CALGARY, Alberta, Aug. 09, 2018 (GLOBE NEWSWIRE) — InPlay Oil Corp. (TSX:IPO) (OTCQX:IPOOF) (“InPlay” or the “Company”) announces its financial and operating results for the three and six months ended June 30, 2018. InPlay’s condensed unaudited interim financial statements and notes, as well as management’s discussion and analysis (“MD&A”) for the three and six months ended June 30, 2018 will be available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) and our website (“www.inplayoil.com”).
Financial and Operating Highlights
|(CDN) ($000’s) (except per share figures)||Three months ended
|Six months ended
|Oil and natural gas sales||20,993||14,584||40,902||29,733|
|Adjusted funds flow from operations(1)||7,376||6,171||15,314||12,270|
|Per share – basic and diluted||0.11||0.10||0.23||0.20|
|Net Income (Loss)||(326||)||457||1,064||1,467|
|Per share – basic and diluted||0.00||0.01||0.02||0.02|
|Exploration and Development Capital expenditures||12,329||4,446||25,875||13,957|
|Net Property Acquisitions (Dispositions)||184||1,219||(4,138||)||1,203|
|Basic weighted-average shares||67,886,619||62,386,891||67,886,619||62,391,505|
|Diluted weighted-average shares||67,886,619||62,386,891||67,886,619||62,391,505|
|Daily production volumes|
|Crude oil (bbls/d)||2,597||2,140||2,654||2,165|
|Natural gas liquids (bbls/d)||441||313||426||328|
|Natural gas (Mcf/d)||8,147||7,793||7,954||7,871|
|Crude Oil & NGLs ($/bbls)||72.99||56.06||69.19||56.87|
|Natural gas ($/Mcf)||1.10||2.92||1.62||2.85|
|Operating netbacks ($ per boe)(1)|
|Oil and Gas sales||52.48||42.72||51.30||43.17|
|Operating Netback (prior to realized derivative contracts)||28.74||21.97||28.54||22.42|
|Realized gain (loss) on derivative contracts||(4.91||)||1.19||(3.82||)||0.78|
|Operating Netback (including realized derivative contracts)||23.83||23.16||24.72||23.12|
(1) “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 and therefore may not be comparable with the calculations of similar measures for other companies. “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 Oil and Gas Metrics 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 and six months ended June 30, 2018.
InPlay’s capital program over the second quarter 2018 saw a continued focus on our Willesden Green bioturbated Cardium assets and the completion of our first Huxley Duvernay light oil horizontal well. We continue to see exceptional results from our development in our core Willesden Green Cardium area with our wells exceeding our internal type curves and showing some of the best initial production results to date of all Cardium wells drilled in the area. InPlay is firmly established in one of the most active, substantial and economic horizontal development light oil plays as well as one of the most exciting emerging light oil plays in the Western Canadian Sedimentary Basin. We are positioned to be one of the highest growth light oil focused junior oil and gas companies amongst our light oil peers with light oil and liquids currently comprising approximately 70% of our first half 2018 production and 94% of our total revenues.
Q2 2018 Financial & Operating Highlights
- Total production is up 17% to 4,396 boe/d compared to the second quarter of 2017 resulting in average production for the first half of 2018 of 4,405 boe/d within our previous annual average 2018 guidance of 4,400 – 4,500 boe/d. Total oil and liquids weighting also increased to 69% from 65% entirely attributable to light oil growth over the same respective periods.
- Light oil production of 2,597 bbl/day is a 21% increase over the second quarter of 2017 and light oil and liquids production is a 24% increase over the second quarter of 2017 reflecting focused development of our light oil weighted Cardium assets.
- Revenues increased 44% from the second quarter of 2017 to $21.0 million (96% derived from light oil and liquids). Light oil revenues in the second quarter increased 60% over the second quarter of 2017 to $18.5 million, also tracking the focused development of our light oil weighted Cardium assets.
- Operating income of $11.5 million, represents a 53% increase over the second quarter of 2017 with a corresponding 31% increase in operating netback to $28.74/boe.
- Adjusted funds flow from operations was $7.4 million or $0.11 per basic share representing a 20% increase over the second quarter of 2017. Adjusting for realized losses on derivative contracts, adjusted funds flow from operations would be $9.3 million or $0.14 per basic share for the quarter.
- InPlay’s borrowing base was increased by 25% to $75 million following the completion of the annual borrowing base review providing the Company expanded financial capacity.
