) and 6.2 MMboe of unrisked contingent resources (best estimate) as at December 31, 2019.

The Acquisition is comprised of high netback, light oil producing assets in southern Alberta (the “Assets”). The Assets include existing infrastructure to enable the current gas injection enhanced oil recovery (EOR) scheme, with capacity to allow for potential further field development opportunities. The Assets also include associated oil and gas processing and injection facilities located in proximity to key sales points.

Under the terms of the Acquisition, IPC acquired all of the issued and outstanding common shares of Granite (“Granite Shares”) for consideration of approximately USD 27 million (CAD 37.1 million) and IPC assumed Granite’s net debt of approximately USD 30 million (CAD 40 million). Each former Granite shareholder is entitled to receive CAD 0.95 for each Granite Share held prior to the Acquisition (the “Cash Consideration”).

The Granite Shares are expected to be delisted from the Toronto Stock Exchange and the OTCQX on or around March 10, 2020.

Pursuant to the letter of transmittal mailed to Granite shareholders in connection with the special meeting of Granite shareholders held on March 5, 2020, in order to receive the Cash Consideration, registered holders of Granite Shares are required to deposit a duly completed the letter of transmittal together with their share certificates, with Computershare Trust Company of Canada. Shareholders whose Granite Shares are registered in the name of a broker, dealer, bank, trust company or other nominee should contact their nominee with questions regarding receipt of the Cash Consideration.

 

IPC Announces Results of Share Repurchase Program

IPC Announces Results of Share Repurchase Program

March 2, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) is pleased to announce that IPC repurchased a total of 348,936 IPC common shares (ISIN: CA46016U1084) during the period of February 17 to 28, 2020 under the previously announced share repurchase program.

The share repurchase program, announced by IPC on November 7, 2019, is being implemented in accordance with the Market Abuse Regulation (EU) No 596/2014 (MAR) and Commission Delegated Regulation (EU) No 2016/1052 (Safe Harbour Regulation) and the applicable rules and policies of the Toronto Stock Exchange (TSX) and Nasdaq Stockholm and applicable Canadian and Swedish securities laws.

During the period of February 17 to 28, 2020, IPC repurchased a total of 300,000 IPC common shares on Nasdaq Stockholm. All of these share repurchases were carried out by Pareto Securities AB on behalf of IPC.

For more information regarding transactions under the share repurchase program in Sweden, including aggregated volume, weighted average price per share and total transaction value for each trading day during the period of February 17 to 28, 2020, see the following link to Nasdaq Stockholm’s website:

http://www.nasdaqomx.com/transactions/markets/nordic/corporate-actions/stockholm/repurchases-of-own-shares

During the period of February 17 to 28, 2020, IPC purchased a total of 48,936 IPC common shares on the TSX and/or alternative Canadian trading systems. All of these share repurchases were carried out by Stifel Nicolaus Canada Inc. on behalf of IPC.

As previously announced, all common shares repurchased by IPC under the share repurchase program will be cancelled. Following cancellation of the above repurchased shares, the total number of issued and outstanding IPC common shares will be 155,378,693 and IPC will not hold any common shares in treasury. On February 28, 2020, IPC cancelled 1,865,776 common shares and the total number of issued and outstanding shares is 155,385,093. IPC currently holds 6,400 common shares in treasury.

A full breakdown of the transactions conducted during the period of February 17 to 28, 2020 according to article 5.3 of MAR and article 2.3 of the Safe Harbour Regulation on Nasdaq Stockholm is attached to this press release. Since November 11, 2019 up to and including February 28, 2020, a total of 8,341,372 IPC common shares have been repurchased under the share repurchase program through the facilities of the TSX, Nasdaq Stockholm and/or alternative Canadian trading systems. Under the applicable TSX normal course issuer bid rules, a maximum of 11,517,057 IPC common shares may be repurchased over the period of twelve months commencing November 11, 2019 and ending November 10, 2020, or until such earlier date as the normal course issuer bid is completed or terminated by IPC.

