InPlay Oil Corp press release
InPlay Oil Corp. Announces First Quarter 2025 Financial and Operating Results and Updated 2025 Capital Budget Post Closing of the Highly Accretive Pembina Asset Acquisition
TSX - Toronto Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · Canada
Canada NewsWire
CALGARY, AB , May 8, 2025 /CNW/ - InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (" InPlay " or the " Company ") announces its financial and operating results for the three months ended March 31, 2025 and an updated 2025 capital budget following the successful completion of the strategic acquisition of Cardium light oil focused assets (the " Acquired Assets ") in the Pembina area of Alberta (the " Acquisition ") from Obsidian Energy Ltd. And certain of its affiliates (collectively " Obsidian "). 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, 2025 will be available at " www.sedarplus.ca " and on our website at " www.inplayoil.com ". All figures presented herein reflect the Company's six (6) to one (1) share consolidation, which was effective April 14, 2025 . An updated corporate presentation will be available on our website shortly.
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First Quarter 2025 Highlights
Achieved average quarterly production of 9,076 boe/d (1) (55% light crude oil and NGLs), a 5% increase over Q1 2024 and ahead of internal forecasts. Generated strong quarterly Adjusted Funds Flow ("AFF") (2) of $16.8 million ( $1.10 per basic share (3) ). Returned $4.1 million to shareholders by way of monthly dividends, equating to a 16% yield relative to the current share price. Since November 2022 InPlay has distributed $44 million in dividends including dividends declared to date. Maintained a strong operating income profit margin (3) of 54%. Improved field operating netbacks (3) to $25.71 /boe, an increase of 3% compared to Q4 2024.
First quarter results exceeded expectations, driven in part by the outperformance of newly drilled wells at Pembina Cardium Unit #7 (PCU#7). A two well pad delivered average initial production ("IP") rates of 677 boe/d (75% light oil and NGLs) over the first 30 days and 492 boe/d (66% light oil and NGLs) over the first 60 days, both significantly above expectations. Over the initial two-month period, production from these wells was more than 100% above our type curve. These wells ranked in the top-ten for production rates for all Cardium wells in the basin for the month of March.
Complementing InPlay's strong operational momentum, Obsidian drilled four (4.0 net) wells on the Acquired Assets in the first quarter. The first two (2.0 net) wells, which started production mid quarter, are outperforming our internal type curve by approximately 50% with average IP rates of 304 boe/d (91% light oil and NGLs) over the first 30 days and 295 boe/d (85% light oil and NGLs) over the first 60 days. The remaining two wells, brought online in the final days of the first quarter, are performing more than 350% above our internal type curve, with average IP rates per well of 887 boe/d (88% light oil and NGLs) over their initial 30 day period.
The Company is very excited about the highly accretive Pembina Acquisition announced February 19, 2025 and had anticipated strong results from the combined assets. The exceptional results from the first quarter drilling program, combined with the outperformance of base production, have driven current field estimated production to approximately 21,500 boe/d (64% light oil and NGLs) significantly exceeding what we had initially forecasted at the announcement of the Acquisition. Given the current volatility in commodity prices, this material outperformance provides the Company with significant flexibility to scale back our capital program, providing "more for less" while maintaining our production forecasts, allowing for more aggressive debt repayment even in a lower pricing environment.
2025 Capital Budget and Associated Guidance
Following the closing of the highly accretive Acquisition on April 7, 2025 , InPlay is pleased to provide initial pro forma guidance inclusive of the Acquired Assets. This guidance reflects the exceptional operational performance across the Company's expanded asset base, while taking into account the current volatile commodity price environment. It also underscores InPlay's continued commitment to maximizing free cash flow to support ongoing debt reduction, while positioning the Company to support its return to shareholder strategy.
InPlay's Board has approved an updated capital program of $53 – $60 million for 2025. InPlay plans to drill approximately 5.5 – 7.5 net Extended Reach Horizontal ("ERH") Cardium wells over the remainder of the year. A significant portion of the remaining 2025 capital budget is expected to be directed toward the Acquired Assets, which (as outlined above) continue to materially outperform internally modelled type curves. Cost efficiencies realized through InPlay's recent drilling program, combined with the application of InPlay's drilling and completion techniques to the Acquired Assets, are expected to further enhance well economics. Capital will also be spent tying in certain InPlay assets into the newly acquired facilities, eliminating significant trucking costs, and marks the first step in our synergy cost savings strategy. Due to the outperformance of production across our asset base, InPlay has reduced total capital spending for the remainder of 2025 by approximately 30% (relative to initial expectations) without reducing production estimates.
