InPlay Oil Corp. Announces 2021 Capital Budget and Guidance and Provides an Operations Update with Production Guidance Exceeding Pre-COVID 2019 Production Levels
Production guidance is above my forecast I will be updating my forecast/valuation model this afternoon. My valuation will be going up.
CALGARY, Alberta, Jan. 07, 2021 (GLOBE NEWSWIRE) -- InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company”) is pleased to announce that its Board of Directors has approved a $23 million capital program for 2021 with forecast average production of 5,100 – 5,400 boe/d (69% oil and liquids).
InPlay Oil (IPOOF) Update - Jan 8
InPlay Oil (IPOOF) Update - Jan 8
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: InPlay Oil (IPOOF) Update - Jan 8
In the fourth quarter the Company resumed its development program drilling three (3.0 net) extended reach
horizontal (“ERH”) wells in Willesden Green which were completed and placed on production at the end of
2020 and one (0.2 net) ERH Nisku well which was drilled and will be completed and brought on production in
the first quarter of 2021. As a result of changes in well design and continued advances in completion technology,
in addition to exceptional project execution, this three well program was among the most cost effective and
efficient programs to date in Willesden Green. Drilling these three wells took 7.9, 8.3 and 8.8 days respectively
compared to our previously experienced drilling times of 9.0 – 9.5 days. This sets a new industry standard for
pacesetter drill times in the area with InPlay now drilling 4 of 5 of the fastest ERH wells in the area to date.
Completions and equipping of the wells were also executed efficiently on time and under budget leading to
drilling, completions and equipping cost savings of approximately $800,000 per well. Total drilling, completion
and equipping costs were under $2.4 million per well, equating to a 25% reduction, versus previous costs of $2.9
- $3.3 million per well significantly enhancing the economics and capital efficiencies in the area.
Efforts toward restoring economic production that had been temporarily curtailed in April continued through the
fourth quarter. Currently, there remains approximately 150 boe/d (75% light oil and liquids) of production
requiring servicing, of which the majority is expected to be brought back on production in 2021 with commodity
price improvements.
Current production, which includes approximately one week of early clean up production from the three new
Willesden Green ERH wells, is estimated at 5,300 boe/d (70% light oil and liquids) based on field estimates.
I have updated my forecast/valuation model for InPlay (IPOOF) and posted it to the EPG website. My current valuation is $0.60US/share. InPlay should generate approximately $30Cdn million operating cash flow ($0.44Cdn per share) in 2021 based on the capital program outlined below.
2021 Capital Program Overview
The Company’s Board of Directors has approved a development capital program for 2021 of $23 million. This
capital budget and forecast is relatively unchanged to the one presented to the BDC and our syndicate of
lenders in October 2020 which supported securing the $25 million term loan. This capital spending program is
supported by a robust hedging program through the first half of 2021 with approximately half of our
anticipated crude oil production hedged. As demonstrated in the past, the Company will continue to remain
flexible, adaptable and react promptly to changing commodity prices throughout the year to adjust the capital
program if deemed appropriate. InPlay’s objective is to generate Free Adjusted Funds Flow (“FAFF”) (1)
which is expected at current commodity prices.
InPlay’s planned capital program is forecasted to result in 2021 annual average production of 5,100 to 5,400
boe/d (69% light oil & liquids) delivering estimated organic annual production growth of approximately 28%
to 35% over 2020. Based on this program, the 2021 adjusted funds flow (“AFF”) (1) forecast is $30.5 to $33.5
million, representing an approximate 280% to 320% increase relative to estimated 2020 AFF. Estimated FAFF
of $7.0 to $10.0 million is forecast in 2021, intended to be used for debt reduction. Net debt to earnings before
interest, taxes and depletion (“EBITDA”) (1) for 2021 is forecast to be 1.7 – 1.9 times. The 2021 operating
income profit margin (1) is forecast to be approximately 59%, as a result of improving reduced operating costs
and higher forecasted future strip commodity prices.
In 2021, InPlay plans on drilling approximately 8.0 net ERH Cardium wells in Pembina and Willesden Green < ERH = Extended Reach Horizontal
and completing the 0.2 net Nisku ERH well drilled in 2020. Initial plans for the first quarter, consist of three
ERH wells to be drilled on our recently acquired Pembina lands, with the remaining five wells to be drilled in
both the Willesden Green and Pembina areas over the balance of the year. InPlay has been approved and will
start the Alberta Energy Regulator’s Area Based Closure (“ABC”) program with plans to spend approximately
4 - 5 % of our forecast AFF on decommissioning efforts throughout the year.
