International Petroleum Corporation Third Quarter 2023 Financial
and Operational Results; Share Repurchase Program Update; and Chief
Executive Officer Succession
International Petroleum Corporation (IPC or the
Corporation) (TSX, Nasdaq Stockholm: IPCO) today released its
financial and operational results and related management’s
discussion and analysis (MD&A) for the three and nine months
ended September 30, 2023.
Mike Nicholson, IPC's Chief Executive Officer, comments: “We are
very pleased to announce another strong quarter for IPC. We
produced an average of 50,200 barrels of oil equivalent per day
(boepd) during the third quarter. Given the strong average daily
production over the first nine months of 2023, we expect to exceed
an average of 50,000 boepd for the full year 2023, above the high
end of our guidance range. We continue to progress the exciting
development of Phase 1 of the Blackrod project in Canada, with cost
levels and schedule in line with expectation.
We also expect to complete our current normal course issuer bid
(NCIB) program in Q4 2023 and intend to seek Toronto Stock Exchange
(TSX) approval to renew the NCIB for a further 12 months. Our
current intention is to fully complete that renewed NCIB program
during the course of 2024.
Finally, I will be stepping down from executive management of
IPC at the end of 2023 with William Lundin, currently Chief
Operating Officer of the Corporation, assuming the role of
President and CEO. I plan to stay closely involved with the bright
future of IPC as a continuing member of the Board of
Directors.”
Q3 2023 Business Highlights
- Strong quarterly average net production of approximately 50,200
barrels of oil equivalent (boe) per day (boepd) for the third
quarter of 2023 (55% heavy crude oil, 14% light and medium crude
oil and 31% natural gas).(1)
- Blackrod Phase 1 development progressing on schedule and
budget.
- Disposal of non-core properties in Canada for MUSD 17 (0.6
MMboe of 2P reserves; approximately 400 bopd of average current
production).(1)(2)
- Successfully completed planned maintenance turnaround at the
Bertam Field in Malaysia on scope, schedule and budget.
- 1.31 million common shares purchased and cancelled during Q3
2023 under IPC’s normal course issuer bid (NCIB); annual program
90% complete.
- IPC plans to seek TSX approval for the renewal of the NCIB for
a further twelve months from December 2023 to December 2024, with
IPC’s current intention to fully complete the renewed program.
- Successfully completed USD 150 million tap issue under IPC’s
existing 7.25% senior unsecured bond framework.
- IPC succession plan sees William Lundin assume the role of
President and CEO from January 1, 2024 as Mike Nicholson retires
from executive management; Mike to continue as a Director of IPC
and William to join the Board as a new Director.
Q3 2023 Financial Highlights
- Operating costs per boe of USD 17.9 for Q3 2023.(1)(3)
- Operating cash flow (OCF) generation for Q3 2023 amounted to
MUSD 119.(1)(3)
- Capital and decommissioning expenditures of MUSD 80 for Q3
2023.(1)
- Free cash flow (FCF) generation for Q3 2023 amounted to MUSD 35
(MUSD 103 pre Blackrod funding).(1)(3)
- Net cash of MUSD 83 as at September 30, 2023.(3)
- Net result of MUSD 72 for Q3 2023.
Reserves and Resources
- Total 2P reserves as at December 31, 2022 of 487 million boe
(MMboe), with a reserves life index (RLI) of 27 years.(1)(2)
- Contingent resources (best estimate, unrisked) as at December
31, 2022 of 1,162 MMboe.(1)(2)
2023 Annual Guidance
- Full year 2023 average net production forecast unchanged at
greater than 50,000 boepd.(1)
- Full year 2023 operating costs guidance forecast remains
unchanged at USD 17.5 to 18.0 per boe.(1)(3)
- Full year 2023 OCF guidance tightened to between MUSD 340 to
365 (assuming Brent USD 80 to 90 per barrel for the remainder of
2023) from previous guidance of MUSD 320 to 390 (assuming Brent USD
75 to 90 per barrel).(1)(3)
- Full year 2023 capital and decommissioning expenditures
forecast reduced from MUSD 365 to MUSD 330.(1)
- Full year 2023 FCF forecast range tightened to between MUSD -15
to 5 (assuming Brent USD 80 to 90 per barrel for the remainder of
2023) from previous guidance of MUSD -65 to 5 (assuming Brent USD
75 to 90 per barrel), after taking into account MUSD 240 of
proposed 2023 Blackrod capital expenditures.(1)(3)(4)
|
Three months endedSeptember 30 |
Nine months endedSeptember 30 |
USD Thousands |
2023 |
2022 |
2023 |
2022 |
Revenue |
257,366 |
299,361 |
655,446 |
874,683 |
Gross profit |
93,429 |
140,489 |
210,559 |
421,298 |
Net result |
71,681 |
90,503 |
143,269 |
276,542 |
Operating cash flow (2) |
119,142 |
171,654 |
279,414 |
509,279 |
Free cash flow (2) |
34,703 |
116,681 |
67,379 |
364,954 |
EBITDA (2) |
123,054 |
174,328 |
284,334 |
513,829 |
Net Cash / (Debt) (2) |
83,097 |
88,615 |
83,097 |
88,615 |
Oil prices rebounded during the third quarter
with Brent prices averaging USD 87 per barrel compared with USD 78
per barrel during the second quarter. The strength we have seen in
physical markets shone through, with recessionary fears on the back
of higher interest rates taking a back seat during the quarter.
