Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- International Petroleum Corp (IPCFF, Financial) delivered an average production of 45,000 barrels of oil equivalent per day, aligning with their forecast range.
- The company maintained its full-year production guidance at 46,000 to 48,000 barrels of oil equivalent per day.
- Operating costs for Q3 were slightly below guidance, leading to a revised full-year operating expenditure forecast of below $18 per BOE.
- The company has a strong balance sheet with net debt at $157 million USD and gross cash resources just shy of $300 million USD.
- No material safety incidents were reported in the quarter, and the company is on track to achieve its net emissions intensity reduction target by 2025.
Negative Points
- Q3 free cash flow was negative $38 million USD, although it was positive $44 million USD excluding Blackrod growth spend.
- Gas prices remained weak, impacting revenues and reducing optimization activity at the Suffield gas assets.
- The company experienced a slight build in net debt relative to the prior quarter, attributed to growth spend at Blackrod and share buybacks.
- Operating cash flow for the first nine months was $264 million USD, lower than the previous year.
- The company anticipates a significant CapEx spend in 2025, with around $250 million USD expected for the Blackrod project alone.
Q & A Highlights
Q: How should we think about 2025 capital expenditures compared to 2024, which is a peak investment year?
A: William Lundin, CEO, mentioned that specific 2025 CapEx guidance has not been provided yet. However, the majority of the Blackrod project CapEx will be spent by the end of 2024, with around $250 million USD remaining. The 2025 CapEx is likely to be around this amount, but formal approval is pending.
Q: What is the strategic angle for keeping international assets in the portfolio, particularly those linked to Brent prices?
A: William Lundin explained that the Malaysian and French assets were foundational for IPC and have delivered significant free cash flow. They offer high-quality Brent-linked production and have undeveloped opportunities. The assets contribute substantial value to the portfolio and IPC remains open to growth in these jurisdictions.
Q: Are you setting up the capability to do more M&A next year, and do you see more opportunities in the market?
A: William Lundin stated that IPC remains opportunistic about M&A, especially if high-quality assets become available at a discount. The company is financially robust and open to acquisitions that do not overly stress the balance sheet.
Q: What are your thoughts on the draft regulations on emissions released in Canada?
A: William Lundin noted that the proposed emissions cap targets a 26% reduction by 2030. IPC is studying carbon capture and storage at Onion Lake Thermal to comply with potential regulations. The company views the proposal as punitive but is committed to assessing emission-reducing technologies.
Q: What terms and amounts would be available for secured financing, and are there any hedging requirements?
A: Christophe Nerguararian, CFO, mentioned that IPC has strong relationships with Canadian banks, offering a CAD180 million revolving credit facility. The terms are around base rate plus 3%, with no hedging requirements. IPC could raise more financing if needed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