 

IPC Updated Share Capital

IPC Updated Share Capital

February 28, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) reports the following, in accordance with the Swedish Financial Instruments Trading Act:

Following the cancellation of a further 1,865,776 common shares repurchased by IPC under the share repurchase program announced on November 7, 2019, the total number of issued and outstanding common shares of the Corporation is 155,385,093 common shares with voting rights.

 

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IPC Updated Share Capital
28.02.2020, 85.87 KB

IPC Announces Results of Share Repurchase Program

IPC Announces Results of Share Repurchase Program

February 17, 2020

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) is pleased to announce that IPC repurchased a total of 384,836 IPC common shares (ISIN: CA46016U1084) during the week of February 10 to 14, 2020 under the previously announced share repurchase program.

The share repurchase program, announced by IPC on November 7, 2019, is being implemented in accordance with the Market Abuse Regulation (EU) No 596/2014 (MAR) and Commission Delegated Regulation (EU) No 2016/1052 (Safe Harbour Regulation) and the applicable rules and policies of the Toronto Stock Exchange (TSX) and Nasdaq Stockholm and applicable Canadian and Swedish securities laws.

During the week of February 10 to 14, 2020, IPC repurchased a total of 357,000 IPC common shares on Nasdaq Stockholm. All of these share repurchases were carried out by Pareto Securities AB on behalf of IPC.

For more information regarding transactions under the share repurchase program in Sweden, including aggregated volume, weighted average price per share and total transaction value for each trading day during the week of February 10 to 14, 2020, see the following link to Nasdaq Stockholm’s website:

http://www.nasdaqomx.com/transactions/markets/nordic/corporate-actions/stockholm/repurchases-of-own-shares

During the same period, IPC purchased a total of 27,836 IPC common shares on the TSX and/or alternative Canadian trading systems. All of these share repurchases were carried out by Stifel Nicolaus Canada Inc. on behalf of IPC.

As previously announced, all common shares repurchased by IPC under the share repurchase program will be cancelled. Following cancellation of the above repurchased shares, the total number of issued and outstanding IPC common shares will be 155,727,629 and IPC will not hold any common shares in treasury. The total number of issued and outstanding shares is 157,250,869 and IPC currently holds 1,523,240 common shares in treasury.

A full breakdown of the transactions conducted during the week of February 10 to 14, 2020 according to article 5.3 of MAR and article 2.3 of the Safe Harbour Regulation on Nasdaq Stockholm is attached to this press release. Since November 11, 2019 up to and including February 14, 2020, a total of 7,992,436 IPC common shares have been repurchased under the share repurchase program through the facilities of the TSX, Nasdaq Stockholm and/or alternative Canadian trading systems. A maximum of 11,517,057 IPC common shares may be repurchased over the period of twelve months commencing November 11, 2019 and ending November 10, 2020, or until such earlier date as the share repurchase program is completed or terminated by IPC.

 

IPC’s Capital Markets Day 2020 webcast on February 11 at 14.00 CET

2019 Year-End Financial Results and 2020 Budget, Production and Resource Guidance

February 11, 2020

Join us today at 14.00 CET for IPC’s Capital Markets Day presentation where our management team will comment on the latest and future developments in International Petroleum Corporation.

CMD link:  https://ipc.videosync.fi/2020-02-11-cmd

2019 Year-End Financial Results and 2020 Budget, Production and Resource Guidance

2019 Year-End Financial Results and 2020 Budget, Production and Resource Guidance

February 11, 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 (MD&A) for the year ended December 31, 2019.(1) IPC is also pleased to announce its 2020 capital expenditure budget of USD 149 million and its 2020 production guidance of between 46,000 and 50,000 barrels of oil equivalent (boe) per day (boepd).(2) 2019 year-end proved plus probable (2P) reserves and best estimate contingent resources (unrisked) are respectively 300 million boe (MMboe) and 1,089 MMboe.(2)(3)

Business Development Highlights
• In January 2020, IPC announced the proposed light oil acquisition of 2P reserves of 14.0 MMboe and 6.2 MMboe of contingent resources (best estimate, unrisked) as at December 31, 2019(2)(3), for total equity and debt consideration of USD 59 million. The acquisition of Granite Oil Corp. (Granite) will be IPC’s third acquisition in less than three years. Completion of the Granite transaction remains subject to satisfaction of certain conditions and is expected to occur in early March 2020.

