IPC Announces 2023 Year-End Financial and Operational Results and 2024 Budget, Reserves and Guidance

International Petroleum Corporation (IPC or the Corporation) (TSX, Nasdaq Stockholm: IPCO) today released its financial and operating results and related management’s discussion and analysis (MD&A) for the three months and year ended December 31, 2023. IPC is also pleased to announce its 2024 budget, including that IPC continues to progress the development of the Blackrod Phase 1 project in Canada in line with schedule and budget. IPC also confirms its intention to complete the previously announced normal course issuer bid (NCIB) to acquire a further 6.5 million common shares up to December 2024, in addition to the 1.8 million common shares already purchased for cancellation under the NCIB in December 2023 and January 2024. IPC’s 2024 capital and decommissioning expenditure budget is USD 437 million and its 2024 average daily production guidance is between 46,000 and 48,000 barrels of oil equivalent (boe) per day (boepd).(1) 2023 year-end proved plus probable (2P) reserves are 468 million boe (MMboe) and best estimate contingent resources (unrisked) are 1,145 MMboe.(1,2)

William Lundin, IPC's President and Chief Executive Officer, comments: “We are very pleased to announce that IPC achieved record operational results in 2023. Our average net production was 51,100 boepd for the full year, with very strong operational and ESG performance across all our areas of operation. We exited 2023 at approximately 49,500 boepd. In a significant investment year for our Blackrod Phase 1 development project, we still produced positive annual free cash flows from our business. We also returned USD 95 million to shareholders through share buybacks and closed the Cor4 acquisition for a consideration of USD 62 million, ending the year in a net cash position of USD 58 million. With significant gross cash resources of USD 517 million at 2023 year-end, we continue to be well positioned to deliver on our three strategic pillars of Organic Growth, Stakeholder returns, and M&A that drive value creation for our stakeholders.(1,3) On Organic Growth, we are very pleased with the progress of the development of Phase 1 of the Blackrod project, Canada, which remains in line with schedule and budget. Phase 1 of the Blackrod project continues to forecast first oil in late 2026, with peak production planned to increase to 30,000 bopd by 2028. This transformational growth project is forecast to push IPC production levels on average from approximately 55,000 boepd between 2024 to 2028, to approximately 65,000 boepd between 2029 to 2033.(1,2) On Stakeholder Returns, we completed the 2022/2023 NCIB program, purchasing and cancelling 9.3 million IPC common shares over the period of December 5, 2022 to December 4, 2023, representing approximately 6.8% of the common shares outstanding at the start of that program. We immediately recommenced purchasing under the renewed 2023/2024 NCIB, purchasing for cancellation 1.2 million common shares during December 2023 and over 600,000 common shares during January 2024. We confirm our intention to complete the 2023/2024 NCIB by purchasing up to a further 6.5 million common shares by early December 2024, representing a 6.5% reduction in the number of shares common outstanding at the beginning of the 2023/2024 NCIB. On M&A, we successfully integrated the assets acquired in March 2023 through the acquisition of Cor4 Oil Corp. (Cor4) adjacent to our Suffield property in Alberta, Canada. We continue to advance oil drilling operations in the exciting Ellerslie play.(1) I am very pleased to have assumed the President and CEO role from January 1, 2024. IPC has a world class set of asset and management teams which is further complemented by a very experienced and skilled Board; this combined with our high-quality assets makes IPC a differentiator amongst the E&P space. I look forward to continuing to advance the proven strategies of IPC in this exciting year of financial strength, operational excellence and continued growth.”

