InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the
“Company”) is pleased to announce its financial and operating
results for the three months ended March 31, 2020. InPlay’s
condensed unaudited interim financial statements and notes, as well
as management’s discussion and analysis (“MD&A”) for the three
months ended March 31, 2020 will be available at “www.sedar.com”
and our website at “www.inplayoil.com”.
Financial and Operating Results:
(CDN) ($000’s) |
|
|
|
Three months endedMarch 31 |
|
|
|
|
|
2020 |
|
2019 |
|
Financial |
|
|
|
|
Oil and natural gas sales |
|
|
|
13,092 |
|
19,210 |
|
Funds flow |
|
|
|
3,235 |
|
8,534 |
|
Per share – basic and diluted |
|
|
|
0.05 |
|
0.13 |
|
Per boe |
|
|
|
7.43 |
|
20.02 |
|
Adjusted funds flow(1) |
|
|
|
3,418 |
|
9,054 |
|
Per share – basic and diluted(1) |
|
|
|
0.05 |
|
0.13 |
|
Per boe(1) |
|
|
|
7.85 |
|
21.24 |
|
Comprehensive income (loss) |
|
|
|
(100,497 |
) |
1,035 |
|
Per share – basic and diluted |
|
|
|
(1.47 |
) |
0.02 |
|
Exploration and development capital expenditures |
|
|
|
11,632 |
|
14,763 |
|
Property acquisitions/(dispositions) |
|
|
|
- |
|
87 |
|
Net debt |
|
|
|
(63,713 |
) |
(60,033 |
) |
Shares outstanding |
|
|
|
68,256,616 |
|
68,256,616 |
|
Basic & diluted weighted-average shares |
|
|
|
68,256,616 |
|
68,256,616 |
|
|
|
|
|
|
Operational |
|
|
|
|
Daily production volumes |
|
|
|
|
Crude oil (bbls/d) |
|
|
|
2,432 |
|
2,723 |
|
Natural gas liquids (bbls/d) |
|
|
|
807 |
|
500 |
|
Natural gas (Mcf/d) |
|
|
|
9,271 |
|
9,084 |
|
Total (boe/d) |
|
|
|
4,784 |
|
4,737 |
|
Realized prices |
|
|
|
|
Crude oil & NGLs ($/bbls) |
|
|
|
38.53 |
|
58.28 |
|
Natural gas ($/Mcf) |
|
|
|
2.06 |
|
2.82 |
|
Total ($/boe) |
|
|
|
30.07 |
|
45.06 |
|
Operating netbacks ($/boe)(1) |
|
|
|
|
Oil and natural gas sales |
|
|
|
30.07 |
|
45.06 |
|
Royalties |
|
|
|
(2.09 |
) |
(3.50 |
) |
Transportation expense |
|
|
|
(0.79 |
) |
(0.92 |
) |
Operating costs |
|
|
|
(14.67 |
) |
(14.29 |
) |
Operating netback |
|
|
|
12.52 |
|
26.35 |
|
Realized gain (loss) on derivative contracts |
|
|
|
0.00 |
|
0.05 |
|
Operating netback (including realized derivative
contracts) |
|
|
|
12.52 |
|
26.40 |
|
(1) “Adjusted funds flow” or “AFF”,
“adjusted funds flow per share, basic and diluted”, “adjusted funds
flow per boe”, “operating income”, “operating netback per boe” and
“operating income profit margin” do not have a standardized meaning
under International Financial Reporting Standards (IFRS) and GAAP
and therefore may not be comparable with the calculations of
similar measures for other companies. “Adjusted funds flow” adjusts
for decommissioning expenditures from funds flow. Please
refer to “Non-GAAP Financial Measures” and “BOE equivalent” at the
end of this news release and to the section entitled “Non-GAAP
Measures” in our MD&A for details of calculations, rationale
for use and applicable reconciliation to the nearest IFRS
measure.
First Quarter 2020 Financial &
Operations Overview
Production averaged 4,784 boe/d in the first
quarter of 2020 with approximately 340 boe/d of production down
during the month of January due to extremely cold weather and with
the new wells drilled in the quarter being brought on at restricted
rates due to the rapid commodity price decline through March. This
is a one percent increase compared to the 4,737 boe/d produced over
the first quarter of 2019. Operating costs over the first
quarter were $14.67/boe, five percent lower than $15.38/boe in the
fourth quarter of 2019.