2019 Financial and Operational Highlights
• Average net production of approximately 47,200 boepd for the fourth quarter of 2019.
• Full year 2019 average net production of approximately 45,800 boepd, in line with Q3 2019 guidance.
• Full year 2019 operating costs(4) per boe of USD 12.8, slightly ahead of Q3 2019 guidance.
• Capital expenditure for full year 2019 of USD 181 million, USD 4 million below Q3 2019 guidance with USD 3 million phased into 2020.
• Successfully delivered a 26 development well program in the Suffield area, Canada.
• Extensive Suffield area gas swabbing and well optimization program delivered during 2019.
• Onion Lake Thermal facility expansion and upgrades completed in Canada, as well as the addition of the new F-Pad wells.
• Third well pair at the Blackrod project, Canada, completed with approximately 1,400 metres of horizontal section; commencing steam injection in early 2020.
• Successful delivery of the Vert La Gravelle field Phase I redevelopment project, lifting Q4 2019 production in France by 28 percent relative to Q3 2019.
• Successfully delivered the three well infill drilling programme at the Bertam field in Malaysia and identified additional infill potential.
• 2P reserves as at December 31, 2019 increased to 300 MMboe, with a 2019 reserves replacement ratio of 89% excluding acquisitions and 173% including acquisitions.(2)(3)(5)
• Contingent resources (best estimate, unrisked) increased from 849 MMboe as at December 31, 2018 to 1,089 MMboe as at December 31, 2019.(2)(3)

Three months ended December 31 Year ended December 31
USD Thousands20192018 20192018
Revenue145,535111,898553,749454,443
Gross profit43,24526,311152,904146,864
Net result38,37229,346103,588103,644
Operating cash flow(4)78,88858,322307,944279,018
Free cash flow(4)4,43234,86489,308203,282
EBITDA(4)77,35358,032302,513264,041
Net Debt(4)231,503276,761231,503276,761

• Full year 2019 operating cash flow (OCF)(4) generation of USD 308 million, the highest annual OCF since IPC’s inception.
• Full year 2019 free cash flow (FCF)(4) generation of USD 89 million.
• Net debt(4) reduced from USD 277 million as at December 31, 2018 to USD 231.5 million as at December 31, 2019.
• Net debt(4) to EBITDA(4) ratio of less than 0.8 times as at December 31, 2019.
• In November 2019, IPC announced a share repurchase program, with the ability to repurchase up to approximately 11.5 million IPC shares over a twelve month period. Repurchased for USD 16.9 million and cancelled approximately 3.9 million IPC shares as at end December 2019 and a further approximately 2.9 million IPC shares were repurchased for USD 11.8 million, of which approximately 2.5 million shares were cancelled, as at end January 2020.

2020 Budget and Production Guidance
• 2020 average net production guidance of 46,000 to 50,000 boepd.(2)
• 2020 operating costs guidance at USD 13.7 per boe.(2)(4)
• Full year 2020 capital expenditure budget of USD 149 million, including USD 3 million of carry-over costs from 2019 and USD 10 million relating to the assets to be acquired in the Granite transaction.(2)

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

“Our focus since launching IPC in April 2017 remains unchanged: seeking to deliver operational excellence, demonstrating financial resilience, maximizing the value of our resource base and targeting growth through acquisition. With financial results delivered at the high end of guidance and the most active quarter of investment across all areas of operations, as well as the announcement of another corporate acquisition and the ongoing execution of IPC’s second share repurchase program, we continue to make excellent progress on all fronts in delivering on that strategy.