IPC’s strategy since launching IPC in April 2017 remains unchanged: to deliver operational excellence through responsible operatorship, maintain financial resilience, maximise the value of our resource base, target growth organically and through acquisitions, and deliver stakeholder returns. IPC has followed through on this vision resulting in material value creation for all stakeholders through efficient capital allocation and operational proficiency. Since inception, IPC has sustained no material safety incidents across all operating domains, delivered within or ahead of guidance every reporting year, increased the Reserves Life Index (RLI) from 8 years to 27 years largely through 5 accretive acquisitions, and cancelled over 62.5 million common shares. The company is strongly positioned to continue following through on our strategy supported by a strong balance sheet to start 2024 with net cash of USD 58 million and material production growth expected from the Blackrod Phase 1 development with first oil expected in late 2026.(3) Following a year of exceptionally high oil and gas prices in 2022 with Brent prices averaging over USD 100 per barrel for the full year 2022, IPC continued to benefit in 2023 from strong oil benchmark prices, with average Brent prices over USD 82 per barrel for the full year. Quarterly average Brent prices during 2023 ranged between USD 78 to USD 87 per barrel. Strong oil and gas demand is expected to continue in 2024 which, along with such factors as OPEC+ decisions to curtail supply, potential market and transportation disruptions due to ongoing geopolitical tensions, and current global observed crude inventory levels at the bottom end of the five-year average, could limit downside risks on commodity prices in 2024. These positive factors may be partially offset by increased forecast supply from countries such as the United States in a Presidential election year, which could be expected to limit price upside. In Canada, fourth quarter 2023 West Texas Intermediate (WTI) to Western Canadian Select (WCS) crude price differentials averaged around USD 22 per barrel, with average differentials of around USD 18.5 for the full year. The Trans-Mountain (TMX) pipeline is currently expected to commence line-fill in the first half of 2024 which should benefit the WTI/WCS differentials during 2024 and into the future. IPC has hedged the WTI/WCS differential for approximately 70% of our Canadian crude production at USD 15 per barrel and hedged 25% of our WTI exposure for approximately USD 81 per barrel for 2024. Gas markets in 2023 witnessed a substantial decrease from the 2022 average AECO benchmark prices above CAD 5 per Mcf. The average AECO gas price was CAD 2.30 per Mcf for the fourth quarter of 2023, and an average of CAD 2.60 for the full year 2023. IPC’s realized prices for gas were CAD 2.55 per Mcf for the fourth quarter of 2023 and CAD 3.36 per Mcf for the full year 2023, taking into account hedges in place until October 31, 2023. IPC benefits from a well-balanced mix of production comprising approximately 54% Canadian Crude, 33% Canadian Natural Gas and 13% Brent weighted oil, on average over 2023. With strong commodity pricing, combined with delivering operational excellence above the high end of IPC’s 2023 guidance, IPC has again been able to deliver a very strong financial performance in the fourth quarter and throughout the full year 2023.

Fourth Quarter and Full Year 2023 Highlights

During the fourth quarter of 2023, IPC’s assets delivered average net production of 49,600 boepd, in line with high-end guidance for the quarter. This was made possible by high operational performance across all of IPC’s assets as well as the production contribution from IPC’s 2023 investment program in Canada and France, notwithstanding some downtime from two production wells in Malaysia through Q4 which have now been worked-over and are back on-stream as of end January 2024. Full year 2023 average net production of 51,100 boepd was a record high for IPC and on target with guidance of greater than 50,000 boepd.(1) IPC’s operating costs per boe for the fourth quarter of 2023 was USD 18.3. Full year 2023 operating costs per boe was USD 17.6, in line with guidance of USD 17.5 to 18 per boe.(3) Operating cash flow (OCF) generation for the fourth quarter of 2023 was USD 74 million. Full year 2023 OCF was USD 353 million in line with the most recent guidance of USD 340 to 365 million. (3) Capital and decommissioning expenditure for the fourth quarter of 2023 was USD 130 million. Full year 2023 capital and decommissioning expenditure of USD 327 million was in line with guidance of USD 330 million. Free cash flow (FCF) generation was in line with guidance at negative USD 65 million during the fourth quarter of 2023, reflecting the higher level of capital expenditure on the Blackrod Phase 1 development project. Full year 2023 FCF generation was USD 3 million, at the higher end of the most recent guidance of USD -65 to 5 million.(3) As at December 31, 2023, IPC’s net cash position was USD 58 million. IPC’s gross cash on the balance sheet amounts to USD 517 million which provides IPC with significant financial strength to continue progressing its strategies in 2024, including advancing the Phase 1 Blackrod development, returning value to shareholders through the 2023/2024 NCIB, and remaining opportunistic to M&A.(3)

