International Petroleum (TSE:IPCO) said third-quarter production met its forecast at 44,000 barrels of oil equivalent per day, while the company maintained its full-year 2026 production guidance of 44,000 to 47,000 boepd.
President and Chief Executive Officer William Lundin said the company expects a higher quarterly production average in the fourth quarter as the Blackrod project continues its ramp-up. IPC expects to exit 2026 at more than 50,000 boepd, though it did not provide a specific exit-rate target.
The company reported operating cash flow of $79 million and free cash flow of $27 million during the third quarter. Year-to-date operating cash flow stood at $214 million at the end of September, while year-to-date free cash flow was $14 million.
Guidance Updated for Higher Capital Spending
IPC maintained its 2026 operating-cost guidance of $18 to $20 per boe, despite third-quarter unit operating costs of $21 per boe. Chief Financial Officer Christophe Nerguararian said costs were elevated by workovers in Malaysia and fixed cost elements associated with initial Blackrod production. He said unit costs at Blackrod should decline as production rises in the fourth quarter and through 2027.
The company increased its 2026 capital expenditure guidance to $185 million from $163 million, including decommissioning spending. Lundin said the increase reflects additional investments in Canadian thermal assets, including two infill wells at Onion Lake Thermal, resource maturation work at Blackrod and drilling activity in Southern Alberta.
The company expects the additional projects to be weighted toward production contributions in 2027. IPC also completed a drilling campaign in France, where it drilled four sidetracks. Lundin said the first well is producing about 500 barrels of oil per day and is a nearly one-kilometer horizontal well in the FAB field.
IPC revised its full-year operating cash flow forecast to $275 million to $350 million, based on assumed Brent prices of $80 to $110 per barrel for the remainder of 2026. Full-year free cash flow guidance was updated to a range of $35 million to $110 million.
Blackrod Production Continues to Build
Blackrod Phase I was delivered ahead of schedule and on budget, according to Lundin. The project was producing at spot rates above 10,000 barrels per day at the time of the presentation, compared with 12 well pairs online at the end of the third quarter and about 18 well pairs online at the time of the call.
IPC reiterated its expectation for Blackrod to reach nameplate production of 30,000 barrels of oil per day by the end of 2027. Lundin said the well pairs have performed in line with, or slightly ahead of, their type-curve estimates.
“We don’t see this as any major risks to getting there beyond standard oil field risks of ramping the asset up,” Lundin said in response to an analyst question about the path to plateau production.
The company plans to begin additional resource maturation work at Blackrod near the end of 2026, continuing into early 2027. It is also conducting early engineering studies for a potential debottlenecking expansion of the Phase I facility. Lundin said any decision on a future expansion would depend on production ramp-up, cash flow, commodity prices and the company’s balance sheet, with the earliest potential timing in early 2028.
IPC owns 100% of Blackrod, which it said has more than 1.4 billion barrels of total recoverable volumes, including 2P reserves and 2C resources. The asset has regulatory approval for production of as much as 80,000 barrels per day.
Debt Declines and Liquidity Remains Available
Net debt declined to $473 million at the end of September from $484 million at the end of 2025. Nerguararian said leverage, measured as net debt to trailing 12-month EBITDA, was slightly below 1.8 times and should continue to improve.
IPC had a Canadian revolving credit facility totaling about $250 million, with less than $50 million drawn at quarter-end, leaving more than $200 million of available liquidity. The company’s remaining bond debt totaled $400 million and carries a 7.5% coupon. Mandatory $25 million bond repayments are scheduled to begin in April 2028.
Nerguararian also cited a Canadian federal “productivity mega deduction” that allows companies to expense 100% of Canadian capital expenditures incurred from Sept. 15. He said the measure should further improve IPC’s liquidity position.
The company remains unhedged for benchmark Brent and WTI oil prices, although it has hedges in place for certain differentials between WTI and Western Canadian Select. IPC also hedged approximately 40% to 50% of expected 2027 operating costs against currency movements because its operating expenses are incurred in Canadian, French and Malaysian local currencies.
Asset Sale and Share Repurchases
During the quarter, IPC completed the sale of the non-core Mooney asset for gross proceeds of C$70 million. Lundin said the asset had roughly 4 million barrels of 2P reserves and had generated about $30 million in free cash flow since 2019.
IPC repurchased 1.3 million shares under its current normal course issuer bid program and said it intends to renew the program in December. Lundin said the company has repurchased 78 million shares in aggregate since its formation in 2017.
On potential acquisitions, Lundin said IPC remains opportunistic and has participated in several processes in Canada and Southeast Asia during the year, though none resulted in a transaction. He said the company is not running any active asset-sale processes and would pursue acquisitions only if they were accretive or transformational.
About International Petroleum (TSE:IPCO)
International Petroleum Corp is an international oil and gas exploration and production company. It is engaged in the exploration, development, and production of oil and gas. Geographically, the company holds a portfolio of oil and gas production assets and development projects in Canada, Malaysia and France. It is based in Canada and derives revenue from the sales of gas, crude oil, and natural gas liquids, of which key revenue is derived from the sales of crude oil.
