Mr. Mike Nicholson reports

INTERNATIONAL PETROLEUM CORPORATION ANNOUNCES FIRST QUARTER 2023 FINANCIAL AND OPERATIONAL RESULTS

International Petroleum Corp. has released its financial and operational results and related management's discussion and analysis for the three months ended March 31, 2023. Dollar amounts are in U.S. dollars unless otherwise stated.

Mike Nicholson, International Petroleum's chief executive officer, commented: "We are pleased to announce another quarter of record average net daily production as IPC achieved 52,800 barrels of oil equivalent per day during the first quarter of 2023. Our financial results during the quarter are in line with the 2023 guidance announced at our capital markets day in February as we continue to produce cash flows from our operations in Canada, Malaysia and France. During the first quarter, we announced and completed the acquisition of Cor4 Oil Corp. in Canada, expected to add approximately 4,000 boe/d to our 2023 average net daily production. We also continue purchases of IPC common shares under the normal course issuer bid in accordance with our stated capital allocation framework. In addition, we are progressing the development of phase 1 of the Blackrod project in Canada, with work to date in line with schedule and budget."

First quarter 2023 business highlights:

• Record quarterly average net production of approximately 52,800 barrels of oil equivalent per day for the first quarter of 2023 (50 per cent heavy crude oil, 18 per cent light and medium crude oil, and 32 per cent natural gas);
• Decision taken to advance the development of phase 1 of the Blackrod project in Canada, maturing 218 million barrels of oil equivalent (MMboe) of 2P reserves (1) (2);
• Successful completion of the Cor4 acquisition in Canada forecast to add approximately 4,000 boe/d of average production over 2023 and 15.9 MMboe of 2P reserves (1) (2);
• 10-year extension signed for the Bertam field, Malaysia, production-sharing contract (PSC) to 2035;
• 4.76 million common shares purchased and cancelled during Q1 2023 under International Petroleum's normal course issuer bid (NCIB).

Q1 2023 financial highlights:

• Operating costs per boe of $17.30 for Q1 2023 in line with CMD guidance for Q1 2023 (1) (3);
• Operating cash flow (OCF) generation for Q1 2023 amounted to $76 (1) (3);
• Capital and decommissioning expenditures of $55 for Q1 2023 in line with CMD guidance (1);
• Free cash flow (FCF) generation for Q1 2023 amounted to $16 (1) (3);
• Net cash of $67 as at March 31, 2023 (3);
• Increased Canadian revolving credit facility (RCF) from $75-million (Canadian) to $150-million (Canadian) (fully committed and undrawn) and extended maturity from February, 2024, to May, 2025;
• Net result of $40 for Q1 2023.

Reserves and resources:

• Total proven plus probable reserves as at Dec. 31, 2022, of 487 million boe, with a reserves life index (RLI) of 27 years (1) (2);
• Contingent resources (best estimate, unrisked) as at Dec. 31, 2022, of 1,162 MMboe (1) (2).

2023 annual guidance:

• Full-year 2023 average net production forecast expected to be at the upper end of 48,000 to 50,000 boe/d guidance range (1);
• Full-year 2023 operating costs guidance forecast at $17.50 to $18 per boe (1) (3);
• Full-year 2023 OCF guidance estimated at between $250 and $495 (assuming Brent $70 to $100 per barrel) (1) (3);
• Full-year 2023 capital and decommissioning expenditure guidance forecast at $365, including $287 relating to phase 1 of the Blackrod project (1);
• Full-year 2023 FCF forecast ranges from approximately minus $145 to $105 (assuming Brent $70 to $100 per barrel) after taking into account $287 of proposed 2023 Blackrod capital expenditures (1) (3).

                  FINANCIAL HIGHLIGHTS   
             (in thousands of U.S. dollars)

                           Three months ended March 31,
                                   2023           2022

Revenue                        $192,516       $259,782
Gross profit                     40,205        119,100
Net result                       39,563         80,822
Operating cash flow (3)          75,900        145,110
Free cash flow (3)               16,259         96,479
EBITDA (3)                       76,079        145,463
Net cash/(debt) (3)              66,956        (42,367)
                              ---------      ---------

During the first quarter of 2023, oil and gas prices weakened on demand concerns as rising interest rates aimed at taming high inflation stoked recessionary fears. This was further exacerbated by the unfolding banking crisis during the quarter. Brent prices averaged slightly over $80 per barrel during the quarter, down by around 10 per cent compared with the fourth quarter of 2022. The surprise production cuts announced by Organization of the Petroleum Exporting Countries and allies in early April are a second pre-emptive move by the group, aimed at ensuring recent oil price weakness is not sustained. While inventory levels have built back close to the five-year average levels, the OPEC+ cuts are expected by market observers to push the oil market back into deficit for the rest of 2023.

