IPC Announces First Quarter 2025 Financial and Operational Results

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 months ended March 31, 2025.

William Lundin, IPC's President and Chief Executive Officer, comments: “We are pleased to announce another strong quarter of operational and financial performance for Q1 2025. IPC achieved an average net daily production during the quarter of 44,400 barrels of oil equivalent per day (boepd). Our results during the quarter were in line with the 2025 guidance announced at our Capital Markets Day in February as we continue to execute according to plan across our operations in Canada, Malaysia and France. Notably, the transformational Blackrod Phase 1 development project in Canada has progressed substantially during the quarter and forecast first oil is maintained with the original project sanction guidance for late 2026. We also continued with purchases of IPC common shares under the normal course issuer bid, having completed approximately 60% of the current 2024/2025 program between December 2024 to March 2025.”

Q1 2025 Business Highlights

• Average net production of approximately 44,400 boepd for the first quarter of 2025, within the guidance range for the period (52% heavy crude oil, 15% light and medium crude oil and 33% natural gas).⁽¹⁾
• Continued progressing Phase 1 development activity as well as future phase resource maturation works at the Blackrod asset.
• At Onion Lake Thermal, all four planned production infill wells and the final Pad L well pair have been successfully drilled.
• 3.9 million IPC common shares purchased and cancelled during Q1 2025 and continuing with target to complete the full 2024/2025 NCIB this year.

Q1 2025 Financial Highlights

• Operating costs per boe of USD 17.3 for Q1 2025, in line with guidance.⁽³⁾
• Operating cash flow (OCF) generation of MUSD 75 for Q1 2025, in line with guidance.⁽³⁾
• Capital and decommissioning expenditures of MUSD 99 for Q1 2025, in line with guidance.
• Free cash flow (FCF) generation for Q1 2025 amounted to MUSD -43 (MUSD 37 pre-Blackrod capital expenditure).⁽³⁾
• Gross cash of MUSD 140 and net debt of MUSD 314 as at March 31, 2025.⁽³⁾
• Net result of MUSD 16 for Q1 2025.

Reserves and Resources

• Total 2P reserves as at December 31, 2024 of 493 MMboe, with a reserve life index (RLI) of 31 years.⁽¹⁾⁽²⁾
• Contingent resources (best estimate, unrisked) as at December 31, 2024 of 1,107 MMboe.⁽¹⁾⁽²⁾
• 2P reserves net asset value (NAV) as at December 31, 2024 of MUSD 3,083 (10% discount rate).⁽¹⁾⁽²⁾

2025 Annual Guidance

• Full year 2025 average net production guidance range forecast maintained at 43,000 to 45,000 boepd.⁽¹⁾
• Full year 2025 operating costs guidance range forecast maintained at USD 18 to 19 per boe.⁽³⁾
• Full year 2025 OCF revised guidance estimated at between MUSD 240 and 270 (assuming Brent USD 60 to 75 per barrel for the remainder of 2025) from previous guidance of between MUSD 210 and 280 (assuming Brent USD 65 to 85 per barrel).⁽³⁾⁽⁴⁾
• Full year 2025 capital and decommissioning expenditures guidance forecast maintained at MUSD 320.
• Full year 2025 FCF revised guidance estimated at between MUSD -135 and -110 (assuming Brent USD 60 to 75 per barrel for the remainder of 2025) from previous guidance of between MUSD -150 and -80 (assuming Brent USD 65 to 85 per barrel), after taking into account MUSD 230 of forecast full year 2025 capital expenditures relating to the Blackrod asset.⁽³⁾⁽⁴⁾

