International Petroleum Corp. 2021 budget GUIDANCE $37 million and reported production of 43,000 barrels of oil equivalent (BOE) per day.
CAPITAL GUIDANCE
We are pleased to announce International Petroleum Corp. 2021 budget our 2021 production guidance is 41,000 to 43,000 boepd.(1) We forecast operating costs for 2021 to be USD 14.6 per boe.(3) We also forecast significant free cash flow generation based on our 2P reserves base of an aggregate of more than USD 600 million to USD 900 million over the period of 2021 to 2025, without taking into account development of our contingent resources or any further potential acquisitions.
Our 2021 capital expenditure budget is USD 37 million, as IPC focuses our 2021 strategy on free cash flow
generation and debt reduction. The 2021 budget includes continued Onion Lake Thermal Pad D’ completion
work, gas optimization activities in the Suffield area, well conversions at the Ferguson asset and Blackrod project
activities in Canada. We plan limited capital activities in France and Malaysia for 2021, with flexibility to amend
our plans based on commodity prices.
International Petroleum Corp. (IPC) Well & Facility Permits Download
International Petroleum Corp. 2021 budget “2020 was certainly the year when we were all called upon to rise up and face the unprecedented challenge of dealing with the outbreak of the Covid-19 pandemic effects. The restrictions we all had to endure to combat the virus in early 2020 turned our world upside down, leading to a collapse in oil demand and profound oil price weakness. The lack of an early agreement by OPEC+ on a supply response only served to exacerbate market balances which had already become severely dislocated.
Thankfully though, following agreement on the deepest production curtailments we have ever seen from the
OPEC+ group and other producers, including ourselves, we began to see some positive results. Those actions
managed to flatten the curve of inventory builds towards the end of the second quarter of 2020. This in turn
led to the oil market moving into deficit during the second half of 2020 with a draw down in excessive
inventory levels as the rebalancing process commenced. As a result of the market tightening, average Brent oil
prices increased from second quarter levels of around USD 30 per barrel to around USD 45 per barrel during
the fourth quarter.
As we look forward into 2021, uncertainties remain as we continue to see new variants and waves of Covid-19
infections. The pace of recovery in oil demand will be dependent on the successful roll out of the vaccination
program and the easing of restrictions on mobility. For a sustained recovery in oil prices, discipline and
compliance on the supply side measures announced by OPEC+ will also be essential, particularly when
considering the timing of easing of the supply curtailments.
As a result, we believe it is prudent to exercise caution with respect to future capital expenditure and growth
plans. We held firm on our reset 2020 expenditure program even as we saw oil prices recovering in the
second half of the year. We have set a limited capital budget for 2021 with a focus on free cash flow
generation and debt reduction. We do not expect to see a return to organic production growth until we see
stronger evidence of a more balanced market.
That being said, the massive collapse in investment combined with the redirection of future capital investment
away from upstream oil and gas in favour of renewable energy by the majors, along with the dramatic
reductions in US shale drilling activity, could set the scene for brighter times ahead. IPC believes that we are
very well positioned to benefit from the recovery.
We expect to continue with our opportunistic approach with respect to further business development
opportunities. Despite the turmoil the sector has been through, we have already witnessed an uptick in activity
levels in the M&A market and anticipate that this will continue in the months ahead.
Oil & Gas News
International Petroleum Corp. Well Permits & Wells Spud (Canada Only)
The oil and gas industry is highly regulated by Government agencies. One of the responsibilities is to approve well permits. A well permit is the intent of an oil & gas operator to drill a new well. Well permits include oil wells, gas wells, water wells and more..
Spudding is the process of beginning to drill a well in the oil and gas industry. … After the surface hole is completed, the main drill bit—which performs the task of drilling to the total depth—is inserted and this process can also be referred to as “spudding in.” Data source International Petroleum Corp. 2021 budget
International Petroleum Corp. Wells Drilled Last 2 Years Map (Canada Only)
Suffield Area, Alberta
Acquired by IPC early in 2018, the Suffield area assets are conventional oil and natural gas assets held over a large, contiguous land position of 800,000 net acres of shallow natural gas rights and 100,000 net acres of oil rights. Production and reserves from the assets come from conventional shallow oil and gas wells. These stable, low-decline producing fields have low production costs and significant future development potential from a combination of low risk development drilling, well stimulation and enhanced oil recovery opportunities.
Oil is produced from the Suffield area assets using both enhanced (EOR) and conventional recovery methods via water drive with pumped multi-lateral horizontal wells. The production is collected in a network of pipelines and transported to a central processing facility. In 2018, IPC recommenced conventional oil well drilling at Suffield, successfully bringing the N2N pool EOR facility and alkaline surfactant polymer (ASP) injection programme online in 2019.
Sweet natural gas production in the Suffield area is via shallow wells producing from multiple formations. The wells produce into a network of natural gas pipelines with a number of compressor stations. In 2018, IPC commenced a multi-year gas optimisation programme with a ramp up in well swabbing activity and an extensive well recompletion programme targeting underdeveloped production zones.
IPC is operator of the Suffield Oil asset holding 100% working interest.
IPC is operator of the Suffield Gas asset holding 99.7%¹ working interest.
¹ On a well-count basis
Ferguson Field, Alberta
Acquired by IPC in 2020, the Ferguson asset is a high netback, light oil field in Southern Alberta. The core pool produces high-quality ~30 API oil, and is under a successful gas injection enhanced oil recovery (EOR) scheme, with a significant inventory of infill drilling opportunities.
The pool was discovered in 2012 and in 2013 a gas injection enhanced oil recovery (EOR) scheme was established in the core producing area (Ferguson Alberta Bakken Oil Fairway). The pilot project has since expanded to a full-scale, highly successful EOR program, the approval area for which covers the bulk of the core producing area. IPC’s operational focus at Ferguson is on extending the core pool area’s EOR program to create high-value, long-life, low-decline production and drilling highly capital-efficient wells that will return significant value for years to come.
IPC is operator of the Ferguson Oil asset holding 100% working interest.
Onion Lake Thermal, Saskatchewan
Acquired by IPC in 2019, Onion Lake Thermal is a conventional heavy oil property located in the Lloydminster area in Saskatchewan. The Onion Lake property is made up of a 14,000 boepd heavy oil thermal project with a reserve life of over 20 years.
Oil is produced from the Onion Lake Thermal assets utilising a modified SAGD (steam-assisted-gravity-drainage) technique, steam is injected in the direction of the reservoir in a matrix type formation generating steam heat chambers around the horizontal sections of strategically placed production wells, maximising steam oil ratio efficiency, production rates and ultimate recovery. The production is collected in a common pipeline system and routed to processing facilities. In early 2019, a steam optimisation project was completed at the processing facility lifting Onion Lake Thermal name-plate capacity to 14,000 boepd.
IPC is operator of the Onion Lake Thermal asset holding 100% working interest.
Canada Northern Conventional and EOR (Other)
In addition, IPC holds conventional heavy oil assets at Onion Lake Primary, Mooney (EOR), John Lake and Graindale with production capacity of ~2,500 boepd.
Blackrod, Alberta
Regulatory approval has been received for an 80,000 boepd SAGD (steam-assisted-gravity-drainage) oil sands project at Blackrod. The delineated resource contains 1 billion boe of best estimate contingent resource.
For the last 6 years, a SAGD pilot at Blackrod has been operated, which has validated both commercial production rates and a corresponding steam oil ratio. Further pilot well testing and project optimisation studies are planned through 2020 to increase productivity, reduce capital costs and strengthen overall value.
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About International Petroleum Corp. (IPC)
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”.
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