CALGARY, Alberta – InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company”) is pleased to provide an operations update.
InPlay’s average production in the second quarter of 2021 is forecast to be approximately 5,325 boe/d(1) (70% light oil & NGLs) based on field estimates, representing a record quarterly production rate for the Company. Production is ahead of forecast as a result of the continued outperformance of six 100% Cardium wells drilled in Pembina, three of which were brought on production in the fourth quarter of 2019 and three direct offsets that were brought on production in the first quarter of 2020. Production rates are also supported by the exceptionally strong results of the three 100% Pembina Cardium 1.5 mile wells drilled on our recently acquired lands which were brought on production at the end of the first quarter of 2021. The average combined initial production (“IP”) rates(1) from the most recent three wells are as follows:
IP 30 (% light oil and NGLs) |
IP 60 (% light oil and NGLs) |
IP 90 (% light oil and NGLs) |
Current* (% light oil and NGLs) |
890 boe/d 297 boe/d (per well) (80%) |
1,323 boe/d 441 boe/d (per well) (78%) |
1,408 boe/d 469 boe/d (per well) (76%) |
1,505 boe/d 502 boe/d (per well) (68%) |
* Field estimates as of July 2, 2021
These wells have produced an average of approximately 42,240 boe(1) per well (76% light oil and NGLs) in the first ninety days of production, which is 45% above our forecast and 100% above proved undeveloped booked reserves in our December 31, 2020 independent reserve evaluation. The Company estimates, based on current performance, that these wells will pay out in six months at a West Texas Intermediate (“WTI”) price of approximately USD $60.00/bbl and an even shorter time frame at current WTI pricing of approximately USD $76.00/bbl.
With these tremendous results, InPlay has redirected drilling capital to wells on our recently acquired Pembina asset, as disclosed in our May 6, 2021 press release. The Company started drilling another three well pad directly offsetting the three wells drilled in the first quarter of 2021 and is currently drilling the third well on this pad. These wells are expected to be on production by the end of July.
At this time, InPlay reiterates its 2021 estimated annual average production guidance of 5,100 to 5,400 boe/d(1)(3) (69% light oil & NGLs) and currently expects to be at the high end of the production range. The Company is scheduled to release its second quarter financial and operational results on August 11, 2021 and will provide updated 2021 average annual production guidance at this time as additional production data from the three wells currently being drilled will be available. This update is also expected to include revised commodity price estimates, as current forward strip WTI oil prices for the second half of 2021 are approximately USD $14.00/bbl higher than the last price forecast we published in May 2021.
InPlay implemented a successful and comprehensive hedging program in 2020 to protect the Company’s balance sheet during a period of extreme commodity price volatility. The program provided InPlay with the cost certainty to restart our capital program in the fourth quarter of 2020 and has allowed the Company to quickly surpass our pre-COVID 2019 production levels. The majority of these hedges implemented in 2020 expired on June 30, 2021, with the Company’s hedging position for the second half of the year being primarily collars at much more favorable pricing levels.
Our current 2021 guidance is expected to result in continued record production for the remainder of the year. These production levels combined with strong forward strip commodity prices and increased operating income profit margins(2) from operational efficiencies are expected to result in a significant and record Adjusted Funds Flow (“AFF”) (2)(3) for InPlay.
We are very pleased with the recent operational results and the outlook for our operations. These results coupled with our recently renewed Senior Credit Facility places InPlay in a strong position to generate outsized returns for our shareholders. The Company remains committed to be a top-tier, capital efficient light oil growth company amongst light oil peers. Based on current commodity prices, InPlay anticipates record levels of AFF in 2021 generating approximately 35% Free Adjusted Fund Flow(2)(3) planned to be used to reduce debt moving towards a target of 1.0 times net debt to quarterly annualized EBITDA(2)(3) ratio sooner than anticipated.
We look forward to sharing our upcoming results with our shareholders. An updated corporate presentation will be available on our website at “www.inplayoil.com” in the upcoming day.