However, more recent talk of higher interest rates for longer by
the Federal Reserve Bank, led to oil prices retreating from a push
towards USD 100 per barrel in late September, back towards USD 85
per barrel in early October.
Looking forward, the decision by OPEC+ to extend
their ‘voluntary cuts’ through the end of 2023, could set the stage
for a large deficit and further draws on already below average
inventories during the fourth quarter. Inventory levels now sit
more than 100 million barrels below the five-year average levels.
Heightened tensions, with the tragic outbreak of war in the Middle
East, are exacerbating the situation and will no doubt lead to
increased pricing volatility going forward.
IPC has decided to commence the hedging of its
benchmark oil price exposure for 2024. Around 25% of 2024 West
Texas Intermediate (WTI) exposure has been hedged at a price of USD
81 per barrel.
The third quarter 2023 WTI to Western Canadian
Select (WCS) crude price differentials averaged around USD 13 per
barrel, a USD 2 per barrel improvement on the second quarter. The
fundamental outlook for 2024 differentials remains positive with
the expansion of the Trans Mountain (TMX) pipeline (590,000 barrels
per day of extra capacity linking Edmonton to the port of
Vancouver) as well as a reduction in Mexican heavy oil exports to
the US (due to domestic refinery capacity increases by more than
200,000 barrels per day). That being said, a possible delay in
start-up of the TMX pipeline from the first quarter to the second
quarter of 2024 as a result of a tunnelling issue, has seen 2024
WTI to WCS differential widen to more than USD 17 per barrel. IPC
took the decision to hedge 75% of our WCS differential exposure
prior to news of the TMX pipeline potential delay, when market
prices were more favourable averaging USD 15 per barrel.
Gas market prices held stable during the third
quarter at around CAD 2.50 per Mcf. During the third quarter, IPC
continued to benefit from the AECO gas price hedges that were put
in place when gas prices were much stronger in late 2022: 33.7 MMcf
per day at CAD 4.10 per Mcf from April to October 2023, which
represents approximately 50% of our net long exposure.
Third Quarter 2023 Highlights and Full Year 2023
Guidance
During the third quarter of 2023, our assets
delivered average net production of 50,200 boepd, above our
high-end guidance for the third quarter in succession. Above
high-end guidance performance in Canada was partially offset by
some downtime from two production wells in Malaysia that are
scheduled for workover intervention activity. This work is expected
to be concluded by January 2024. Given the very strong performance
during the first nine months of 2023 averaging around 51,600 boepd,
full year 2023 average net production guidance remains unchanged at
greater than 50,000 boepd, above our original high end
guidance.(1)
Our operating costs per boe for the third
quarter of 2023 were USD 17.9, in line with our latest guidance.
Full year 2023 operating costs per boe guidance of USD 17.5 to 18.0
per boe remains unchanged.(1)(3)
Operating cash flow (OCF) generation for the
third quarter of 2023 was USD 119 million, towards the high end of
guidance, driven by strong production and tighter WTI to WCS
differentials. Full year 2023 OCF guidance of USD 320 to 390
million (assuming Brent USD 75 to 90 per barrel) is tightened to
USD 340 to 365 million (assuming Brent USD 80 to 90 per barrel for
the remainder of 2023).(1)(3)
Full year 2023 capital and decommissioning
expenditure forecast of USD 365 million is revised down to USD 330
million largely driven by rephasing of certain Blackrod capital
expenditure from 2023 into 2024 and some additions relating to the
workover of two wells in Malaysia.(1)
Free cash flow (FCF) generation was USD 35
million (USD 103 million pre Blackrod funding) during the third
quarter of 2023. Full year 2023 FCF guidance of USD -65 to 5
million (assumed Brent USD 75 to 90 per barrel) is tightened to USD
-15 to 5 million (assuming Brent USD 80 to 90 per barrel for the
remainder of 2023).(1)(3)(4)
IPC’s transformational growth program is
estimated to generate FCF post growth investment of between USD 2.6
and 4.4 billion over the next ten years assuming average Brent oil
prices between USD 75 to 95 per barrel. This represents more than 2
to 3 times IPC’s current market capitalisation.(1)(3)(4)
During the third quarter of 2023, IPC
successfully completed a tap issue of USD 150 million under IPC’s
existing 7.25% senior unsecured bond framework issued at 7%
discount to par value and therefore with net proceeds amounting to
USD 139.5 million to further strengthen IPC’s cash position.
