International Petroleum Co. Reports Strong Q1 Performance

International Petroleum Co ((TSE:IPCO)) has held its Q1 earnings call. Read on for the main highlights of the call.

International Petroleum Co. recently held its earnings call, revealing a strong operational and financial performance. The company showcased strategic progress in key projects, such as Blackrod Phase 1, and highlighted effective hedging strategies and a successful share repurchase program. Despite these positive developments, challenges remain due to negative free cash flow, increased net debt, and market volatility, which the company must navigate carefully.

Strong Production and Financial Performance

International Petroleum Co. reported a production rate of 44,000 barrels of oil equivalent per day for the first quarter, aligning with its guidance. The company achieved an operating cash flow of $75 million and an EBITDA of $71 million, underscoring its robust financial health.

Blackrod Phase 1 Progress

Significant strides have been made in the Blackrod Phase 1 project, with $77 million spent in the first quarter. The project remains on schedule and within budget, with expectations to deliver First Oil by 2026.

Effective Hedging Strategy

The company has effectively hedged about 50% of its WTI to WCS differential exposure at $14 per barrel, 40% of Canadian crude at $71 WTI, and 40% of Brent exposure at $76. This strategy provides crucial downside protection amid market volatility.

No Material Safety Incidents

In the first quarter, International Petroleum Co. reported no material safety incidents, reflecting its strong commitment to health and safety management.

Share Repurchase Program

The company has repurchased 75 million shares since the inception of its NCIB program at significantly low prices. This move has created value through buybacks, and the program is nearing completion.

Negative Free Cash Flow

International Petroleum Co. faced a negative free cash flow of $43 million in the first quarter, with a full-year forecast ranging from minus $135 million to minus $110 million. This is primarily due to growth capital expenditure.

Increased Net Debt

Net debt increased by approximately $100 million, reaching $314 million as of April 1, 2025. This rise is attributed to heavy spending on the Blackrod project and share buybacks.

Economic and Market Volatility

The company expressed concerns about the macroeconomic environment, particularly the potential impact of geopolitical tensions and OPEC’s increased supply on demand, which could lead to lower oil prices.

Forward-Looking Guidance

International Petroleum Co. maintains its full-year production guidance between 43,000 and 45,000 barrels per day. Operating costs for the year are expected to be slightly higher than the first quarter’s $17.30 per barrel. The company projects full-year operating cash flow between $240 million and $270 million, with capital expenditure set at $320 million for 2025.

In conclusion, International Petroleum Co.’s earnings call highlighted strong operational and financial performance, with strategic advancements in key projects. While effective hedging strategies and share repurchases bolster the company’s position, challenges such as negative free cash flow and increased net debt require careful management. The company’s forward-looking guidance remains optimistic, with steady production and financial targets set for the year.