During the first quarter of 2025, oil prices were relatively stable, with Brent prices averaging just below USD 76 per barrel. Following the quarter, commodity prices pulled back with spot Brent rates falling to USD 60 per barrel in April 2025. The physical crude market remained tight throughout the first quarter, prompting OPEC and the OPEC+ group to increase supply ahead of expectations. The timing of the supply increases coincided with the United States proposing harsh tariffs to countries deemed in a trade surplus of US goods. These two events have impacted future crude supply and demand outlooks, in turn weighing on spot and future oil benchmark prices. Despite the poor market sentiment, global inventories remain below the 5-year average, high geopolitical tensions persist, non-OPEC 2025 oil production (namely, in the US) is unlikely to grow at current prices, and US Federal Reserve Bank rate cuts are likely to occur in the near future. IPC prudently supplemented downside protection measures at the beginning of the first quarter of 2025 through financial swap hedging arrangements which in total represent nearly 40% of our forecast 2025 oil production at around USD 76 and USD 71 per barrel for Dated Brent and West Texas Intermediate (WTI), respectively, for the remainder of 2025.

In Canada, WTI to Western Canadian Select (WCS) crude price differentials during the first quarter of 2025 averaged just under USD 13 per barrel, with spot differentials decreasing to around USD 9 per barrel in April 2025. The Western Canadian Sedimentary Basin (WCSB) petroleum producers have greatly benefited from the TMX pipeline expansion with differentials tightening to levels not seen since 2020. There are currently no tariffs on Canadian crude exports to the United States, which remain covered by the US Mexico Canada free trade agreement. IPC has hedged the WTI/WCS differential for approximately 50% of our forecast 2025 Canadian oil production at USD 14 per barrel for 2025.

Natural gas markets in Canada for the first quarter of 2025 remained weak, given the softer than average winter weather conditions and high natural gas storage levels. The average AECO gas price was CAD 2.1 per Mcf for the first quarter of 2025. The forward strip implies improved pricing for Canadian gas benchmark prices, driven by the pending startup of the West Coast LNG Canada project later this year. Approximately 50% of our net long exposure is hedged at CAD 2.4 per Mcf to end October 2025, dropping to around 15% for November and December at CAD 2.6 per mcf.

First Quarter 2025 Highlights and Full Year 2025 Guidance

During the first quarter of 2025, our portfolio delivered average net production of 44,400 boepd, in line with guidance. Operational performance from our producing assets was strong to start the year as high facility and well uptimes were achieved. Drilling activity commenced in the first quarter of 2025 at Onion Lake Thermal, which aims to sustain production levels at the asset for 2025. In Malaysia, drilling and well maintenance works are planned to start in the second quarter of 2025, in line with plan. We maintain the full year 2025 average net production guidance range of 43,000 to 45,000 boepd.⁽¹⁾

Our operating costs per boe for the first quarter of 2025 was USD 17.3, in line with guidance. Full year 2025 operating expenditure guidance of USD 18.0 to 19.0 per boe remains unchanged.⁽³⁾

Operating cash flow (OCF) generation for the first quarter of 2025 was MUSD 75. Full year 2025 OCF guidance is tightened to MUSD 240 to 270(assuming Brent USD 60 to 75 per barrel for the remainder of 2025).⁽³⁾⁽⁴⁾

Capital and decommissioning expenditure for the first quarter of 2025 was MUSD 99 in line with guidance. Full year 2025 capital and decommissioning expenditure of MUSD 320 is maintained.

Free cash flow (FCF) generation was MUSD -43 (MUSD 37 pre-Blackrod capital expenditure) during the first quarter of 2025. Full year 2025 FCF guidance is tightened to MUSD -135 to -110 (assuming Brent USD 60 to 75 per barrel for the remainder of 2025) after taking into account MUSD 320 of forecast full year 2025 capital expenditures (including MUSD 230 relating to the Blackrod asset).⁽³⁾⁽⁴⁾

As at March 31, 2025, IPC’s net debt position was MUSD 314, from a net debt position of MUSD 209 as at December 31, 2024, mainly driven by the funding of forecast capital expenditures and the continuing share repurchase program (NCIB). Gross cash on the balance sheet as at March 31, 2025 amounts to MUSD 140 and IPC has access to an undrawn Canadian credit facility of greater than 130 MUSD. The access to liquidity supports IPC to follow through on its key strategic objectives of enhancing stakeholder value through organic growth, stakeholder returns, and pursuing value adding M&A.⁽³⁾