Following the tap issue, IPC has USD 450 million of senior
unsecured bonds outstanding with maturity in February 2027.
IPC’s net cash position of USD 64 million as at
June 30, 2023 was increased to USD 83 million as at September 30,
2023.(3) Gross cash on the balance sheet as at September 30, 2023
amounts to USD 542 million providing a significant war chest to
pursue our three strategic pillars of returning value to
stakeholders, pursuing value adding M&A and focusing on organic
growth. Furthermore, during Q3 2023, IPC increased its Canadian
Revolving Credit Facility (RCF) from CAD 150 million to CAD 165
million. The RCF remains undrawn as at October 31, 2023.
Phase 1 Blackrod Project
Following the successful completion of FEED
studies and the continued strong production performance from well
pair three during 2022, IPC took the decision in Q1 2023 to advance
the development of Phase 1 of the Blackrod project. Development
capital expenditure to first oil is estimated at approximately USD
850 million. First oil of the Phase 1 development is estimated to
be in late 2026, with forecast production of 30,000 bopd by 2028.
The breakeven oil price estimated by IPC assuming a 10% discount
rate is a WTI price of approximately USD 59 per barrel. Using the
December 31, 2022 price forecasts of our independent qualified
reserves evaluator, Sproule Associates Limited (Sproule), the net
present value as at that date, at a 10% discount rate (after tax),
of Phase 1 of the Blackrod project is USD 807 million. IPC intends
to fund the Phase 1 development with cash on hand and forecast FCF
generated by our operations.(1)(2)
During the third quarter, the Phase 1
development activities have progressed according to plan. The
engineering, procurement and construction (EPC) contract for the
major Phase 1 central processing facility was signed in Q2 2023 and
project work continued to progress during Q3 2023 with cost levels
and schedule in line with expectation. In addition, IPC has locked
in more than 70% of the CAD/USD exposure through a combination of
hedging and contractual arrangements to give greater certainty to
the USD funding requirement for the Phase 1 project costs.
M&A
During the first nine months of 2023, IPC
continued the successful integration of the acquired Brooks assets
into the Group following completion of the Cor4 acquisition in
March 2023. Four wells were successfully drilled and brought on
production from the Ellerslie fairway since the beginning of the
year and we plan to drill another four wells on this exciting play
in 2023, two more than originally planned.(1)(2)
During the third quarter, IPC agreed to dispose
of a small package of non-core production and land assets in the
John Lake and Fishing Lake areas in Canada. Total proceeds from the
disposal amounted to USD 17 million. Current production associated
with the assets was around 365 bopd. 2P reserves and NPV10 value as
of January 1, 2023 were 0.6 MMboe and USD 7.7 million respectively.
The John Lake disposal closed in Q3 2023 and Fishing Lake early
October 2023.(1)(2)
Capital Allocation
Framework
Normal Course Issuer Bid
In Q4 2022, IPC announced the renewal of the
NCIB, with the ability to repurchase up to approximately 9.3
million common shares over the twelve-month period to early
December 2023. By the end of September 2023, IPC purchased and
cancelled 8.4 million common shares under the NCIB. The average
price of common shares purchased under the renewed NCIB during the
period of December 2022 to September 2023 was SEK 101 / CAD 13.00
per share. IPC expects to complete the current NCIB program of 9.3
million common shares during Q4 2023.
As at September 30, 2023, IPC had a total of
129,189,220 common shares issued and outstanding, with no common
shares held in treasury.
Capital Allocation Plans
IPC’s capital allocation framework consists of
distributing to shareholders a minimum of 40% of the FCF generated
by the business, provided that IPC’s net debt to EBITDA ratio is at
or below 1 time.(3) These shareholder distributions are planned to
be implemented by continued share repurchases under the NCIB as
well as the consideration by IPC of other forms of shareholder
distributions, subject to further applicable regulatory and
corporate approvals.