Production for the quarter averaged 4,396 boe/d (69% oil and liquids) including downtime, equating to approximately 140 bbl/d of oil and liquids due to shut in and lost production from third party completion operations, as well as increased industry drilling activity resulting in facility constraints for fluid handling and increased natural gas line pressures in certain parts of Willesden Green. This required extra oil facility work to allow us to continue to move fluids and the addition of two compressors to reduce back pressures on the Cardium light oil wells.
InPlay’s capital program of $12.3 million in the second quarter of 2018 was comprised of several exploration, development and land acquisition activities. Development capital was focused on the Willesden Green bioturbated Cardium where we drilled two 100 percent working interest extended reach horizontal wells and started a non-operated extended reach horizontal well that drilled through quarter end. Facility construction was started in the quarter for these wells, and they were completed subsequent to quarter end. Facility expansions and additions were also undertaken to alleviate fluid handling and gas processing constraints for current and future production. In aggregate, InPlay has drilled and completed an equivalent of 10.5 gross horizontal miles (7.9 net horizontal miles) in Willesden Green to the end of the second quarter. Our first Huxley Duvernay well was completed and equipped in the quarter with initial flow back production starting in June and currently in the cleanup phase. Additional acreage was acquired by InPlay at the Crown land sale in the quarter for $1.4 million, resulting in the addition of 12 sections (7,680 acres) to our core Huxley area and current Duvernay land holdings. This added contiguous acreage to our existing land position and increases our holdings in the area by 33 percent to 48.25 sections (30,880 acres).
Adjusted funds flow from operations for the second quarter was $7.4 million or $0.44 per basic share annualized. The strong increase in WTI crude oil prices over the first half of the year resulted in realized losses on crude oil derivative contracts of $2.0 million (27 percent of adjusted funds flow from operations) in the second quarter. Sixty percent of the Company’s crude oil commodity derivative contracts in place through the second quarter and first half of 2018 expired on June 30, 2018.
We are extremely pleased with our Cardium horizontal drilling results in Willesden Green. Results to date have exceeded our internally forecasted type curves and notwithstanding the lost production from offsetting third party fracturing operations and facility restraints, we remain on track to deliver top tier growth amongst our light oil peers. When coupled with the rise in WTI benchmark oil prices and an improved forward looking supply/demand picture for world crude oil prices we are optimistic of our ability to continue to deliver top tier growth.
The second half of 2018 will see the completion of the two wells that were drilled at the end of the second quarter and the drilling of an estimated 5 additional extended reach horizontal wells. The Willesden Green area is where the majority of budgeted development capital for the year will be spent. With exceptional production results from our drilling achieved to date, we are increasing our average forecasted 2018 production guidance to 4,500 – 4,600 boe/d (71% light oil and liquids) and 2018 exit production to 4,900 – 5,000 boe/d (72% light oil and liquids). Our focused program for the remainder of the year, at current future pricing, is estimated to yield a net debt to annualized fourth quarter adjusted funds flow from operations ratio of approximately 1.2 times. Our 2018 exploration and development capital budget excluding land has been increased by $3.0 million to $41.0 million as all remaining wells to be drilled will be extended reach and forecast capital is being added for infrastructure and facilities on our recently acquired lands to ensure we have the ability to move our products. Total second half 2018 capital expenditures are forecast to be less than second half 2018 adjusted funds flow from operations. The reduced amounts hedged under crude oil derivative contracts starting in the second half of the year is expected to result in significantly improved returns on financial results compared to the second quarter with current crude oil commodity forecast prices.
InPlay continues to see exceptional results from wells recently drilled in our Willesden Green area and are excited about InPlay’s growth and development potential given the land and asset positions assembled in the Willesden Green and Pembina Cardium plays, as well as in the East Basin Duvernay. We look forward to releasing results from our latest extended reach Cardium horizontal wells drilled on the assets we acquired in the first quarter of 2018. Also, in the coming months, we expect to be in a position to release results on our first Duvernay well that was drilled to retain land in our Huxley area of operations. Plans this year and going forward are to continue to deploy capital towards these high return, top quartile operating netback assets and, given our financial flexibility, we expect to be able to deliver sustainable light oil production per-share growth for our 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 are excited about our program for the remainder of the year and we look forward to reporting our upcoming results.
For further information please contact:
President and Chief Executive Officer
InPlay Oil Corp.
Telephone: (587) 955-0632
Chief Financial Officer
InPlay Oil Corp.
Telephone: (587) 955-0634