CALGARY, Alberta, May 10, 2018 (GLOBE NEWSWIRE) — InPlay Oil Corp. (TSX:IPO) (OTCQX:IPOOF) (“InPlay” or the “Company”) announces its financial and operating results for the three months ended March 31, 2018. 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, 2018 will be available shortly on the System for Electronic Document Analysis and Retrieval (“SEDAR”) and our website (“www.inplayoil.com”).
Financial and Operating Highlights
|(CDN) ($000’s) (except per share figures)||Three months ended
|Oil and natural gas sales||19,909||15,149|
|Adjusted funds flow from operations(1)||7,938||6,096|
|Per share – basic and diluted||0.12||0.10|
|Per share – basic and diluted||0.05||0.02|
|Exploration and Development Capital expenditures||13,546||9,511|
|Net Property (dispositions)||(4,321||)||(16||)|
|Basic & Diluted weighted-average shares||67,886,619||62,396,169|
|Daily production volumes|
|Crude oil (bbls/d)||2,711||2,191|
|Natural gas liquids (bbls/d)||411||343|
|Natural gas (Mcf/d)||7,758||7,950|
|Crude Oil & NGLs ($/bbls)||65.45||57.66|
|Natural gas ($/Mcf)||2.18||2.79|
|Operating netbacks ($ per boe)(1)|
|Oil and Gas sales||50.11||43.62|
|Operating Netback (prior to realized derivative contracts)||28.33||22.87|
|Realized gain (loss) on derivative contracts||(2.72||)||0.38|
|Operating Netback (including realized derivative contracts)||26.61||23.25|
||“Adjusted funds flow from operations”, “Net Debt”, “Operating netback per boe” and “Operating netback” do not have a standardized meaning under international financial reporting standards (“IFRS”) and GAAP. “Adjusted funds flow from operations” adjusts for decommissioning obligation expenditures and net change in operating non-cash working capital from net cash flow provided by operating activities. Please refer to Non-GAAP Financial Measures and BOE equivalent at the end of this news release.|
Message to Shareholders:
We are pleased to present InPlay’s financial and operating results for the three months ended March 31, 2018.
InPlay’s first quarter capital program was directed towards its Willesden Green bioturbated Cardium assets where we are seeing some of the most productive results from Cardium light oil wells in Alberta. This capital program assisted in positioning InPlay as one of the highest growth light oil focused junior oil and gas Companies, with light oil and liquids comprising approximately 71% of our first quarter production and 93% of our total revenues. The $13.5 million development capital program was expended over the quarter, net of $4.3 million in net proceeds from acquisition and disposition activities, resulting in record average quarterly production of 4,415 boe/d and operating income of $11.3 million.
Q1 2018 Financial & Operating Highlights:
- Total production is up 14% to 4,415 boe/d compared to the first quarter of 2017, within annual average 2018 guidance of 4,400 – 4,500 boe/d. Total oil and liquids weighting also increased to 71% from 65% entirely attributable to light oil growth over the same respective periods.
- Light oil production of 2,711 bbl/day is a 24% increase over the first quarter of 2017 and an eight percent increase over the fourth quarter of 2017, reflecting focused development of our light oil weighted Cardium assets.
- Development in Willesden Green resulted in area production growth of approximately 175% to over 2,200 boe/day in the first quarter of 2018 compared to December 2016 with light oil and liquids weighting increasing to 77% from 58%.
- Revenues increased 31% from the first quarter of 2017 to $19.9 million (93% derived from light oil and liquids). Light oil revenues in the first quarter increased 40% over the first quarter of 2017 to $16.9 million also tracking the focused development of our light oil weighted Cardium assets.
- Operating income of $11.3 million, represents a 42% increase over the first quarter of 2017 with a corresponding 24% increase in operating netback to $28.33/boe. First quarter 2018 operating income represents an 11% increase over the fourth quarter of 2017 with a resulting eight percent increase in operating netbacks.
- Adjusted funds flow from operations of $7.9 million ($0.12 per basic share and $0.48 per basic share annualized) representing a 30% increase over the first quarter of 2017.
- Net income for the first quarter was $1.4 million, a 38% increase over the first quarter of 2017.
- Closed the disposition of a non-core gas plant facility for proceeds of $10 million.
- Acquired 6,059 net acres and an additional 50 net tier 1 potential drilling locations identified by management in Willesden Green for consideration of $5.7 million.
