CALGARY, Alberta, Jan. 21, 2020 (GLOBE NEWSWIRE) — InPlay Oil Corp. (“InPlay” or the “Company”) is pleased to announce that its Board of Directors has approved a $35 million Exploration and Development capital program for 2020.
InPlay delivered another year of exceptional operational results while successfully responding to significant challenges facing the industry. The Company continued to leverage its proven track-record of drilling proficiency and operational expertise to set industry pacesetting drilling times for horizontal Cardium wells in both the Willesden Green and Pembina core areas. Management’s continued capital and operating cost improvements and high-quality drilling inventory has allowed InPlay to deliver top-tier capital efficiencies and light oil growth amongst our light oil peers despite continued volatile commodity prices. Similar to the last few years, InPlay will adopt a prudent and flexible 2020 capital program that is forecasted to achieve between 6 and 10% annual production growth over 2019.
InPlay drilled 13 (8.2 net) horizontal wells in 2019 primarily in the Willesden Green and Pembina areas, including 10 (5.2 net) extended reach horizontal (“ERH”) wells and 3 (3.0 net) one-mile horizontal wells. As announced in November of 2019, due to lower commodity prices than originally forecasted and more specifically, continued low natural gas liquids (“NGL”) pricing, we prudently reduced our 2019 capital program from $36 million to $32 million, in line with expected 2019 adjusted funds flow (“AFF”)(1), drilling 8.2 net horizontal wells instead of the originally planned 9.0 – 10.0 net horizontal wells. Notwithstanding the reduction of wells brought on production and lower capital program, the strong performance of our latest wells resulted in estimated annual average production of 5,000 boe/d (67% oil and liquids) for 2019, achieving our annual production guidance of 5,000 – 5,200 boe/d which was increased in August 2019 from our original guidance of 4,900 – 5,100 boe/d. This represents a 7% increase in annual average production over 2018, achieved despite an 11% reduction in originally planned capital spending.
Due to InPlay’s technical advancements, the three 100% Pembina horizontal wells drilled in Q3 2019 achieved record drill times for one mile wells in Pembina averaging 4.4 days per well compared to 7.5 to 8.0 days during our last drilling program in Pembina in 2017. The wells initially flowed for 7 to 10 days and then were placed on artificial lift. Due to operational issues (including erratic run times) the cleanup of the wells took a month longer than projected but are now producing at rates exceeding our forecast with average per well initial production (“IP”) 30 day rates of 164 boe/d (97% light oil and liquids), average IP 60 day production rates of 179 boe/d (95% oil and liquids) and average IP 90 day production rates of 190 boe/d (94% light oil and liquids). Each of the wells has produced at their highest rates with no decline over the past month at an average per well rate of 226 boe/d (92 % oil and liquids). InPlay is highly encouraged by these strong production rates which, combined with a 25% reduction in average all-in well costs totaling $1.8 million, makes InPlay’s Pembina inventory economically competitive with its Willesden Green assets.
2020 Capital Program Overview
The Company’s Board of Directors has approved a capital program for 2020 of $35 million focusing on sustainability and flexibility. We will continue to run a smart and sound junior light oil growth company and will adjust the capital program if required in response to the continued potential for volatile commodity prices. The program is designed to spend less capital than AFF while expecting to deliver top tier production per share growth amongst our peers.
In 2020, InPlay plans on drilling approximately 10.0 – 11.0 net development Cardium wells in Willesden Green and Pembina, in addition to one exploration vertical stratigraphic test East Duvernay well in the Huxley area. The first quarter plans consist of one ERH Willesden Green well and, with the exceptional results and economics of our most recent three well Pembina program, InPlay plans to drill three additional one-mile Pembina Cardium wells which have a short tie-in to the existing modular facilities built around the three wells drilled in the fourth quarter of 2019. The program includes one Duvernay stratigraphic well to be drilled and additional geological testing to secure further information on our exciting western-most block of land in the area which has had recent offsetting drilling activity. The Duvernay stratigraphic well is estimated to cost $1.2 million and will also extend the majority of our land holdings on this block for an additional 5 years. Approximately 20% of development capital in 2020 is expected to be focused in the Pembina area and 80% in the Willesden Green area. The Company plans to spend approximately 2 – 3 % of our AFF on our continued decommissioning efforts.
InPlay’s planned capital program is forecasted to result in 2020 annual average production of 5,300 to 5,500 boe/d (67% – 69% oil & liquids) delivering estimated organic annual production growth of 6% to 10%. Based on this program, the 2020 AFF(1) forecast is $36 to $39 million representing a 12% to 21% increase relative to 2019. Excess AFF above capital expenditures is expected to be used for debt reduction. The 2020 operating income profit margin(1) is forecast to be approximately 55%.
The Company’s 2020 guidance is based on a current future commodity price curve with an annual average WTI price of US $57.00/bbl, $2.00/mcf AECO and with estimates on foreign exchange of $0.76 CDN/USD. A change in the price of WTI by US $5.00/bbl results in a change of approximately $7 million in AFF.
(1)AFF and operating income profit margin are Non-GAAP Measures. See “Reader Advisories – Non-GAAP Financial Measures”.
About InPlay Oil Corp.
InPlay, based in Calgary, Alberta, has been engaged in the business of exploring for, developing and producing oil and natural gas, and acquiring oil and natural gas properties in western Canada since it commenced operations as a private company in June 2013. InPlay has concentrated on exploration and development drilling of light oil prospects in the Province of Alberta in a focused area of Central and West Central Alberta.
The InPlay management team has worked closely together for several years in both private and public company environments and has an established track record of delivering cost-effective per share growth in reserves, production, AFF and funds flow. InPlay will continue to implement its proven strategy of exploring, acquiring, and exploiting assets with a long term focus on large, light oil resources. The InPlay management team brings a full spectrum of geotechnical, engineering, negotiating and financial experience to its investment decisions. An updated corporate presentation will be posted to InPlay’s website in due course. Additional information about the Company can be found on SEDAR and on InPlay’s website at: www.inplayoil.com.