The first quarter 2023 West Texas Intermediate to Western Canadian Select crude price differentials averaged around $25 per barrel, $5 per barrel wider than the base-case 2023 market guidance. Those market factors that have driven differentials wider such as the U.S. Strategic Petroleum Reserve (SPR) releases, higher natural gas prices and refinery outages have turned to provide more favourable tailwinds to Canadian differentials going forward. In addition, the expansion of the Trans Mountain pipeline (590,000 barrels per day of extra capacity linking Edmonton to the port of Vancouver) due in service in first quarter 2024, as well as a reduction in Mexican heavy oil exports to the United States, as domestic refinery capacity increases by more than 200,000 barrels per day, is expected to provide stronger support to WTI/WCS differentials going forward. Current WTI/WCS differentials have tightened to less than $16 per barrel for the rest of 2023 and the whole of 2024 as a result of these favourable market developments.

Gas markets weakened significantly during the first quarter of 2023. International Petroleum's average realized gas price was $3.10 (Canadian) per thousand cubic feet compared with $5.90 per Mcf during the fourth quarter of 2022. The recent weakness, seen in North American gas prices, was, to a large extent, driven by a much milder winter in Europe and the reduced demand for U.S. liquefied natural gas as a result. International Petroleum was partially protected by Alberta Energy Company gas price hedges that were put in place when gas prices were much stronger in late 2022: 33.7 million cubic feet per day at $6.26 (Canadian) per Mcf in Q1 2023 and $4.10 per Mcf from April to October, 2023.

First quarter 2023 highlights and full-year 2023 guidance

During the first quarter of 2023, its assets delivered average net production of 52,800 boe/d, above its high-end guidance for the quarter and a record high for International Petroleum. This was made possible by the very high uptime performance across all its assets, as well as the production contribution from its recent Cor4 acquisition in Canada. Given the very strong start to the year, full-year 2023 average net production is expected to be toward the upper end of the guidance range of 48,000 to 50,000 boe/d (1).

Its operating costs per boe for the first quarter of 2023 was $17.30 in line with its latest guidance. Full-year 2023 operating cost per boe guidance of $17.50 to $18 per boe remains unchanged (1) (3).

Operating cash flow (OCF) generation for the first quarter of 2023 was $76-million. Full-year 2023 OCF guidance of $250-million to $495-million (assumed Brent $70 to $100 per barrel) is unchanged (1) (3).

Capital and decommissioning expenditure for the first quarter of 2023 was $55-million in line with guidance. Full-year 2023 capital and decommissioning expenditure of $365-million is unchanged (1).

Free cash flow (FCF) generation was $16-million during the first quarter of 2023. Full-year 2023 FCF guidance of minus $145-million to $105-million (assumed Brent $70 to $100 per barrel) remains unchanged (1) (3).

During the first quarter of 2023, International Petroleum's net cash position of $175-million was reduced to $67-million, largely driven by the financing of $62-million for the Cor4 acquisition and $46-million for the continuing share repurchase program(3). Gross cash on the balance sheet as at March 31, 2023, amounts to $378-million, providing a significant war chest to pursue its three strategic pillars of returning value to stakeholders, pursuing value-adding mergers and acquisitions and focusing on organic growth. In addition, International Petroleum further strengthened its liquidity position during the first quarter by increasing its Canadian revolving credit facility (RCF) from $75-million (Canadian) to $150-million (Canadian).

Phase 1 Blackrod project

Following the successful completion of FEED (front-end engineering design) studies and the continued strong production performance from well pair three during 2022, International Petroleum took the decision in Q1 2023 to advance the development of phase 1 of the Blackrod project. Development capital expenditure to first oil is estimated at approximately $850-million (including inflation and contingencies). First oil of the phase 1 development is estimated to be in late 2026, with forecast production of 30,000 barrels of oil per day by 2028. The break-even oil price estimated by International Petroleum assuming a 10-per-cent discount rate is a West Texas Intermediate price of approximately $59 per barrel. Using the Dec. 31, 2022, price forecasts of its qualified independent reserves evaluator, Sproule Associates Ltd., the net present value as at that date, at a 10-per-cent discount rate (after tax), of phase 1 of the Blackrod project is $807-million. International Petroleum intends to finance the phase 1 development with cash on hand and forecast FCF generated by its operations (1) (2).