Key highlights of the updated 2025 capital program include:
Production per Share Growth: Forecasted average annual production of 16,000 – 16,800 boe/d (1) (60% – 62% light oil and NGLs), a 15% increase (based on mid-point) in production per weighted average share compared to 2024 despite 30% less capital spending than initially expected, driven by: Lower corporate base decline rate of 24% due to the favorable decline profile of the Acquired Assets; Improved corporate netbacks driven by the higher oil and liquids weighting of the Acquired Assets; and Enhanced capital efficiencies from high graded drilling inventory of the pro forma assets.
FAFF Generation and Dividend Sustainability: AFF (2) per weighted average share (4) of $5.00 – $5.35 , a 13% increase (based on mid-point) compared to 2024. Free adjusted funds flow ("FAFF") (3) of $68 – $76 million equating to a 35% – 40% FAFF Yield (3) , a 10x increase (based on mid-point) in FAFF per share compared to 2024 despite a 17% year over year reduction in forecasted WTI price.
Top Tier Returns: Total return of 50% – 55% after combining FAFF Yield and production per share growth (4) , which is expected to be at the high end of our peer group.
Debt Reduction: Excess FAFF (3) is planned to be used to reduce debt. Projected year-end Net Debt (2) of $213 – $221 million equating to a $31 – $39 million reduction from closing of the Acquisition. Year-end Net Debt to Q4 2025 annualized EBITDA (3) ratio of 1.1x – 1.3x.
InPlay continues to monitor global trade and commodity dynamics, including United States tariffs on Canada . Capital spending will be weighted towards the back end of the year with drilling expected to resume again in August, providing ample time to finalize capital spending allocation depending on commodity pricing and continued asset performance. As a result of minimal capital spending in the second quarter, InPlay anticipates generating significant FAFF which will be directed to reducing debt. InPlay will remain flexible and will make decisions based on our core strategy of disciplined capital allocation, maintaining financial strength to ensure the long term sustainability of our strategy and return to shareholder program.
Updated 2025 Guidance Summary:
| | 2025 | | WTI (US$/bbl) | 63.10 | | FX (CAD$/USS) | 0.70 | | AECO (CAD$/GJ) | 2.30 | | Production (boe/d) (1) | 16,000 – 16,800 | | Capital ($ millions) | 53 – 60 | | Net Wells Drilled | 8.5 – 10.5 | | AFF ($ millions) (2) | 124 – 133 | | FAFF ($ millions) (3) | 68 – 76 | | Year-end Net Debt ($ millions) (2) | 213 – 221 | | Net Debt / Q4 2025 annualized EBITDA (3) | 1.1 – 1.3 | | Dividend ($ millions) | 26 – 27 |
Following closing of the Acquisition, a significant hedging program was undertaken to help provide downside commodity price protection. As further detailed in the hedging summary section in this press release, InPlay has hedged approximately 75% of its net after royalty oil production and 67% of its net after royalty production on a BOE basis for the remainder of 2025. InPlay's strong hedge book provides insulation to the current commodity price volatility which is highlighted in the sensitivity table below.
| | Impact to 2025 AFF | | US$5.00/bbl Decrease in WTI ($ million) | (7.6) | | US$5.00/bbl Increase in WTI ($ million) | 4.5 | | C$0.25/GJ Decrease in AECO ($ million) | (1.1) | | C$0.25/GJ Increase in AECO ($ million) | 1.7 |
With low decline high netback assets, a flexible budget, a resilient balance sheet, and becoming a larger company, InPlay remains well positioned to sustainably navigate future commodity price cycles. Adhering to this disciplined strategy has allowed the Company to navigate previous commodity price cycles including the COVID-19 pandemic price environment.
