International Petroleum Corporation Announces Revised 2020 Expenditure Plans

International Petroleum Corporation (IPC or the Corporation) (TSX, 
Nasdaq Stockholm: IPCO) announces its plans to reduce total forecast 
2020 expenditure by between USD 125 and 190 million. IPC's revised total 
estimated 2020 capital and decommissioning expenditures account for 
approximately USD 85 million of the total forecast reduction. IPC's 
total forecast 2020 operating costs are revised downwards by between USD 
40 and 105 million, depending on production levels and commodity prices. 
 
   Mike Nicholson, IPC's Chief Executive Officer, comments: "Following the 
extraordinary developments in the world since we released our 2020 
budget and production guidance and held our 2020 Capital Markets Day in 
February, IPC is taking decisive action to reset our 2020 expenditure 
plans in order to maximise the financial flexibility of the Corporation. 
 
   Given that we operate the majority of our assets, IPC has significant 
financial and operational flexibility to react swiftly to recent events 
and to positively prepare the Corporation to navigate through this 
period of extremely low commodity prices. All remaining discretionary 
2020 expenditures have been deferred or cancelled and we have built into 
our forecast range the temporary curtailment of production from those 
fields that are not expected to generate positive cash flows at these 
low pricing levels. These proposed production curtailments relate to our 
oil production, as we currently forecast positive cash flows from our 
gas production in Canada. We currently expect our 2020 net average 
production to be in the range of 30,000 to 45,000 barrels of oil 
equivalent (boe) per day, depending on how commodity prices evolve over 
the remainder of 2020 and the operational choices that we make to 
maximise the liquidity position of the Corporation. Operating costs for 
2020 are expected to be in the range of USD 12 to 13 per boe. 
 
   We retain access to significant financial headroom, with undrawn amounts 
under existing credit facilities currently at around USD 90 million. 
 
   We expect to be able to fully fund our revised 2020 expenditure program 
from cash flows and current borrowing capacity. Assuming average 2020 
Brent oil prices of USD 25 per barrel and assuming Western Canadian 
Select oil prices are at zero for the remainder of the year, we would 
expect to utilise around half of our liquidity headroom. This 
demonstrates the financial resilience of IPC to respond to sustained low 
oil prices. 
 
   The situation around the Covid-19 outbreak continues to evolve in all of 
our countries of operation. We are focused on protecting the health and 
safety of our employees, contractors and other stakeholders, while also 
working to ensure business continuity. The revised expenditure program 
and changes to operations will commence immediately. The Corporation 
will continue to monitor the commodity price outlook, as well as the 
restrictions and potential disruptions relating to the Covid-19 outbreak, 
and IPC has the ability to make further adjustments to these forecasts 
as needed." 
 
   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 Gordon                                   Robert Eriksson 
 VP Corporate Planning and Investor Relations     Media Manager 
 [e-mail]       [e-mail] 
 Tel: [phone]                            Tel: [phone] 
 
 
 
   The information was submitted for publication, through the contact 
persons set out above, at 08:30 CET on April 2, 2020. 
 
   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. 
 
   The Covid-19 virus and the restrictions and disruptions related to it, 
as well as the actions of certain oil and gas producing nations, have 
had a drastic adverse effect in 2020 on the world demand for, and prices 
of, oil and gas as well as the market price of the shares of oil and gas 
companies generally, including the Corporation's common shares. These 
factors are beyond the control of the Corporation and it is difficult to 
assess how these, and other factors, will continue to affect the 
Corporation and the market price of IPC's common shares. In light of the 
current situation, as at the date of this press release, the Corporation 
continues to review and assess its business plans and assumptions 
regarding the business environment, as well as its estimates of future 
production, cash flows, operating costs and capital expenditures. 
 