2019 Year-End Results
During the fourth quarter of 2019, our assets delivered average daily net production of 47,200 boepd, a four percent increase from Q3 2019. Full year 2019 average production was 45,800 boepd, in line with our Q3 2019 guidance. Record high net production levels above 49,000 boepd were achieved in early December 2019, marginally below the previously guided 50,000 boepd exit rate as the start-up of our A-20 well in Malaysia was moved into mid-January 2020. Our operating costs per boe for the fourth quarter was USD 12.4, resulting in a full year 2019 average operating costs per boe of USD 12.8, marginally below our Q3 2019 guidance.(4)

IPC delivered a very strong full year 2019 financial performance generating an operating cash flow of USD 308 million, at the upper end of Q3 2019 guidance and a full year net result of USD 104 million.(4) The Q4 2019 operating cash flow amounted to USD 79 million.(4) Free cash flow generation for the full year 2019 was USD 89 million (excluding the share repurchase program and before payment of the spin-off residual working capital liability to Lundin Petroleum).(4) This robust financial performance allowed IPC to fund its expenditure and share repurchase programs, whilst reducing net debt levels from USD 277 million at the end of 2018 to USD 231.5 million by the end of 2019.(4)

In Canada, during Q4 2019, the full year 2019 average net production levels at the Suffield area were two percent higher than 2018 levels demonstrating the positive impact of our ongoing oil drilling and gas optimization programs more than offsetting natural declines. Our N2N enhanced oil recovery (EOR) project and drilling program was completed as scheduled in 2019. In addition, preparatory work continued during Q4 2019 which is expected to allow our single rig drilling program to continue through 2020. At Onion Lake Thermal in Canada, facility optimization work completed earlier in 2019 that allowed for steam injection to commence at F-Pad during Q3 2019 and production ramp up through Q4 2019. Following completion of the ramp up of production, average production rates during December 2019 were just below 12,000 boepd in line with expectation. As we look forward, we plan to add another drilling pad during 2020 to increase production toward facility capacity levels of 14,000 boepd by year-end 2020.

In Malaysia, a world class uptime performance on the Bertam FPSO in excess of 99 percent continued during Q4 2019. Fourth quarter 2019 production on the Bertam field was 5,400 bopd, in line with our Q3 2019 guidance and five per cent higher than Q3 2019 production as we started to benefit from production from the three well infill drilling program. Following encouraging results from the 2019 infill drilling program, two additional infill drilling locations have been identified and booked as contingent resources in the A-15/A-20 Bertam field area. Further technical work is planned on these locations during 2020, for potential drilling in 2021.

In France, average daily production in Q4 2019 was 28 percent higher than Q3 2019 production, averaging 3,200 boepd. The drilling in Q3 2019 of our first horizontal development well at the Vert La Gravelle field was a major milestone for IPC. Production from the well continues to exceed expectation. With Phase I of the Vert La Gravelle redevelopment now being completed, our focus and attention now turns to the Phase I development of the Villeperdue West field in 2020 with three horizontal production wells planned, as well as assessing the potential for a Phase II development of Vert La Gravelle.

As at end December 2019, IPC’s 2P reserves are 300 MMboe compared to 288 MMboe as at December 31, 2018.(2)(3) This includes a reserves replacement ratio in 2019 of 89 percent, excluding the assets to be acquired in the Granite transaction, and 173 percent including the Granite assets.(2)(5)

In addition, IPC has increased its best estimate contingent resources (unrisked) as at end December 2019 to 1,089 MMboe, compared to 849 MMboe as at end December 2018.(2)(3) We are confident that we have a solid resource base in place to provide the feedstock to add to reserves in the future.

Based on third party reserves reports, the net present value (NPV)(2)(3)(6) of IPC’s 2P reserves as at December 31, 2019 was USD 2,410 million. IPC’s net asset value (NAV)(2)(3)(7) as at December 31, 2019 was USD 2,120 million. IPC’s NAV per share(2)(3)(8) was USD 13.3 as at December 31, 2019, representing an increase of over 7 percent from December 31, 2018.