The IPC Board of Directors has approved, subject
to acceptance by the TSX, the renewal of IPC’s NCIB for a further
twelve months from December 2023 to December 2024. We expect that
the renewed NCIB program will permit IPC to purchase on the TSX
and/or Nasdaq Stockholm, and cancel, up to a further 8.3 million
common shares, representing approximately 6.5% of the total
outstanding common shares (or 10% of IPC’s “public float” under
applicable TSX rules) following completion of the current NCIB
program.
Despite the level of capital investment expected
for 2024, in particular related to the Blackrod Phase 1 project,
and notwithstanding the capital allocation framework described
above, IPC’s current intention is to complete the renewed NCIB
program during 2024. We continue to believe that materially growing
our 2P reserves, production and asset value whilst reducing our
share count is a winning combination for shareholders.
Environmental, Social and Governance
(“ESG“) Performance
Alongside the publication of the second quarter
2023 financial report, IPC released its fourth annual
Sustainability Report and its first standalone TCFD Report. IPC is
committed to the continued advancement of ESG practices in its
sustainability focus areas. The Group’s six sustainability
priorities are:
- Ethics & Integrity
- Rewarding Workplace
- Health & Safety
- Community Engagement
- Climate Action
- Environmental
Stewardship
As part of IPC’s commitment to operational
excellence, its objective is to reduce risk and eliminate hazards
to prevent the occurrence of accidents, ill health, and
environmental damage, as these are essential to the success of our
operations. During the third quarter of 2023, IPC recorded no
material safety or environmental incidents.
With respect to climate action, as previously
announced, IPC targets a reduction of net GHG emissions intensity
by the end of 2025 to 50% of IPC’s 2019 baseline and IPC remains on
track to achieve this reduction. During Q1 2023, IPC extended its
commitment to remain at 2025 levels of 20 kg CO2/boe through to the
end of 2027.
IPC Succession Plan
After nineteen years with the Lundin Group, Mike
Nicholson, President and CEO has informed the IPC Board of his
intention to step down from his executive position at the end of
2023. William Lundin, currently Chief Operating Officer of IPC
(COO), will assume the role of President and CEO from January 1,
2024 and Nicki Duncan, currently Group Operations Lead, will assume
the role of COO. The Board intends to increase the size of the
Board to seven members and William will join as a new Director as
of January 1, 2024, with Mike remaining on the Board.
Mike Nicholson said:
“IPC is generating robust cash flow from the
base business, the balance sheet is stronger than ever, and our
Blackrod growth project is progressing well, on schedule and
budget.
I firmly believe that our production and cash
flow growth, coupled with continued share buy backs and
opportunistic M&A, will continue to generate superior
shareholder returns in the years ahead.
I am excited to be handing over the reins to
William Lundin, current COO of IPC, with such a bright future ahead
of the company. Having had the pleasure of working side by side
with Will for more than three years in his current role, I have
been deeply impressed with his knowledge of value creation within
the resource industry and the vision that we share to set the pace
for our industry peers and to continue to outperform the
competition. Will has amassed a vast amount of experience from
working in field operations at Onion Lake Thermal and project
management in the Canadian business, executive management within
IPC, and strategic oversight in his various board positions across
the Lundin Group. I know that Lukas Lundin would be very proud of
Will’s progression to CEO. The COO role will be assumed by Nicki
Duncan, currently IPC’s Group Operations Lead.
I am delighted to remain as a Board Director and
in this capacity look forward to my continued involvement in the
amazing IPC success story.”
William Lundin said:
“It has been a privilege working alongside Mike.
His contributions to IPC and Lundin Energy have been invaluable and
we look forward to his continued support as a Director of IPC.
I take great pride in having the opportunity to
represent IPC as President and CEO and look forward in continuing
to maximise value alongside a highly talented team. Our strategy
remains intact to deliver shareholder returns, grow organically,
and opportunistically seek accretive acquisitions. With a strong
balance sheet, proven portfolio of high-quality producing assets
delivering robust free cashflow to the business combined with
transformational production growth to come from our Blackrod asset,
the outlook for IPC is extremely bright.”
Notes:
(1) See “Supplemental Information regarding
Product Types” in “Reserves and Resources Advisory” below. See also
the annual information form for the year ended December 31, 2022
(AIF) available on IPC’s website at www.international-
petroleum.com and under IPC’s profile on SEDAR+ at
www.sedarplus.ca. IPC completed the acquisition of Cor4 on March 3,
2023. The Financial Statements have been prepared on that basis,
with revenues and expenses related to the Brooks assets acquired in
the Cor4 acquisition included in the Financial Statements from
March 3, 2023. Certain historical and forecast operational and
financial information included in the MD&A, including
production, reserves, operating costs, OCF, FCF and EBITDA related
to the assets acquired in the Cor4 acquisition, are reported based
on the effective date of the Cor4 acquisition of January 1, 2023.
