International Petroleum Corp.
("IPC") (TSX, Nasdaq Stockholm:
IPCO) is pleased to announce the closing of the previously
announced acquisition of Granite Oil Corp. (“Granite”) (TSX:GXO;
OTCQX:GXOCF) (the "Acquisition"). The Acquisition
includes total proved plus probable ("2P") reserves of 14.0 million
barrels of oil equivalent (MMboe) and 6.2 MMboe of unrisked
contingent resources (best estimate) as at December 31,
2019.
The Acquisition is comprised of high netback,
light oil producing assets in southern Alberta (the "Assets"). The
Assets include existing infrastructure to enable the current gas
injection enhanced oil recovery (EOR) scheme, with capacity to
allow for potential further field development opportunities. The
Assets also include associated oil and gas processing and injection
facilities located in proximity to key sales points.
Under the terms of the Acquisition, IPC acquired
all of the issued and outstanding common shares of Granite
("Granite Shares") for consideration of approximately USD 27
million (CAD 37.1 million) and IPC assumed Granite’s net debt of
approximately USD 30 million (CAD 40 million). Each former Granite
shareholder is entitled to receive CAD 0.95 for each Granite Share
held prior to the Acquisition (the “Cash Consideration”).
The Granite Shares are expected to be delisted
from the Toronto Stock Exchange and the OTCQX on or around March
10, 2020.
Pursuant to the letter of transmittal mailed to
Granite shareholders in connection with the special meeting of
Granite shareholders held on March 5, 2020, in order to receive the
Cash Consideration, registered holders of Granite Shares are
required to deposit a duly completed the letter of transmittal
together with their share certificates, with Computershare Trust
Company of Canada. Shareholders whose Granite Shares are registered
in the name of a broker, dealer, bank, trust company or other
nominee should contact their nominee with questions regarding
receipt of the Cash Consideration.
International Petroleum Corp. (IPC) is an
international oil and gas exploration and production company with a
high quality portfolio of assets located in Canada, Malaysia and
France, providing a solid foundation for organic and inorganic
growth. IPC is a member of the Lundin Group of Companies. IPC is
incorporated in Canada and IPC’s shares are listed on the Toronto
Stock Exchange (TSX) and the Nasdaq Stockholm exchange under the
symbol "IPCO".
For further information, please contact:
Rebecca GordonVP Corporate Planning and Investor
Relationsrebecca.gordon@international-petroleum.comTel: +41 22 595
10 50 |
or |
Robert ErikssonMedia Managerreriksson@rive6.chTel: +46 701 11 26
15 |
The information was submitted for publication,
through the contact persons set out above, at 08:30 CET on March 6,
2020. Forward-Looking Statements This press
release contains statements and information which constitute
"forward-looking statements" or "forward-looking information"
(within the meaning of applicable securities legislation). Such
statements and information (together, "forward-looking statements")
relate to future events, including IPC’s performance, business
prospects or opportunities. Actual results may differ materially
from those expressed or implied by forward-looking statements. The
forward-looking statements contained in this press release are
expressly qualified by this cautionary statement. Forward-looking
statements speak only as of the date of this press release, unless
otherwise indicated. IPC does not intend, and does not assume any
obligation, to update these forward-looking statements, except as
required by applicable laws.
All statements other than statements of
historical fact may be forward-looking statements. Any statements
that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, forecasts, guidance,
budgets, objectives, assumptions or future events or performance
(often, but not always, using words or phrases such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", “forecast”, "predict", "potential", "targeting",
"intend", "could", "might", "should", "believe", "budget" and
similar expressions) are not statements of historical fact and may
be "forward-looking statements". Forward-looking statements
include, but are not limited to, statements with respect to: the
expected timing of which the Granite Shares will be de-listed from
the TSX and OTCQX; the ability of IPC to achieve and maintain
current and forecast production and take advantage of production
growth and development upside opportunities related to the Assets
post-completion of the Acquisition; the ability of IPC to integrate
the Assets into its current operations; the ability of existing
infrastructure to enable EOR projects, as well as capacity to allow
for potential further field development opportunities; the
existence of drill-ready opportunities and their ability to add
further near-term production of high netback, light oil barrels;
estimates of reserves; estimates of contingent resources; the
ability to generate free cash flows; and future drilling and other
exploration and development activities. Statements relating to
"reserves" and "contingent resources" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves and
resources described exist in the quantities predicted or estimated
and that the reserves and resources can be profitably produced in
the future. Ultimate recovery of reserves or resources is based on
forecasts of future results, estimates of amounts not yet
determinable and assumptions of management.
The forward-looking statements are based on
certain key expectations and assumptions made by IPC, including
expectations and assumptions concerning: prevailing commodity
prices and currency exchange rates; applicable royalty rates and
tax laws; interest rates; future well production rates and reserve
and contingent resource volumes; operating costs; the timing of
receipt of regulatory approvals; the performance of existing wells;
the success obtained in drilling new wells; anticipated timing and
results of capital expenditures; the sufficiency of budgeted
capital expenditures in carrying out planned activities; the
timing, location and extent of future drilling operations; the
successful completion of acquisitions and dispositions; the
benefits of acquisitions; the state of the economy and the
exploration and production business in the jurisdictions in which
IPC operates and globally; the availability and cost of financing,
labour and services; and the ability to market crude oil,
natural gas and natural gas liquids successfully.