2020 Budget and Production Guidance
We are pleased to announce our 2020 production guidance is 46,000 to 50,000 boepd.(2) We forecast operating costs for 2020 to be USD 13.7 per boe.(2)(4) We also forecast significant free cash flow generation based on our 2P reserves base of an aggregate of more than USD 500 million to USD 1.3 billion over the coming five years, without taking into account development of our contingent resources or any further potential acquisitions.(2)(3)(4)(9)

Our 2020 capital expenditure budget is USD 149 million(2), targeting production growth in all of our countries of operations. The budget includes continued oil drilling and gas optimization activities in the Suffield area, Onion Lake Thermal facilities work and Blackrod project activities in Canada, as well as carry-over drilling expenditures on the Bertam field in Malaysia. In France, we continue with finalising Phase I of the Vert La Gravelle redevelopment project and we plan to commence the Villeperdue West development project. In addition, the budget includes approximately USD 10 million to invest in growing the assets to be acquired in the Granite transaction in Canada.(2)

Further details regarding IPC’s 2020 budget and production guidance will be provided at IPC’s Capital Markets Day presentation to be held on February 11, 2020 at 14:00 CET. A copy of the Capital Markets Day presentation will be available on IPC’s website at www.international-petroleum.com.”

Notes:
(1) IPC’s financial statements and MD&A for the year ended December 31, 2019 are available on IPC’s website at www.international-petroleum.com and under IPC’s profile on SEDAR at www.sedar.com.
(2) Includes the reserves and contingent resources as at December 31, 2019 and the forecast 2020 production, operating costs and capital expenditures attributable to the oil and gas assets of Granite, assuming acquisition as of January 1, 2020. Completion of the Granite transaction remains subject to satisfaction of certain conditions and is expected to occur in early March 2020. The acquisition cost of USD 59 million includes USD 29 million in cash and USD 30 million in net debt assumption. See “Forward-Looking Statements” below.
(3) See “Disclosure of Oil and Gas Information” below. Further information with respect to IPC’s and Granite’s reserves, contingent resources and estimates of future net revenue, including assumptions relating to the calculation of NPV, are further described in the material change report (MCR) filed on the date of this press release by IPC and available under IPC’s profile on www.sedar.com and on IPC’s website at www.international-petroleum.com. 2P reserves as at December 31, 2019 of 300 MMboe includes 286.2 MMboe attributable to IPC’s oil and gas assets and 14.0 MMboe attributable to Granite’s oil and gas assets. Contingent resources (best estimate, unrisked) as at December 31, 2019 of 1,089 MMboe includes 1,082.5 MMboe attributable to IPC’s oil and gas assets and 6.2 MMboe attributable to Granite’s oil and gas assets.
(4) Non-IFRS measure, see “Non-IFRS Measures” below and in the MD&A.
(5) Reserves replacement ratio is based on 2P reserves of 288 MMboe as at December 31, 2018, production during 2019 of 16.7 MMboe, additions to 2P reserves during 2019 of 14.8 MMboe (or 28.8 MMboe including the 2P reserves attributable to the acquisition of the Granite assets which is expected to be completed in early March 2020) and 2P reserves of 286.2 MMboe (or 300 MMboe including the 2P reserves attributable to the acquisition of the Granite assets which is expected to be completed in early March 2020) as at December 31, 2019.
(6) NPV is after tax, discounted at 8% and based upon the forecast prices and other assumptions further described in the MCR. NPV of the 2P reserves as at December 31, 2019 of USD 2,410 million includes USD 2,202.5 million attributable to IPC’s oil and gas assets and USD 207.6 million attributable to Granite’s oil and gas assets. See “Disclosure of Oil and Gas Information” below.
(7) NAV is calculated as NPV less net debt as at December 31, 2019. Net debt as at December 31, 2019 includes USD 231.5 million as described above and an additional USD 59 million in respect of the Granite acquisition cost, assuming acquisition as of such date. Completion of the Granite transaction remains subject to satisfaction of certain conditions and is expected to occur in early March 2020.
(8) NAV per share is based on the number of IPC common shares outstanding as at December 31, 2019 being 159,790,869.
(9) Estimated free cash flow generation based on IPC’s current business plans over the period of 2020 to 2024. Assumptions include average net production of a variance around 50 Mboepd, average Brent oil prices of USD 55 to 75 per boe escalating by 2% per year, average gas prices of CAD 2.50 per thousand cubic feet, and average Brent to Western Canadian Select differentials as estimated by IPC’s independent reserves evaluator and as further described in the MCR. IPC’s current business plans and assumptions, and the business environment, are subject to change. Actual results may differ materially from forward-looking estimates and forecasts. See “Forward-Looking Statements” below.

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