InPlay executed on an active first quarter 2018 capital program, with $13.5 million of development capital focused on the Willesden Green bioturbated Cardium where we drilled 2 (1.2 net) extended reach horizontal wells and 4 (2.6 net) one-mile horizontal wells. Production based on field estimates from the quarter’s extended reach horizontal wells delivered an average IP30 rate of 538 boe/d (88% light oil and liquids) and delivered an average IP60 production rate of 474 boe/d (88% light oil and liquids). The one mile wells came on later in the quarter delivering an average IP30 production rate of 298 boe/d (91% oil and liquids). In aggregate, InPlay drilled and completed an equivalent of 7.5 gross (4.9 net) horizontal miles.
The Company closed the disposition of a natural gas facility and associated infrastructure for $10 million in gross proceeds, where only 14% of the throughput of this facility was utilized by InPlay. The facility, which was located in a non-core area to InPlay, was sold for over 13 times net operating income. We also closed strategic Cardium asset acquisitions in the Willesden Green area for a total cost of $5.7 million (including adjustments). These acquisitions significantly added to our Willeden Green core area with 6,059 net acres of land (a 31% increase) and a potential drilling inventory of over 50 net tier 1 horizontal locations identified by management (a 64% increase) in the bioturbated zone where some of the highest light oil returns in Western Canada are being generated with average initial production ratios of over 85% light oil and liquids. These newly acquired lands are contiguous with the recent strong drilling results achieved by InPlay, and other industry operators surrounding these lands delivering results which are exceeding our forecasted type curve estimates. InPlay plans to begin drilling on these lands late in the second quarter and into the second half of 2018.
The steps InPlay has taken throughout 2017 and into 2018, including the completion of multiple strategic tuck-in Willesden Green acquisitions, Crown land sale acquisitions predominantly in the East Basin Duvernay area, a flow-through share financing, the non-core facility divestiture and the focused shift in capital to Willesden Green, positions InPlay as a sustainable long-term Company with two exciting light oil plays in the Cardium and the East Duvernay light oil shale play while maintaining solid financial flexibility. The Willesden Green property will be actively developed as our current growth area over the near term, while the Duvernay play is expected to be developed at a more measured pace. Competitor activity in the Duvernay in close proximity to our lands continues to demonstrate very encouraging results as completion techniques evolve. Our long tenure Crown land holdings provide us time, favorable royalty rates and allows us the flexibility to track industry developments in the area as we plan toward developing the play in order to maximize its profitability.
The remainder of 2018 will see approximately 6–7 net additional Cardium horizontal wells drilled. The Willesden Green area is planned to comprise, at a minimum, 80% of budgeted development capital for the year and will include additional extended reach horizontal wells. Completion of our first Duvernay horizontal well is expected to be the highlight in the second quarter and we would expect results by the middle to the end of the third quarter as peak production typically occurs in the first two to four months. Approximately $5.0 million of 2018 capital will be directed towards this activity on the Company’s Duvernay play.
We reiterate our forecasted 2018 production guidance to average between 4,400 – 4,500 boe/d (72% light oil and liquids) and 2018 exit production of 4,800 – 4,900 boe/d (73% light oil and liquids). Capital expenditures are expected to track approximate funds flow for the year with a targeted net debt to annualized fourth quarter adjusted funds flow ratio of approximately 1.2 times.
Given InPlay’s significant exposure to light oil prices, the Company is following the ongoing strength in the crude oil commodity market. A continuation of current crude oil commodity prices at the levels we have seen to date, above our budgeted USD $60.00 WTI, may provide ample capacity for InPlay to potentially expand its capital program in the second half of 2018.
InPlay’s capital program for the year will continue to be focused on properties that are expected to provide top tier returns and increase overall corporate light oil production and cashflow from operations.
We are very excited about InPlay’s growth and development potential going forward given the land and asset positions we have assembled in the Willesden Green and Pembina Cardium, as well as the East Basin Duvernay. With these high return, top quartile operating netback assets and our financial flexibility, we expect to be able to deliver a focused and meaningful development program delivering sustainable per-share growth for shareholders.
We thank our employees and directors for their ongoing commitment and dedication and we thank all of our shareholders for their continued interest and support. We look forward to reporting our upcoming results to our shareholders.