Financial and Operating Results:
| (CDN) ($000's) | | Three months ended
March 31 | | | | | | | 2025 | 2024 | | Financial | | | | | | Oil and natural gas sales | | | 38,936 | 37,997 | | Adjusted funds flow (2) | | | 16,782 | 16,525 | | Per share – basic (3)(5) | | | 1.10 | 1.08 | | Per share – diluted (3) (5) | | | 1.06 | 1.08 | | Per boe (3) | | | 20.54 | 21.10 | | Comprehensive income (loss) | | | (2,887) | 1,686 | | Per share – basic (5) | | | (0.19) | 0.11 | | Per share – diluted (5) | | | (0.18) | 0.11 | | Dividends | | | 4,098 | 4,098 | | Per share | | | 0.27 | 0.27 | | Capital expenditures – PP&E and E&E | | | 13,888 | 25,530 | | Property acquisitions (dispositions) | | | 343 | (25) | | Net debt (2) | | | 63,286 | 59,897 | | Shares outstanding (5) | | | 15,236,681 | 15,019,893 | | Basic weighted-average shares (5) | | | 15,211,366 | 15,032,425 | | Diluted weighted-average shares (5) | | | 15,839,268 | 15,308,537 | | | | | | | | Operational | | | | | | Daily production volumes | | | | | | Light and medium crude oil (bbls/d) | | | 3,429 | 3,452 | | Natural gas liquids (boe/d) | | | 1,572 | 1,487 | | Conventional natural gas (Mcf/d) | | | 24,452 | 22,000 | | Total (boe/d) | | | 9,076 | 8,605 | | Realized prices (3) | | | | | | Light and medium crude oil & NGLs ($/bbls) | | | 75.13 | 72.72 | | Conventional natural gas ($/Mcf) | | | 2.33 | 2.66 | | Total ($/boe) | | | 47.66 | 48.52 | | Operating netbacks ($/boe) (4) | | | | | | Oil and natural gas sales | | | 47.66 | 48.52 | | Royalties | | | (5.84) | (5.78) | | Transportation expense | | | (1.15) | (1.09) | | Operating costs | | | (14.96) | (15.36) | | Operating netback (4) | | | 25.71 | 26.29 | | Realized gain on derivative contracts | | | 0.07 | 0.29 | | Operating netback (including realized derivative contracts) (4) | | | 25.78 | 26.58 |
First Quarter 2025 Financial & Operations Overview:
The year has begun with strong momentum as production for the quarter exceeded internal forecasts, largely due to the outperformance of new ERH wells in PCU#7. Three (3.0 net) ERH wells were brought online at the end of February as part of a $13.9 million capital program, inclusive of $1.4 million invested in well optimization initiatives which continues to lower corporate declines. Production averaged 9,076 boe/d (1) (55% light crude oil and NGLs) in the quarter, a 5% increase from 8,605 boe/d (1) in the first quarter of 2024.
Notably, a two well pad drilled in PCU#7 exceeded expectations, delivering average IP rates of 677 boe/d (75% light oil and NGLs) and 492 boe/d (66% light oil and NGLs) per well over their first 30 and 60 days, respectively, which is over 100% above our internally modeled type curve for these wells.
Obsidian drilled four (4.0 net) wells on the Acquired Assets in the first quarter. The first two (2.0 net) wells, which came on production mid quarter, are outperforming the internal type curve with IP rates averaging 304 boe/d (91% light oil and NGLs) and 295 boe/d (85% light oil and NGLs) over the first 30 and 60 days, respectively (approximately 50% above our internally modelled type curve). The last two wells were brought online in the final days of the quarter and are performing significantly above internal forecasts with IP rates averaging 887 boe/d (88% light oil and NGLs) per well over their first 30 days (more than 350% above our type curve).
AFF for the quarter was $16.8 million . In addition, the Company returned $4.1 million ( $0.09 per share) in base dividends to shareholders which equates to a yield of 16% based on the current share price. Net debt at quarter-end totaled $63 million , with a net debt to EBITDA ratio (3) of 0.8x, reflecting a healthy financial position.
On behalf of the entire InPlay team and the Board of Directors, we thank our shareholders for their continued support as we advance our strategy of disciplined growth, returns, and long-term value creation. We are excited to report our progress with respect to the strategic Acquisition.
| Notes: | | | 1. | See "Production Breakdown by Product Type" at the end of this press release. | | 2. | Capital management measure. See "Non-GAAP and Other Financial Measures" contained within this press release. | | 3. | Non-GAAP financial measure or ratio that does not have a standardized meaning under International Financial Reporting Standards (IFRS) and GAAP and therefore may not be comparable with the calculations of similar measures for other companies. Please refer to "Non-GAAP and Other Financial Measures" contained within this press release and in our most recently filed MD&A. | | 4. | Supplementary measure. See "Non-GAAP and Other Financial Measures" contained within this press release. | | 5. | Common share and per common share amounts have been updated to reflect the six for one common share consolidation effective April 14, 2025. |
For further information please contact:
Doug Bartole President and Chief Executive Officer InPlay Oil Corp. Telephone: (587) 955-0632
Darren Dittmer Chief Financial Officer InPlay Oil Corp. Telephone: (587) 955-0634
Reader Advisories
Hedging Summary