The Company’s 2021 guidance is based on a current future commodity price curve with an annual average
WTI price of US $49.50/bbl, $2.45/GJ AECO and estimated foreign exchange of $0.78 CDN/USD.
horizontal (“ERH”) wells in Willesden Green which were completed and placed on production at the end of
2020 and one (0.2 net) ERH Nisku well which was drilled and will be completed and brought on production in
the first quarter of 2021. As a result of changes in well design and continued advances in completion technology,
in addition to exceptional project execution, this three well program was among the most cost effective and
efficient programs to date in Willesden Green. Drilling these three wells took 7.9, 8.3 and 8.8 days respectively
compared to our previously experienced drilling times of 9.0 – 9.5 days. This sets a new industry standard for
pacesetter drill times in the area with InPlay now drilling 4 of 5 of the fastest ERH wells in the area to date.
Completions and equipping of the wells were also executed efficiently on time and under budget leading to
drilling, completions and equipping cost savings of approximately $800,000 per well. Total drilling, completion
and equipping costs were under $2.4 million per well, equating to a 25% reduction, versus previous costs of $2.9
- $3.3 million per well significantly enhancing the economics and capital efficiencies in the area.
Efforts toward restoring economic production that had been temporarily curtailed in April continued through the
fourth quarter. Currently, there remains approximately 150 boe/d (75% light oil and liquids) of production
requiring servicing, of which the majority is expected to be brought back on production in 2021 with commodity
price improvements.
Current production, which includes approximately one week of early clean up production from the three new
Willesden Green ERH wells, is estimated at 5,300 boe/d (70% light oil and liquids) based on field estimates.
I have updated my forecast/valuation model for InPlay (IPOOF) and posted it to the EPG website. My current valuation is $0.60US/share. InPlay should generate approximately $30Cdn million operating cash flow ($0.44Cdn per share) in 2021 based on the capital program outlined below.
2021 Capital Program Overview
The Company’s Board of Directors has approved a development capital program for 2021 of $23 million. This
capital budget and forecast is relatively unchanged to the one presented to the BDC and our syndicate of
lenders in October 2020 which supported securing the $25 million term loan. This capital spending program is
supported by a robust hedging program through the first half of 2021 with approximately half of our
anticipated crude oil production hedged. As demonstrated in the past, the Company will continue to remain
flexible, adaptable and react promptly to changing commodity prices throughout the year to adjust the capital
program if deemed appropriate. InPlay’s objective is to generate Free Adjusted Funds Flow (“FAFF”) (1)
which is expected at current commodity prices.
InPlay’s planned capital program is forecasted to result in 2021 annual average production of 5,100 to 5,400
boe/d (69% light oil & liquids) delivering estimated organic annual production growth of approximately 28%
to 35% over 2020. Based on this program, the 2021 adjusted funds flow (“AFF”) (1) forecast is $30.5 to $33.5
million, representing an approximate 280% to 320% increase relative to estimated 2020 AFF. Estimated FAFF
of $7.0 to $10.0 million is forecast in 2021, intended to be used for debt reduction. Net debt to earnings before
interest, taxes and depletion (“EBITDA”) (1) for 2021 is forecast to be 1.7 – 1.9 times. The 2021 operating
income profit margin (1) is forecast to be approximately 59%, as a result of improving reduced operating costs
and higher forecasted future strip commodity prices.
In 2021, InPlay plans on drilling approximately 8.0 net ERH Cardium wells in Pembina and Willesden Green < ERH = Extended Reach Horizontal
and completing the 0.2 net Nisku ERH well drilled in 2020. Initial plans for the first quarter, consist of three
ERH wells to be drilled on our recently acquired Pembina lands, with the remaining five wells to be drilled in
both the Willesden Green and Pembina areas over the balance of the year. InPlay has been approved and will
start the Alberta Energy Regulator’s Area Based Closure (“ABC”) program with plans to spend approximately
4 - 5 % of our forecast AFF on decommissioning efforts throughout the year.
The Company’s 2021 guidance is based on a current future commodity price curve with an annual average
WTI price of US $49.50/bbl, $2.45/GJ AECO and estimated foreign exchange of $0.78 CDN/USD.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group