(2) See “Reserves and Resources Advisory“ below. Further
information with respect to IPC’s reserves, contingent resources
and estimates of future net revenue, including assumptions relating
to the calculation of NPV, are described in the AIF. 2P reserves as
at December 31, 2022 of 487 MMboe includes 471 MMboe attributable
to IPC’s oil and gas assets and 15.9 MMboe attributable to the oil
and gas assets acquired in the Cor4 acquisition.(3)Non-IFRS
measure, see “Non-IFRS Measures” below.(4) Estimated FCF generation
is based on IPC’s current business plans over the periods of 2023
to 2027 and 2028 to 2032, including net cash of USD 175 million as
at December 31, 2022 less the Cor4 acquisition consideration of USD
62 million. Assumptions include average net production of
approximately 50 Mboepd over the period of 2023 to 2027, average
net production of approximately 65 Mboepd over the period of 2028
to 2032, average Brent oil prices of USD 75 to 95 per boe
escalating by 2% per year, and average Brent to Western Canadian
Select differentials and average gas prices as estimated by IPC’s
independent reserves evaluator and as further described in the AIF.
IPC’s market capitalization is at close on October 27, 2023 (USD
1,330 million based on 114.85 SEK/share, 129.2 million IPC shares
outstanding and exchange rate of 11.15 SEK/USD). 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.
International Petroleum Corp. (IPC) is an
international oil and gas exploration and production company with a
high quality portfolio of assets located in Canada, Malaysia and
France, providing a solid foundation for organic and inorganic
growth. IPC is a member of the Lundin Group of Companies. IPC is
incorporated in Canada and IPC’s shares are listed on the Toronto
Stock Exchange (TSX) and the Nasdaq Stockholm exchange under the
symbol "IPCO".
For further information, please contact:
Rebecca GordonVP Corporate Planning and Investor
Relationsrebecca.gordon@international-petroleum.comTel: +41 22 595
10 50 |
Or |
Robert ErikssonMedia Managerreriksson@rive6.chTel: +46 701 11 26
15 |
This information is information that
International Petroleum Corporation is required to make public
pursuant to the EU Market Abuse Regulation and the Securities
Markets Act. The information was submitted for publication, through
the contact persons set out above, at 07:30 CET on October 31,
2023. The Corporation's unaudited interim condensed consolidated
financial statements (Financial Statements) and management's
discussion and analysis (MD&A) for the three and nine months
ended September 30, 2023 have been filed on SEDAR+
(www.sedarplus.ca) and are also available on the Corporation's
website (www.international-petroleum.com).
Forward-Looking Statements This
press release contains statements and information which constitute
"forward-looking statements" or "forward-looking information"
(within the meaning of applicable securities legislation). Such
statements and information (together, "forward-looking statements")
relate to future events, including the Corporation's future
performance, business prospects or opportunities. Actual results
may differ materially from those expressed or implied by
forward-looking statements. The forward-looking statements
contained in this press release are expressly qualified by this
cautionary statement. Forward-looking statements speak only as of
the date of this press release, unless otherwise indicated. IPC
does not intend, and does not assume any obligation, to update
these forward-looking statements, except as required by applicable
laws.
All statements other than statements of
historical fact may be forward-looking statements. Any statements
that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, forecasts, guidance,
budgets, objectives, assumptions or future events or performance
(often, but not always, using words or phrases such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", “forecast”, "predict", "potential", "targeting",
"intend", "could", "might", "should", "believe", "budget" and
similar expressions) are not statements of historical fact and may
be "forward-looking statements".