| | Q2/25 | Q3/25 | Q4/25 | Q1/26 | Q2/26 – Q4/26 | Q1/27 | | | | | | | | | | Natural Gas AECO Swap (mcf/d) | 14,215 | 14,215 | 12,960 | 12,320 | 7,900 | 2,845 | | Hedged price ($AECO/mcf) | $2.20 | $2.20 | $2.60 | $2.80 | $2.90 | $3.65 | | | | | | | | | | Natural Gas AECO Costless Collar (mcf/d) | 9,830 | 13,270 | 12,640 | 12,320 | 11,795 | 13,270 | | Hedged price ($AECO/mcf) | $2.10 - $3.05 | $2.10 - $3.20 | $2.20 - $3.40 | $2.25 - $3.50 | $2.55 - $3.80 | $2.90 - $4.85 | | | | | | | | | | | | | | | | | | Crude Oil WTI Swap (bbl/d) | 3,820 | 3,250 | 2,500 | 3,750 | 500 | 500 | | Hedged price ($USD WTI/bbl) | $61.70 | $62.45 | $62.20 | $60.30 | $60.20 | $60.60 | | | | | | | | | | Crude Oil WTI Costless Collar (bbl/d) | - | 1,300 | 1,300 | - | - | - | | Hedged price ($USD WTI/bbl) | - | $55.00 - $59.35 | $55.00 - $59.35 | - | - | - | | | | | | | | | | Crude Oil WTI Three-way Collar (bbl/d) | 1,700 | 1,300 | 1,300 | - | - | - | | Low sold put price ($USD WTI/bbl) | $60.20 | $59.50 | $59.50 | - | - | - | | Mid bought put price ($USD WTI/bbl) | $68.10 | $67.50 | $67.50 | - | - | - | | High sold call price ($USD WTI/bbl) | $82.90 | $83.00 | $83.00 | - | - | - | | | | | | | | | | Crude Oil MSW Differential Swap (bbl/d) | 3,000 | - | - | - | - | - | | Hedged price ($USD/bbl) | $5.68 | - | - | - | - | - | | | | | | | | | | Electricity AESO Swap (kW) | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | | Hedged price ($kWh) | $0.06217 | $0.06217 | $0.06217 | $0.06217 | $0.06217 | $0.06217 |
Non-GAAP and Other Financial Measures
Throughout this document and other materials disclosed by the Company, InPlay uses certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed under GAAP and therefore may not be comparable to similar measures presented by other entities. The non-GAAP and other financial measures should not be considered alternatives to, or more meaningful than, financial measures that are determined in accordance with GAAP as indicators of the Company performance. Management believes that the presentation of these non-GAAP and other financial measures provides useful information to shareholders and investors in understanding and evaluating the Company's ongoing operating performance, and the measures provide increased transparency and the ability to better analyze InPlay's business performance against prior periods on a comparable basis.
Non-GAAP Financial Measures and Ratios
Included in this document are references to the terms "free adjusted funds flow", "operating income", "operating netback per boe", "operating income profit margin" and "Net Debt to EBITDA". Management believes these measures and ratios 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 "profit before taxes", "profit and comprehensive income", "adjusted funds flow", "capital expenditures", "net debt" or assets and liabilities as determined in accordance with GAAP as a measure of the Company's performance and financial position.
Free Adjusted Funds Flow/FAFF per share
Management considers FAFF and FAFF per share important measures to identify the Company's ability to improve its financial condition through debt repayment and its ability to provide returns to shareholders. FAFF should not be considered as an alternative to or more meaningful than AFF as determined in accordance with GAAP as an indicator of the Company's performance. FAFF is calculated by the Company as AFF less exploration and development capital expenditures and property dispositions (acquisitions) and is a measure of the cashflow remaining after capital expenditures that can be used for additional capital activity, corporate acquisitions, repayment of debt or decommissioning expenditures or potentially return of capital to shareholders. FAFF per share is calculated by the Company as FAFF divided by weighted average shares outstanding. Refer to the "Forward Looking Information and Statements" section for a calculation of forecast FAFF and FAFF per share.
Free Adjusted Funds Flow Yield
InPlay uses "free adjusted funds flow yield" as a key performance indicator. When presented on a corporate basis, free adjusted funds flow is calculated by the Company as free adjusted funds flow divided by the market capitalization of the Company. When presented on an asset basis for acquisition purposes, free adjusted funds flow is calculated by the Company as free adjusted funds flow divided by the operating income of the Acquired Assets. Management considers FAFF yield to be an important performance indicator as it demonstrates a Company or asset's ability to generate cash to pay down debt and provide funds for potential distributions to shareholders. Refer to the "Forward Looking Information and Statements" section for a calculation of forecast FAFF Yield.
Operating Income/Operating Netback per boe/Operating Income Profit Margin
InPlay uses "operating income", "operating netback per boe" and "operating income profit margin" as key performance indicators. 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 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 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. Refer below for a calculation of operating income, operating netback per boe and operating income profit margin. Refer to the "Forward Looking Information and Statements" section for a calculation of forecast operating income, operating netback per boe and operating income profit margin.