Blackrod Project

In Q1 2023, IPC announced the decision to advance the development of Phase 1 of the Blackrod project. Development capital expenditure to first oil is estimated at USD 850 million nominal. First oil of the Phase 1 development is estimated to be in late 2026, with forecast net production of 30,000 bopd by 2028. The Blackrod Phase 1 development targets 218 million barrels of 2P reserves and the sanction case WTI breakeven estimated as of January 1, 2023, using the December 31, 2022 price forecasts of IPC’s qualified independent reserves evaluator, Sproule Associates Limited (Sproule), was USD 59 per barrel assuming a 10% discount rate. Following capital expenditure of USD 240 million invested in 2023, the project is forecast to add USD 981 million to IPC’s 2P reserves net present value (NPV) as at January 1, 2024, with a WTI breakeven of USD 54.5 per barrel assuming a 10% discount rate, using Sproule’s December 31, 2023 price forecasts. IPC forecasts capital expenditure in 2024 for the Blackrod project of USD 362 million, with the remainder of the estimated total project budget to be invested prior to first oil. With greater than 1 billion barrels of contingent resources (best estimate, unrisked) remaining, Blackrod presents material upside to future phase expansions beyond the initial first Phase of development.(1,2,4) Project activities for the multi-year Phase 1 development have progressed in line with schedule and budget. Following the successful completion of Front-End Engineering and Design (FEED) studies through 2022, IPC formerly established a partnership with the Engineering, Procurement and Construction (EPC) contractor in 2023 through contractual commitments for the Central Processing Facility (CPF). As at the end of 2023, major long lead items have been procured, fabrication has commenced, site civil and commercial road expansion works have advanced, drilling is underway, and third-party pipeline commercial agreements are progressing according to plan. Following significant project milestones achieved through 2023, IPC is well positioned to continue advancing responsible development of the Blackrod Phase 1 development through 2024. With a combination of contractual commitments and financial foreign exchange hedges locked in at more favourable rates than assumed at project sanction, IPC sits comfortably within the overall budget and schedule guidance to first oil. IPC intends to fund the remaining Phase 1 development costs with forecast cash flow generated by its operations and cash on hand.(3)

M&A IPC was pleased to close the strategic acquisition of Cor4 in March 2023 for a consideration of USD 62 million. The acquisition, located in the Suffield area, brought in 15.9 MMboe of 2P reserves as at January 1, 2023 and delivered greater than 5,000 boepd through 2023. The asset holds high quality mineral rights within the Ellerslie formation, an attractive feature that crystallised through 2023 as eight wells were successfully drilled into this play supporting higher than forecast production rates. The acquired asset team has been effectively integrated within IPC and further synergies within Suffield area are of continued focus as we seek to unlock further value potential.(1,2) Following the strategic divestiture of small non-core production and land assets in the greater John Lake area in Canada announced in Q3 2023, IPC further sold non-producing lands in Q4 for a consideration of USD 3.5 million. The total proceeds in aggregate from the non-core dispositions in Q3 and Q4 was in excess of USD 20 million. The 2P reserves and NPV10 as of January 1, 2023 were 0.6 MMboe and USD 7.7 million respectively for the divested properties.(2,4) IPC continues to review potential M&A opportunities. IPC has added over USD 2.5 billion of aggregate value in FCF generation and 2P reserves NPV increases, from IPC’s last 5 acquisitions.(3,4)