   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: 2020 production range, 
operating costs 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 ability to reduce expenditures to forecast levels; IPC's 
financial and operational flexibility to react to recent events and to 
prepare the Corporation to navigate through periods of low commodity 
prices; IPC's ability to defer or cancel expenditures and to curtail 
production, and to resume such production following curtailment; IPC's 
continued access to its existing credit facilities, including current 
financial headroom, on terms acceptable to the Corporation; the ability 
to fully fund 2020 expenditures from cash flows and current borrowing 
capacity; the financial resilience of IPC to respond to sustained low 
oil prices; IPC's flexibility to remain within existing financial 
headroom should Brent and Canadian oil prices fall to zero through the 
end of 2020; the ability of IPC to make further adjustments to its 2020 
expenditure plans, including to further lower production and operating 
costs; IPC's ability to generate cash flows; and the ability to maintain 
operations, production and business in light of the Covid-19 outbreak 
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. 
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. 
 
   The forward-looking statements are based on certain key expectations and 
assumptions made by IPC, including expectations and assumptions 
concerning: prevailing commodity prices and currency exchange rates; 
applicable royalty rates and tax laws; interest rates; future well 
production rates and reserve and contingent resource volumes; operating 
costs; the timing of receipt of regulatory approvals; the performance of 
existing wells; anticipated timing and results of capital expenditures; 
the sufficiency of budgeted capital expenditures in carrying out planned 
activities; the benefits of acquisitions; the state of the economy and 
the exploration and production business in the jurisdictions in which 
IPC operates and globally; the availability and cost of financing, 
labour and services; and the ability to market crude oil, natural gas 
and natural gas liquids successfully. 
 
   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: 
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 and 
exchange rate fluctuations; interest rate fluctuations; marketing and 
transportation; loss of markets; competition; incorrect assessment of 
the value of acquisitions; failure to 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. Readers are cautioned that the foregoing list of factors is 
not exhaustive. 
 
   Additional information on these and other factors that could affect IPC, 
or its operations or financial results, are included in the management's 
discussion and analysis for the year ended December 31, 2019 (See 
"Cautionary Statement Regarding Forward-Looking Information" therein), 
the Corporation's Annual Information Form (AIF) for the year ended 
December 31, 2019 (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.sedar.com) or IPC's website 
(www.international-petroleum.com). 
 
   Non-IFRS Measures 
 
   References may be 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 definitions of OCF, FCF, EBITDA, operating costs and net 
debt/net cash that may be used by other public companies. Non-IFRS 
measures should not be considered in isolation or as a substitute for 
measures prepared in accordance with IFRS. 
 
   Management believes that non-IFRS measures are useful supplemental 
measures that may assist shareholders and investors in assessing the 
cash generated by and the financial performance and position of the 
Corporation. Management also uses non-IFRS measures internally in order 
to facilitate operating performance comparisons from period to period, 
prepare annual operating budgets and assess the Corporation's ability to 
meet its future capital expenditure and working capital requirements. 
Management believes these non-IFRS measures are important supplemental 
measures of operating performance because they highlight trends in the 
core business that may not otherwise be apparent when relying solely on 
IFRS financial measures. Management believes such measures allow for 
assessment of the Corporation's operating performance and financial 
condition on a basis that is more consistent and comparable between 
reporting periods. The Corporation also believes that securities 
analysts, investors and other interested parties frequently use non-IFRS 
measures in the evaluation of issuers. Forward-looking statements are 
provided for the purpose of presenting information about management's 
current expectations and plans relating to the future and readers are 
cautioned that such statements may not be appropriate for other 
purposes. 
 
   The definition of each non-IFRS measure is presented in IPC's MD&A (See 
"Non-IFRS Measures" therein). 
 
   Disclosure of Oil and Gas Information 
 
   BOEs may be misleading, particularly if used in isolation. A BOE 
conversion ratio of 6 thousand cubic feet (Mcf) per 1 barrel (bbl) 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. 
 
   Currency 
 
   All 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. 
 
   Attachment 
 
 
   -- PR V5 IPC Revised 2020 Budget 02-04-2020 
      https://ml-eu.globenewswire.com/Resource/Download/3edf97bf-7a36-4198-a661-c10be9c87e6c
 

(END) Dow Jones Newswires

April 02, 2020 02:30 ET (06:30 GMT)