The commodity price collapse as a result of the
COVID-19 crisis heavily impacted our financial results for the
first quarter of 2020. Oil prices were significantly lower
over the first quarter with WTI prices averaging $46.17 USD/bbl,
compared to $54.81 USD/bbl for the first quarter of 2019. This was
amplified during March (when InPlay brought on new production) when
WTI averaged $30.45 USD/bbl. NGL prices also continued to
remain at multi-year lows as the Company’s realized NGL prices
averaged $12.84 CDN/bbl in the first quarter of 2020 compared to
$28.29 CDN/bbl over the same period in 2019, largely due to
continued weakness in propane and butane pricing. During the first
quarter of 2020, InPlay achieved AFF of $3.4 million ($0.05 per
basic share).
InPlay’s capital program for the first quarter
of 2020 consisted of $11.6 million of development capital focused
on one (1.0 net) extended reach horizontal (“ERH”) well in
Willesden Green and three (3.0 net) one-mile horizontal wells in
Pembina. InPlay also built a water disposal facility in Pembina
that has reduced operating costs and is expected to payout in less
than a year at current future commodity pricing.
We are extremely pleased with the positive
results achieved from the continued drilling program in our Central
Pembina Cardium area. The average initial production (“IP”) rates
and related oil and liquids percentages for our three wells
completed in October 2019 and three wells completed in February
2020 are as follows:
|
IP 30 |
IP 60 |
IP 180 |
October 2019 Wells |
164 boe/d (97%) |
179 boe/d (95%) |
182 boe/d (90%) |
February 2020 Wells |
199 boe/d (96%) |
204 boe/d (95%) |
N/A |
These rates are well ahead of corporate type curves despite the
recently completed wells being produced at restricted rates.
Drilling in the Pembina Cardium has lower capital costs than
Willesden Green due to its shallower depth. The less capital
intensive nature coupled with our top-of-class cost structures
(which we have reduced by 25% since our last Pembina program in
2018) attributed to our new drilling and completion techniques
provides the Company with increased top-tier Pembina inventory in a
normal pricing environment. Average costs for the three one
mile Pembina wells drilled during the first quarter were
approximately $1.89 million per well for drilling, completions and
tie in operations. These most recent wells were drilled and
completed during frigid winter conditions when service availability
was tight and costs tend to be higher, but were still consistent
with the three October wells which cost an average of $1.78 million
in more favorable drilling conditions. These wells were completed
and brought on production in the last week of February and given
the commodity price collapse as a result of the COVID-19 crisis,
they are being produced at restricted rates in order to preserve
production and reserves for a more favorable oil price
environment.
Outlook
There has been recent optimism in demand
improving from the lows in April as countries are looking to
cautiously open their economies from strict isolation measures
imposed by governments. This combined with the announced
reductions in production that started May 1 from OPEC+ and
production curtailments by producers worldwide, suggests that
storage may not fill as quickly or to capacity as initially
predicted. InPlay remains steadfast on its focus of managing
the current crisis and is performing daily monitoring of the
economic environment, production economics, government assistance
programs and cost cutting initiatives. Management will
continue to take actions with the objective of preserving liquidity
and managing production and reserves in order to preserve and
realize higher value in improved future pricing environments.
In mid-March the Company quickly started
implementation of operating and corporate cost reduction
initiatives as a response to the unprecedented low pricing
environment. At that time the Company estimated that these
initiatives would result in approximately $7.0 million in savings
over the remainder of 2020 compared to our original forecast
announced in January 2020. Our focus and initiatives have continued
on this front and we are pleased to report that we now estimate
reductions with these controllable costs of between $8.0 – $9.0
million in an extremely low price environment. This equates
to approximately a 25% - 30% reduction and we estimate that we
could retain up to 10% cost reductions in a return to a normal
pricing environment.
InPlay recently received acknowledgment of
receipt of its application for the Canadian Emergency Wage Subsidy.
We are continuing to work with our banking syndicate in pursuing
the recently announced federal support programs through the Export
Development Bank of Canada (“EDC”) and Business Development Bank of
Canada (“BDC”). As previously mentioned in our press release
dated April 23, 2020, the Company believes that we are well
positioned to meet the requirements of the EDC and BDC liquidity
support programs.
