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
rebecca.gordon@international-petroleum.com reriksson@rive6.ch
Tel: +41 22 595 10 50 Tel: +46 701 11 26 15
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)
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