Blackrod

During the first quarter of 2025, IPC continued to advance the Phase 1 development of the Blackrod asset. Growth capital expenditure to first oil is maintained at MUSD 850. First oil of the Phase 1 development is estimated to be in late 2026, with forecast net production of 30,000 boepd by 2028. IPC forecasts capital expenditure in 2025 at the Blackrod asset of MUSD 230, of which MUSD 77 was invested in the Phase 1 development project during Q1 2025. Since the transformational organic growth project was sanctioned in early 2023, MUSD 669, or approximately 80% of the total multi-year project capital budget, has been incurred.⁽¹⁾

Project activities for the multi-year Blackrod Phase 1 development have progressed according to plan. Engineering, procurement and fabrication is substantially complete with greater than 90% of all facility modules delivered to site. Equipment installation, piping inter-connects, electrical and instrumentation are the key areas of focus for construction at the Central Processing Facility (CPF) and well pad facilities.

Resource maturation drilling for future phase expansion considerations took place during Q1 2025. Commercial operational readiness planning has ramped up in line with our progressive turnover strategy to ensure a seamless transition from build to start-up. IPC intends to fund the remaining Blackrod capital expenditure with forecast cash flow generated by its operations, cash on hand and drawing under the existing Canadian credit facility if needed.⁽³⁾

Stakeholder Returns: Normal Course Issuer Bid

In Q4 2024, IPC announced the renewal of the NCIB, with the ability to repurchase up to approximately 7.5 million common shares over the period of December 5, 2024 to December 4, 2025. Under the 2024/2025 NCIB, IPC repurchased and cancelled approximately 0.8 million common shares in December 2024, 3.7 million common shares during Q1 2025, and a further 0.2 million common shares purchased under other exemptions in Canada. The average price of common shares purchased under the 2024/2025 NCIB during Q1 2025 was SEK 146 / CAD 20 per share.

As at March 31, 2025, IPC had a total of 115,176,514 common shares issued and outstanding and IPC held no common shares in treasury. As at April 30, 2025, IPC had a total of 114,248,119 common shares issued and outstanding and IPC held no common shares in treasury.

Notwithstanding the final major capital investment year at Blackrod in 2025, IPC had purchased and cancelled 73% of the maximum 7.5 million common shares allowed under the 2024/2025 NCIB by the end of April 2025 and intends to purchase and cancel the remaining 2.0 million common shares under that program in 2025. This would result in the cancellation of 6.2% of common shares outstanding as at the beginning of December 2024. IPC continues to believe that reducing the number of shares outstanding in combination with investing in long-life production growth at the Blackrod project will prove to be a winning formula for our stakeholders.

Environmental, Social and Governance (ESG) Performance

During the first quarter of 2025, IPC recorded no material safety or environmental incidents.

As previously announced, IPC targets a reduction of our 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. IPC has also made a commitment to maintain 2025 levels of 20 kg CO₂/boe through to the end of 2028.⁽⁵⁾

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, 2024 (AIF) available on IPC’s website at www.international-petroleum.com and under IPC’s profile on SEDAR+ at www.sedarplus.ca.
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 net present value (NPV), are described in the AIF. NAV is calculated as NPV less net debt of USD 209 million as at December 31, 2024.
3. Non-IFRS measures, see “Non-IFRS Measures” below and in the MD&A.
4. OCF and FCF forecasts at Brent USD 60 and 70 per barrel assume Brent to WTI differential of USD 3 and 5 per barrel, respectively, and WTI to WCS differential of USD 10 and 15 per barrel, respectively, for the remainder of 2025. OCF and FCF forecasts assume gas price on average of CAD 2.25 per Mcf for the remainder of 2025.
5. Emissions intensity is the ratio between oil and gas production and the associated carbon emissions, and net emissions intensity reflects gross emissions less operational emission reductions and carbon offsets.