Stakeholder Returns: Normal Course Issuer Bid

During the period of December 5, 2022 to December 4, 2023, IPC purchased and cancelled an aggregate of approximately 9.3 million common shares under the 2022/2023 normal course issuer bid / share repurchase program (NCIB). The average price of shares purchased under the 2022/2023 NCIB was SEK 102 / CAD 13.0 per share. In Q4 2023, IPC announced the renewal of the NCIB, with the ability to repurchase up to approximately 8.3 million common shares over the period of December 5, 2023 to December 4, 2024. Under the 2023/2024 NCIB, IPC repurchased and cancelled approximately 1.2 million common shares in December 2023. By the end of January 2024, IPC repurchased for cancellation over 600,000 common shares under the 2023/2024 NCIB. The average price of common shares purchased under the 2023/2024 NCIB during December 2023 and January 2024 was SEK 114.5 / CAD 15 per share. As at February 6, 2023, IPC had a total of 126,479,966 common shares issued and outstanding, of which IPC holds 102,200 common shares in treasury. Notwithstanding the record level of capital investment forecast for 2024, IPC confirms its intention to continue to purchase and cancel common shares under the 2023/2024 NCIB to the remaining limit of 6.5 million common shares by December 4, 2024. This would result in the cancellation of 6.5% of shares outstanding as at the beginning of December 2023. IPC continues to believe that reducing the number of shares outstanding while in parallel investing in material production growth at Blackrod will prove to be a winning formula for our stakeholders.

Environmental, Social and Governance (ESG) Performance

Responsible operatorship and ensuring that IPC adheres to the highest principles of business conduct have been integral parts of how IPC does business since it started in 2017. With the publication of IPC’s second quarter 2023 financial report, IPC was very pleased to publish its fourth Sustainability Report and its first stand-alone report aligned with the Task Force on Climate-Related Financial Disclosures. 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 & Safetyv
• 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 IPC’s operations. During the fourth quarter and for the full year 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. IPC has extended its commitment to remain at 2025 levels of 20 kg CO2/boe through to the end of 2028.

Reserves, Resources and Value

As at the end of December 2023, IPC’s 2P reserves are 468 MMboe. During 2023, IPC replaced 78% of the annual 2023 production. The reserves life index (RLI) as at December 31, 2023, remains at approximately 27 years.(1,2) The net present value (NPV) of IPC’s 2P reserves as at December 31, 2023 was USD 3,023 million. IPC’s net asset value (NAV) was USD 3,081 or SEK 244 / CAD 32 per share as at December 31, 2023.(1,2,4,5,6) In addition, IPC’s best estimate contingent resources (unrisked) as at December 31, 2023 are 1,145 MMboe, of which 1,066 MMboe relate to future potential phases of the Blackrod project.(1,2)

2024 Budget and Operational Guidance

IPC is pleased to announce its 2024 average net production guidance is 46,000 to 48,000 boepd. IPC forecasts operating costs for 2024 to be USD 18 to 19 per boe.(1,3) IPC forecasts FCF generation based on its 2P reserves base of in aggregate of more than USD 900 to 1,800 million over the period of 2024 to 2028. In addition, IPC forecasts FCF generation of USD 1,750 to 2,800 million over the period of 2029 to 2033.(2,3,7) IPC’s 2024 capital and decommissioning expenditure budget is USD 437 million, with USD 362 million forecast relating to the Phase 1 development of the Blackrod project. The remainder of the 2024 budget in Canada includes, drilling at the Suffield and Ferguson assets, further development of the Mooney asset, and ongoing optimization work. IPC also completed well workover operations in Malaysia by January 2024 and expects to conduct technical studies for future development potential. Following the successful execution of the 2023 drilling campaign in France, the subsurface teams are maturing drilling targets within the Paris Basin. 2024 is set to be a record growth investment year for IPC; we have therefore set a limited sustaining capital expenditure plan of USD 75 million, inclusive of decommissioning, across the producing assets in the portfolio. With robust cashflow being generated from the producing assets and gross cash resources of USD 517 million, IPC intends to fully complete the remaining share buybacks available under the NCIB program through 2024. In all of IPC’s areas of operation, IPC has significant flexibility to control its pace of spend based on the development of commodity prices during 2024. Further details regarding IPC’s proposed 2024 budget and operational guidance will be provided at IPC’s Capital Markets Day presentation to be held on February 6, 2024 at 14:00 GMT. A copy of the Capital Markets Day presentation will be available on IPC's website at www.international-petroleum.com.