Given the contango in the forward price curve and the favorable
economics of deferring production, InPlay has nominated oil
sales in June at approximately 20% of our pre-curtailment capacity.
Our focus is firmly on ensuring operations continue to be conducted
safely, efficiently and in a manner that will result in minimal
start up issues and costs. Oil wells with higher natural gas
rates will be prioritized to keep on production in order to take
advantage of the current strong natural gas pricing. As well
plans are to fill our excess oil storage capacity in order to sell
at anticipated higher future prices. Our production estimate
for June sales is approximately 2,300 boe/d at 50% natural gas
compared to the first quarter corporate average of 32% natural
gas. When pricing recovers, InPlay will reduce
curtailments and sell oil out of storage.
We thank our employees and all of our service
providers for their commitments and efforts in this unprecedented
time as well as our directors for their ongoing commitment and
dedication. Finally, we thank all of our shareholders for
their continued interest and support.
For further information please contact:
Doug Bartole President and Chief Executive Officer InPlay Oil Corp.
Telephone: (587) 955-0632 |
|
Darren Dittmer Chief Financial Officer InPlay Oil Corp. Telephone:
(587) 955-0634 |
Reader Advisories
Non-GAAP Financial
MeasuresIncluded in this press release are references to
the terms “adjusted funds flow”, “adjusted funds flow per share,
basic and diluted”, “adjusted funds flow per boe”, “operating
income”, “operating netback per boe” and “operating income profit
margin”. Management believes these measures are helpful
supplementary measures of financial and operating performance and
provide users with similar, but potentially not comparable,
information that is commonly used by other oil and natural gas
companies. These terms do not have any standardized meaning
prescribed by GAAP and should not be considered an alternative to,
or more meaningful than, “funds flow”, “profit (loss) before
taxes”, “profit (loss) and comprehensive income (loss)” or assets
and liabilities as determined in accordance with GAAP as a measure
of the Company’s performance and financial position.
InPlay uses “adjusted funds flow”, “adjusted
funds flow per share, basic and diluted” and “adjusted funds flow
per boe” as key performance indicators. Adjusted funds flow should
not be considered as an alternative to or more meaningful than
funds flow as determined in accordance with GAAP as an indicator of
the Company’s performance. InPlay’s determination of adjusted
funds flow may not be comparable to that reported by other
companies. Adjusted funds flow is calculated by adjusting for
decommissioning expenditures from funds flow. This item is
adjusted from funds flow as decommissioning expenditures are
incurred on a discretionary and irregular basis and are primarily
incurred on previous operating assets, making the exclusion of this
item relevant in Management’s view to the reader in the evaluation
of InPlay’s operating performance. Adjusted funds flow per share,
basic and diluted is calculated by the Company as adjusted funds
flow divided by the weighted average number of common shares
outstanding for the respective period. Management considers
adjusted funds flow per share, basic and diluted an important
measure to evaluate its operational performance as it demonstrates
its recurring operating cash flow generated attributable to each
share. Adjusted funds flow per boe is calculated by the
Company as adjusted funds flow divided by production for the
respective period. Management considers adjusted funds flow per boe
an important measure to evaluate its operational performance as it
demonstrates its recurring operating cash flow generated per unit
of production. For a detailed description of InPlay’s method of
calculating adjusted funds flow, adjusted funds flow per share,
basic and diluted and adjusted funds flow per boe and their
reconciliation to the nearest GAAP term, refer to the section
“Non-GAAP Measures” in the Company’s MD&A filed on
SEDAR.
InPlay also uses “operating income”, “operating
netback per boe” and “operating income profit margin” as key
performance indicators. Operating income should not be considered
as an alternative to or more meaningful than net income as
determined in accordance with GAAP as an indicator of the Company’s
performance. Operating income is calculated by the Company as
oil and natural gas sales less royalties, operating expenses and
transportation expenses and is a measure of the profitability of
operations before administrative, share-based compensation,
financing and other non-cash items. Management considers operating
income an important measure to evaluate its operational performance
as it demonstrates its field level profitability. Operating netback
per boe is calculated by the Company as operating income divided by
average production for the respective period. Management considers
operating netback per boe an important measure to evaluate its
operational performance as it demonstrates its field level
profitability per unit of production. Operating income profit
margin is calculated by the Company as operating income as a
percentage of oil and natural gas sales. Management considers
operating income profit margin an important measure to evaluate its
operational performance as it demonstrates how efficiently the
Company generates field level profits from its sales revenue. For a
detailed description of InPlay’s method of the calculation of
operating income, operating netback per boe and operating income
profit margin and their reconciliation to the nearest GAAP term,
refer to the section “Non-GAAP Measures” in the Company’s MD&A
filed on SEDAR.