Although IPC believes that the expectations and
assumptions on which such forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because IPC cannot give assurances that
they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number
of factors and risks. These include, but are not limited to: the
risks associated with the oil and gas industry in general such as
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
estimates and projections relating to reserves, resources,
production, revenues, costs and expenses; health, safety and
environmental risks; commodity price and exchange rate
fluctuations; interest rate fluctuations; marketing and
transportation; loss of markets; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to
complete or realize the anticipated benefits of acquisitions or
dispositions; the ability to access sufficient capital from
internal and external sources; failure to obtain required
regulatory and other approvals; and changes in legislation,
including but not limited to tax laws, royalties and environmental
regulations. Readers are cautioned that the foregoing list of
factors is not exhaustive.
Additional information on these and other
factors that could affect IPC, or its operations or financial
results, are included in the management discussion and analysis for
the year ended December 31, 2019 (MD&A) (See "Cautionary
Statement Regarding Forward-Looking Information" therein), the
Corporation's Annual Information Form (AIF) for the year ended
December 31, 2018 (See "Cautionary Statement Regarding
Forward-Looking Information", "Reserves and Resources Advisory" and
"Risk Factors" therein) and other reports on file with applicable
securities regulatory authorities, which may be accessed through
the SEDAR website (www.sedar.com) or IPC's website
(www.international-petroleum.com).
Disclosure of Oil and Gas Information
This press release contains references to estimates
of gross 2P reserves of IPC’s oil and gas assets. Gross reserves
are the total working interest reserves before the deduction of any
royalties and including any royalty interests receivable.
Reserve estimates, contingent resource estimates
and estimates of future net revenue in respect of IPC’s oil and gas
assets acquired in the Acquisition are effective as of December 31,
2019, and are included in reports prepared by Sproule Associates
Limited (Sproule), an independent qualified reserves evaluator, in
accordance with National Instrument 51-101 – Standards of
Disclosure for Oil and Gas Activities (NI 51-101) and the Canadian
Oil and Gas Evaluation Handbook (the COGE Handbook) and using
Sproule’s December 31, 2019, price forecasts.
The price forecasts used in the reserve reports
are as at December 31, 2019 and are available on the website of
Sproule (sproule.com).
"2P reserves" means gross proved plus probable
reserves. "Proved reserves" are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves. "Probable reserves" are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves.
Contingent resources are those quantities of
petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations using established technology
or technology under development, but which are not currently
considered to be commercially recoverable due to one or more
contingencies. Contingencies are conditions that must be satisfied
for a portion of contingent resources to be classified as reserves
that are: (a) specific to the project being evaluated; and (b)
expected to be resolved within a reasonable timeframe.
Contingencies may include factors such as economic, legal,
environmental, political, and regulatory matters, or a lack of
markets. It is also appropriate to classify as contingent resources
the estimated discovered recoverable quantities associated with a
project in the early evaluation stage. Contingent resources are
further classified in accordance with the level of certainty
associated with the estimates and may be sub-classified based on a
project maturity and/or characterized by their economic status.
There are three classifications of contingent
resources: low estimate, best estimate and high estimate. Best
estimate is a classification of estimated resources described in
the COGE Handbook as being considered to be the best estimate of
the quantity that will be actually recovered. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the best estimate. If probabilistic methods are used,
there should be at least a 50% probability that the quantities
actually recovered will equal or exceed the best estimate.
Contingent resources are further classified
based on project maturity. The project maturity subclasses include
development pending, development on hold, development unclarified
and development not viable. All of the contingent resources
acquired in the Acquisition are classified as development
unclarified. Development unclarified is defined as a contingent
resource that requires further appraisal to clarify the potential
for development and has been assigned a lower chance of development
until contingencies can be clearly defined. Chance of development
is the probability of a project being commercially viable.
References to "unrisked" contingent resources
volumes means that the reported volumes of contingent resources
have not been risked (or adjusted) based on the chance of
commerciality of such resources. In accordance with the COGE
Handbook for contingent resources, the chance of commerciality is
solely based on the chance of development based on all
contingencies required for the re-classification of the contingent
resources as reserves being resolved. Therefore unrisked reported
volumes of contingent resources do not reflect the risking (or
adjustment) of such volumes based on the chance of development of
such resources. Chance of development is the probability of a
project being commercially viable and the chance of development
risk of 70% has been applied by IPC to all of the contingent
resources acquired in the Acquisition. The risked contingent
resources (best estimate) as at December 31, 2019 is 4.3 MMboe. The
contingency for all of the unrisked best estimate contingent
resources is IPC’s corporate commitment whether to proceed with the
specific opportunities.
The contingent resources reported in this press
release are estimates only. The estimates are based upon a number
of factors and assumptions each of which contains estimation error
which could result in future revisions of the estimates as more
technical and commercial information becomes available. The
estimation factors include, but are not limited to, the mapped
extent of the oil and gas accumulations, geologic characteristics
of the reservoirs, and dynamic reservoir performance. There are
numerous risks and uncertainties associated with recovery of such
resources, including many factors beyond the Corporation’s control.
There is uncertainty that it will be commercially viable to produce
any portion of the contingent resources referred to in this press
release.
2P reserves and contingent resources have been
aggregated in this press release by IPC. Estimates of reserves and
future net revenue for individual properties may not reflect the
same level of confidence as estimates of reserves and future net
revenue for all properties, due to aggregation. There is no
assurance that the forecast prices and cost assumptions used in the
reserve evaluations will be attained and variances could be
material.
BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 thousand cubic feet (Mcf)
per 1 barrel (bbl) is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. As the value
ratio between natural gas and crude oil based on the current prices
of natural gas and crude oil is significantly different from the
energy equivalency of 6:1, utilizing a 6:1 conversion basis may be
misleading as an indication of value.
CurrencyAll dollar amounts in
this press release are expressed in United States dollars, except
where otherwise noted. References herein to USD mean United
States dollars. References herein to CAD mean Canadian
dollars.
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