During the first quarter, the phase 1 development early groundworks and the final facility engineering activities have progressed in line with schedule and budget. Preparations to enter in the major central processing facility build contract are on track to be finalized in the second quarter. This is expected to provide a high degree of certainty for the fixed-price element of the phase 1 development capital expenditure, which represents close to 50 per cent of the over all phase 1 budget to first oil.

Mergers and acquisitions

During Q1 2023, International Petroleum announced and completed its fifth acquisition in five years. International Petroleum acquired 15.9 MMboe of 2P reserves adjacent to its Suffield property in Alberta, Canada, through the Cor4 acquisition. This acquisition is forecast to add approximately 4,000 boe/d to its Suffield area production in 2023. The producing assets are complementary to both its Suffield asset and a recent land acquisition on the same geological trend that International Petroleum concluded in the fourth quarter of 2022. Following these acquisitions, it has over 25 drilling inventory locations on the Ellerslie play fairway that extends from the west of its Suffield asset to its new land acquisition and into the properties acquired in the Cor4 acquisition. Three wells were drilled and brought on production since the beginning of the year, and the company plans to drill another three wells on this exciting play in 2023. The Cor4 acquisition was completed on March 3, 2023, with the consideration financed using existing cash on hand (1) (2).

2023 capital allocation framework

Normal course issuer bid

In fourth quarter 2022, International Petroleum announced the renewal of the NCIB, with the ability to repurchase up to approximately 9.3 million common shares over the 12-month period to December, 2023. International Petroleum repurchased in December, 2022, and subsequently cancelled approximately 730,000 common shares. By the end of March, 2023, International Petroleum purchased and cancelled a further approximately 4.76 million common shares under the NCIB. The average price of common shares purchased under the renewed NCIB during the period of December, 2022, to March, 2023, was 102 Swedish kronor/$13.25 (Canadian) per share.

As at March 31, 2023, International Petroleum had a total of 132,069,946 common shares issued and outstanding, with no common shares held in treasury.

2023 capital allocation plans

International Petroleum's capital allocation framework consists of distributing to shareholders a minimum of 40 per cent of the FCF generated by the business, provided that International Petroleum's net debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio is at or below one times (3). These shareholder distributions are planned to be implemented by continued share repurchases under the NCIB, as well as the consideration by International Petroleum of other forms of shareholder distributions, subject to further applicable regulatory and corporate approvals.

Despite the higher level of capital investment and notwithstanding the capital allocation framework described above, International Petroleum plans to continue to purchase and cancel common shares under the NCIB to the remaining limit as at March 31, 2023, of 3.8 million common shares by the end of December, 2023, resulting in the anticipated cancellation of 7 per cent of shares outstanding as of December, 2022. It believes a combination of materially expanding its 2P reserves, production and asset value whilst reducing its share count is a winning combination for shareholders.

Environmental, social and governance (ESG) performance

During the first quarter of 2023, International Petroleum recorded no material safety or environmental incidents.

As previously announced, International Petroleum targets a reduction of its net greenhouse gas emission intensity by the end of 2025 to 50 per cent of International Petroleum's 2019 baseline, and International Petroleum remains on track to achieve this reduction. During the first quarter of 2023, International Petroleum extended its commitment to remain at 2025 levels of 20 kilograms carbon dioxide per barrel of oil equivalent through to the end of 2027.

Notes

(1) See the annual information form for the year ended Dec. 31, 2022, available on International Petroleum's website and under International Petroleum's profile on SEDAR. International Petroleum completed the acquisition of Cor4 on March 3, 2023. The financial statements have been prepared on that basis, with revenues and expenses related to the assets acquired in the Cor4 acquisition included in the financial statements from March 3, 2023. Certain historical and forecast operational and financial information included in management's discussion and analysis, including production, reserves, operating costs, OCF, FCF and EBITDA related to the assets acquired in the Cor4 acquisition, is reported based on the effective date of the Cor4 acquisition of Jan. 1, 2023.

(2) Further information with respect to International Petroleum's reserves, contingent resources and estimates of future net revenue, including assumptions relating to the calculation of net present value, are described in the AIF. 2P reserves as at Dec. 31, 2022, of 487 MMboe include 471 MMboe attributable to International Petroleum's oil and gas assets and 15.9 MMboe attributable to the oil and gas assets acquired in the Cor4 acquisition.

(3) This is a non-international financial reporting standard measure.

International Petroleum 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. International Petroleum is a member of the Lundin group of companies. International Petroleum is incorporated in Canada, and International Petroleum's shares are listed on the Toronto Stock Exchange and the Nasdaq Stockholm Exchange under the symbol IPCO.

Currency

All dollar amounts in this press release are expressed in U.S. dollars, except where otherwise noted.

We seek Safe Harbor.