Forward-Looking Information and
Statements This news release contains certain
forward–looking information and statements within the meaning of
applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" “forecast” and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the foregoing, this
news release contains forward-looking information and statements
pertaining to the following: that InPlay’s cost reduction
initiative will lead to estimated savings of approximately $8.0 -
$9.0 million; that the federal support program will be implemented
as announced and the Company’s belief that it will meet the
criteria for access including, without limitation, financial
viability; the estimated time to payout of our Pembina water
disposal facility; the potential for and extent of planned
curtailments or shut-ins and the potential timing and impact
thereof; that short-term production curtailments will not have a
significant impact on long term value of the Company; future
liquidity and financial capacity; June sales estimates; future
results from operations and operating metrics; future costs
(including retention of cost reductions post COVID-19), expenses
and royalty rates; future interest costs; the exchange rate between
the $US and $Cdn; and methods of funding our capital program.
Forward-looking statements or information are based on a number of
material factors, expectations or assumptions of InPlay which have
been used to develop such statements and information but which may
prove to be incorrect. Although InPlay believes that the
expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because InPlay can give no assurance
that such expectations will prove to be correct. In addition to
other factors and assumptions which may be identified herein,
assumptions have been made regarding, among other things: the
impact of increasing competition; the general stability of the
economic and political environment in which InPlay operates; the
timely receipt of any required regulatory approvals; the ability of
InPlay to obtain qualified staff, equipment and services in a
timely and cost efficient manner; drilling results; the ability of
the operator of the projects in which InPlay has an interest in to
operate the field in a safe, efficient and effective manner; the
ability of InPlay to obtain financing on acceptable terms; field
production rates and decline rates; the ability to replace and
expand oil and natural gas reserves through acquisition,
development and exploration; the timing and cost of pipeline,
storage and facility construction and the ability of InPlay to
secure adequate product transportation; future commodity prices;
currency, exchange and interest rates; regulatory framework
regarding royalties, taxes and environmental matters in the
jurisdictions in which InPlay operates; and the ability of InPlay
to successfully market its oil and natural gas products.
The forward-looking information and statements
included herein are not guarantees of future performance and should
not be unduly relied upon. Such information and statements,
including the assumptions made in respect thereof, involve known
and unknown risks, uncertainties and other factors that may cause
actual results or events to defer materially from those anticipated
in such forward-looking information or statements including,
without limitation: the duration and impact of COVID-19; changes in
commodity prices; the potential for variation in the quality of the
reservoirs in which we operate; changes in the demand for or supply
of our products; unanticipated operating results or production
declines; changes in tax or environmental laws, royalty rates or
other regulatory matters; changes in development plans of InPlay or
by third party operators of our properties; increased debt levels
or debt service requirements; inaccurate estimation of our oil and
gas reserve and resource volumes; limited, unfavorable or a lack of
access to capital markets; increased costs; a lack of adequate
insurance coverage; the impact of competitors; and certain other
risks detailed from time-to-time in InPlay's disclosure
documents.
The forward-looking information and statements
contained in this news release speak only as of the date hereof and
InPlay does not assume any obligation to publicly update or revise
any of the included forward-looking statements or information,
whether as a result of new information, future events or otherwise,
except as may be required by applicable securities laws.
Test Results and Initial Production
RatesTest results and initial production rates disclosed
herein, particularly those short in duration, may not necessarily
be indicative of long term performance or of ultimate recovery. A
pressure transient analysis or well-test interpretation has not
been carried out and thus certain of the test results provided
herein should be considered to be preliminary until such analysis
or interpretation has been completed.
BOE equivalent Barrel of oil
equivalents or BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 mcf: 1 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. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
than the energy equivalency of 6:1, utilizing a 6:1 conversion
basis may be misleading as an indication of value.
Inplay Oil (TSX:IPO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Inplay Oil (TSX:IPO)
Historical Stock Chart
From Apr 2023 to Apr 2024