Forward-looking statements include, but are not
limited to, statements with respect to:
- 2023 production range, operating
costs, operating cash flow, free cash flow, and capital and
decommissioning expenditure estimates;
- Estimates of future production,
cash flows, operating costs and capital expenditures that are based
on IPC’s current business plans and assumptions regarding the
business environment, which are subject to change;
- IPC’s financial and operational
flexibility to continue to react to recent events and navigate the
Corporation through periods of volatile commodity prices;
- IPC’s continued access to its
existing credit facilities, including current financial headroom,
on terms acceptable to the Corporation;
- The ability to fully fund future
expenditures from cash flows and current borrowing capacity;
- IPC’s ability to maintain
operations, production and business in light of any future
pandemics and the restrictions and disruptions related thereto,
including risks related to production delays and interruptions,
changes in laws and regulations and reliance on third-party
operators and infrastructure;
- IPC’s intention and ability to
continue to implement our strategies to build long-term shareholder
value;
- The ability of IPC’s portfolio of
assets to provide a solid foundation for organic and inorganic
growth;
- The continued facility uptime and
reservoir performance in IPC’s areas of operation;
- Future development potential of the
Suffield and Ferguson operations in Canada, including the timing
and success of future oil and gas drilling and optimization
programs;
- Development of the Blackrod project
in Canada, including estimates of resource volumes, future
production, timing, regulatory approvals, third party commercial
arrangements, breakeven oil prices and net present values;
- Current and future drilling pad
production at Onion Lake Thermal;
- The potential improvement in the
Canadian oil egress situation and IPC’s ability to benefit from any
such improvements;
- The ability of IPC to achieve and
maintain current and forecast production in France and
Malaysia;
- The ability of IPC to acquire
further common shares under the NCIB, including the timing of any
such purchases;
- The ability of IPC to renew the
NCIB and the number of common shares which may be purchased under a
renewed NCIB;
- The return of value to IPC’s
shareholders as a result of the NCIB;
- The ability of IPC to implement
further shareholder distributions in addition to the NCIB;
- IPC’s ability to implement its GHG
emissions intensity and climate strategies and to achieve its net
GHG emissions intensity reduction targets;
- Estimates of reserves and
contingent resources;
- The ability to generate free cash
flows and use that cash to repay debt;
- IPC’s ability to identify and
complete future acquisitions; and
- Future drilling and other
exploration and development activities.
Statements relating to "reserves" and
"contingent resources" are also deemed to be forward-looking
statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves and resources
described exist in the quantities predicted or estimated and that
the reserves and resources can be profitably produced in the
future. Ultimate recovery of reserves or resources is based on
forecasts of future results, estimates of amounts not yet
determinable and assumptions of management.
Although IPC believes that the expectations and
assumptions on which such forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because IPC can give no assurances that
they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number
of factors and risks.
These include, but are not limited to general
global economic, market and business conditions, the risks
associated with the oil and gas industry in general such as
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
estimates and projections relating to reserves, resources,
production, revenues, costs and expenses; health, safety and
environmental risks; commodity price fluctuations; interest rate
and exchange rate fluctuations; marketing and transportation; loss
of markets; environmental and climate-related risks; competition;
incorrect assessment of the value of acquisitions; failure to
complete or realize the anticipated benefits of acquisitions or
dispositions; the ability to access sufficient capital from
internal and external sources; failure to obtain required
regulatory and other approvals; and changes in legislation,
including but not limited to tax laws, royalties, environmental and
abandonment regulations.
Additional information on these and other
factors that could affect IPC, or its operations or financial
results, are included in the MD&A (See "Cautionary Statement
Regarding Forward-Looking Information" and “Reserves and Resources
Advisory” therein), the Corporation's Annual Information Form (AIF)
for the year ended December 31, 2022 (See "Cautionary Statement
Regarding Forward-Looking Information", "Reserves and Resources
Advisory" and " Risk Factors" therein) and other reports on file
with applicable securities regulatory authorities, including
previous financial reports, management’s discussion and analysis
and material change reports, which may be accessed through the
SEDAR+ website (www.sedarplus.ca) or IPC's website
(www.international-petroleum.com).
Management of IPC approved the production,
operating costs, operating cash flow, capital and decommissioning
expenditures and free cash flow guidance and estimates contained
herein as of the date of this press release. The purpose of these
guidance and estimates is to assist readers in understanding IPC’s
expected and targeted financial results, and this information may
not be appropriate for other purposes.
Estimated FCF generation is based on IPC’s current business
plans over the periods of 2023 to 2027 and 2028 to 2032.
Assumptions include average net production of approximately 50
Mboepd over the period of 2023 to 2027, average net production of
approximately 65 Mboepd over the period of 2028 to 2032, average
Brent oil prices of USD 75 to 95 per boe escalating by 2% per year,
and average Brent to Western Canadian Select differentials and
average gas prices as estimated by IPC’s independent reserves
evaluator and as further described in the AIF. 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.
Non-IFRS MeasuresReferences are
made in this press release to "operating cash flow" (OCF), “free
cash flow” (FCF), "Earnings Before Interest, Tax, Depreciation and
Amortization" (EBITDA), "operating costs" and "net debt"/”net
cash”, which are not generally accepted accounting measures under
International Financial Reporting Standards (IFRS) and do not have
any standardized meaning prescribed by IFRS and, therefore, may not
be comparable with similar measures presented by other public
companies. Non-IFRS measures should not be considered in isolation
or as a substitute for measures prepared in accordance with
IFRS.
The definition of each non-IFRS measure is
presented in IPC's MD&A (See "Non-IFRS Measures" therein).
Operating cash flowThe following table sets out
how operating cash flow is calculated from figures shown in the
Financial Statements:
|
Three months ended September 30 |
|
Nine months ended September 30 |
USD Thousands |
2023 |
2022 |
|
2023 |
2022 |
Revenue |
257,366 |
299,361 |
|
655,446 |
879,683 |
Production
costs |
(130,765) |
(122,655) |
|
(364,889) |
(356,344) |
Current tax |
(7,459) |
(5,052) |
|
(16,045) |
(14,049) |
Operating cash flow |
119,142 |
171,654 |
|
274,512 |
509,279 |
The operating cash flow for the first nine
months of 2023 including the operating cash flow contribution of
the Cor4 acquisition from the effective date of January 1, 2023 to
the completion date of March 3, 2023 amounted to USD 279,414
thousand.
Free cash flowThe following table sets out how
free cash flow is calculated from figures shown in the Financial
Statements:
|
Three months ended September 30 |
|
Nine months ended September 30 |
USD Thousands |
2023 |
2022 |
|
2023 |
2022 |
Operating cash flow - see above |
119,142 |
171,654 |
|
274,512 |
509,279 |
Capital
expenditures |
(76,844) |
(46,729) |
|
(183,904) |
(114,870) |
Abandonment and
farm-in expenditures1 |
(2,755) |
(1,517) |
|
(7,683) |
(5,877) |
General,
administration and depreciation expenses before depreciation2 |
(3,547) |
(2,378) |
|
(11,124) |
(9,499) |
Cash financial
items3 |
(1,293) |
(4,349) |
|
(3,593) |
(14,079) |
Free cash flow |
34,703 |
116,681 |
|
68,208 |
364,954 |
1 See note 17 to the Financial Statements2
Depreciation is not specifically disclosed in the Financial
Statements3 See notes 4 and 5 to the Financial Statements
The free cash flow for the first nine months of
2023 including the free cash flow contribution of the Cor4
acquisition from the effective date of January 1, 2023 to the
completion date of March 3, 2023 amounted to USD 67,379
thousand.
EBITDAThe following table sets out the
reconciliation from net result from the consolidated statement of
operations to EBITDA:
|
Three months ended September 30 |
|
Nine months ended September 30 |
USD Thousands |
2023 |
2022 |
|
2023 |
2022 |
Net result |
71,681 |
90,503 |
|
143,269 |
276,542 |
Net financial
items |
4,257 |
9,225 |
|
16,227 |
31,129 |
Income tax |
25,451 |
37,977 |
|
50,671 |
102,927 |
Depletion |
31,687 |
31,939 |
|
71,488 |
91,721 |
Depreciation of
other tangible fixed assets |
1,509 |
2,991 |
|
6,503 |
8,092 |
Exploration and
business development costs |
(24) |
1,287 |
|
2,007 |
2,217 |
Depreciation
included in general, administration and depreciation expenses
1 |
405 |
406 |
|
1,180 |
1,201 |
Sale of assets |
(11,912) |
_ |
|
(11,912) |
_ |
EBITDA |
123,054 |
174,328 |
|
279,433 |
513,829 |
1 Item is not shown in the Financial
Statements
The EBITDA for the first nine months of 2023
including the EBITDA contribution of the Cor4 acquisition from the
effective date of January 1, 2023 to the completion date of March
3, 2023 amounted to USD 284,334 thousand.
Operating costsThe following table sets out how
operating costs is calculated:
|
Three months ended September 30 |
|
Nine months ended September 30 |
USD Thousands |
2023 |
2022 |
|
2022 |
2021 |
Production costs |
130,765 |
122,655 |
|
364,889 |
351,355 |
Cost of
blending |
(39,836) |
(42,358) |
|
(128,523) |
(142,638) |
Change in
inventory position |
(8,067) |
(9,294) |
|
2,228 |
4,434 |
Operating costs |
82,862 |
71,003 |
|
238,594 |
213,151 |
The operating costs for the first nine months of
2023 including the operating costs contribution of the Cor4
acquisition from the effective date of January 1, 2023 to the
completion date of March 3, 2023 amounted to USD 245,395
thousand.
Net cashThe following table sets out how net
cash is calculated:
USD Thousands |
September 30, 2023 |
December 31, 2022 |
Bank loans |
(9,511) |
(12,142) |
Bonds1 |
(450,000) |
(300,000) |
Cash and cash equivalents |
542,608 |
487,240 |
Net cash |
83,097 |
175,098 |
1 The bond amount represents the redeemable
value at maturity (February 2027).
Reserves and Resource
AdvisoryThis press release contains references to
estimates of gross and net reserves and resources attributed to the
Corporation's oil and gas assets. For additional information with
respect to such reserves and resources, refer to “Reserves and
Resource Advisory” in IPC's MD&A and AIF. Light, medium and
heavy crude oil reserves/resources disclosed in this press release
include solution gas and other by-products. Also see “Supplemental
Information regarding Product Types” below.
Reserve estimates, contingent resource estimates
and estimates of future net revenue in respect of IPC’s oil and gas
assets in Canada (other than the assets acquired in the Cor4
acquisition) are effective as of December 31, 2022, and are
included in the reports prepared by Sproule Associates Limited
(Sproule), an independent qualified reserves evaluator, in
accordance with National Instrument 51-101 – Standards of
Disclosure for Oil and Gas Activities (NI 51-101) and the Canadian
Oil and Gas Evaluation Handbook (the COGE Handbook) and using
Sproule’s December 31, 2022 price forecasts.
Reserve estimates and estimates of future net
revenue in respect of IPC’s oil and gas assets acquired in the Cor4
acquisition are effective as of December 31, 2022 and are included
in the report prepared by GLJ Ltd. (GLJ), an independent qualified
reserves auditor, in accordance with NI 51-101 and the COGE
Handbook, and using Sproule’s December 31, 2022, price
forecasts.
Reserve estimates, contingent resource estimates
and estimates of future net revenue in respect of IPC’s oil and gas
assets in France and Malaysia are effective as of December 31,
2022, and are included in the report prepared by ERC Equipoise Ltd.
(ERCE), an independent qualified reserves auditor, in accordance
with NI 51-101 and the COGE Handbook, and using Sproule’s December
31, 2022 price forecasts.
The price forecasts used in the Sproule, GLJ and
ERCE reports are available on the website of Sproule (sproule.com)
and are contained in the AIF. These price forecasts are as at
December 31, 2022 and may not be reflective of current and future
forecast commodity prices.
The reserve life index (RLI) is calculated by
dividing the 2P reserves of 487 MMboe as at December 31, 2022
(including 15.9 MMboe acquired in the Cor4 acquisition), by the
mid-point of the 2023 CMD production guidance of 48,000 to 50,000
boepd.
IPC uses the industry-accepted standard
conversion of six thousand cubic feet of natural gas to one barrel
of oil (6 Mcf = 1 bbl). A BOE conversion ratio of 6:1 is based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. As the value ratio between natural gas and crude oil
based on the current prices of natural gas and crude oil is
significantly different from the energy equivalency of 6:1,
utilizing a 6:1 conversion basis may be misleading as an indication
of value.
Supplemental Information regarding
Product Types
The following table is intended to provide
supplemental information about the product type composition of
IPC’s net average daily production figures provided in this press
release:
|
Heavy Crude Oil(Mbopd) |
Light and Medium Crude Oil (Mbopd) |
Conventional Natural Gas (per day) |
Total(Mboepd) |
Three
months ended |
|
|
|
|
September 30,
2023 |
25.8 |
7.1 |
103.4 MMcf(17.3 Mboe) |
50.2 |
September 30,
2022 |
22.7 |
10.4 |
101.5 MMcf(16.9 Mboe) |
50.0 |
Nine
months ended |
|
|
|
|
September 30,
2023 |
25.9 |
8.6 |
102.4 MMcf(17.1 Mboe) |
51.6 |
September 30,
2022 |
22.6 |
9.4 |
98.1 MMcf(16.4 Mboe) |
48.4 |
Year
ended |
|
|
|
|
December 31, 2022 |
22.6 |
9.6 |
98.1 MMcf(16.4 Mboe) |
48.6 |
This press release also makes reference to IPC’s
forecast total average daily production of 48,000 to 50,000 boepd
for 2023. IPC estimates that approximately 51% of that production
will be comprised of heavy oil, approximately 16% will be comprised
of light and medium crude oil and approximately 33% will be
comprised of conventional natural gas.
CurrencyAll dollar amounts in
this press release are expressed in United States dollars, except
where otherwise noted. References herein to USD mean United States
dollars. References herein to CAD mean Canadian dollars.
- IPC-Q3-23_FSandMDA_reports
Grafico Azioni International Petroleum (TG:IPT)
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Da Ago 2024 a Set 2024
Grafico Azioni International Petroleum (TG:IPT)
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