Mr. Mike Nicholson reports

INTERNATIONAL PETROLEUM CORPORATION ANNOUNCES SECOND QUARTER 2023 FINANCIAL AND OPERATIONAL RESULTS AND SUSTAINABILITY REPORT 2022

International Petroleum Corp. has released its financial and operational results and related management's discussion and analysis for the three and six months ended June 30, 2023. International Petroleum also released its sustainability report 2022, which details the corporation's environmental, social and governance performance.

Mike Nicholson, International Petroleum's chief executive officer, commented: "We are pleased to announce another quarter of strong financial and operational results for IPC. For the second quarter of 2023, IPC produced an average of 51,800 barrels of oil equivalent per day. Given the strong average daily production over the first half of 2023, we expect to exceed the upper end of our 48,000 to 50,000 boepd guidance range for the full-year 2023. Our financial results during the second quarter are in line with our 2023 guidance. We continue to progress the exciting development of phase 1 of the Blackrod project in Canada, including signing the engineering, procurement and construction contract for the central processing facility, with cost levels and schedule in line with expectation, and a large contingency allowance remaining. In addition, we release today our fourth annual sustainability report, providing further information on our sustainability strategy and initiatives."

Second quarter 2023 business highlights:

• Strong quarterly average net production of approximately 51,800 barrels of oil equivalent for the second quarter of 2023 (49 per cent heavy crude oil, 18 per cent light and medium crude oil, and 33 per cent natural gas) (1);
• Blackrod phase 1 engineering, procurement and construction contract for the central processing facility signed in Canada; integrated the assets acquired in the Cor4 acquisition in Canada (1) (2);
• 1.57 million common shares purchased and cancelled during Q2 2023 under International Petroleum's normal course issuer bid;
• Published International Petroleum's fourth annual sustainability report (2022) and first stand0alone Task Force on Climate-related Financial Disclosures report.

Q2 2023 financial highlights:

• Operating costs per boe of $17 for Q2 2023 (1) (3);
• Operating cash flow (OCF) generation for Q2 2023 amounted to $84-million (1) (3);
• Capital and decommissioning expenditures of $62-million for Q2 2023 (1);
• Free cash flow (FCF) generation for Q2 2023 amounted to $16-million ($65-million pre-Blackrod financing) (1) (3);
• Net cash of $64-million as at June 30, 2023 (3);
• Net result of $32-million for Q2 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 exceed the upper end of 48,000 to 50,000 boepd guidance range (1);
• Full-year 2023 operating costs guidance forecast remains unchanged at $17.5 to $18.0 per boe (1) (3);
• Full-year 2023 OCF guidance tightened to between $320-million to $390-million (assuming Brent $75 to $90 per barrel for the rest of 2023) from previous guidance of $250-million to $495-million (assuming Brent $70 to $100 per barrel) (1) (3);
• Full-year 2023 capital and decommissioning expenditure guidance forecast unchanged at $365-million, including $287-million relating to phase 1 of the Blackrod project (1);
• Full-year 2023 FCF forecast range tightened to between $65-million to $5-million (assuming Brent $75 to $90 per barrel for the rest of 2023) from previous guidance of $145-million to $105-million (assuming Brent $70 to $100 per barrel), after taking into account $287-million of proposed 2023 Blackrod capital expenditures (1) (3) (4).

                              FINANCIAL HIGHLIGHTS
                         (in thousands of U.S. dollars)
 
                           Three months ended June 30,   Six months ended June 30,
                                   2023          2022           2023         2022

Revenue                        $205,564      $315,540       $398,080     $575,322
Gross profit                     52,747       161,709        117,130      280,809
Net result                       32,025       105,217         71,588      186,039
Operating cash flow (3)          84,372       192,515        160,272      337,625
Free cash flow (3)               16,415       151,792         32,674      248,273
EBITDA (3)                       85,201       194,038        161,280      339,501
Net cash (3)                     63,548        14,382         63,548       14,382
                              ---------     ---------      ---------    ---------

The pullback that the company saw in oil and gas prices during the first quarter of 2023 stabilized during the second quarter with Brent prices averaging $78 per barrel compared with just over $80 per barrel during the first quarter. Demand concerns continue to weigh on oil markets, as rising interest rates aimed at taming high inflation raise recessionary fears. The surprise production cuts announced by OPEC+ in early April were followed up with additional voluntary cuts implemented by Saudi Arabia through July and August, a fourth pre-emptive move by the group, aimed at ensuring recent oil price weakness is not sustained. Inventory levels have moved back below the five-year average levels, and market observers expect a deficit in the oil market for the rest of 2023. Strategic Petroleum Reserve (SPR) releases in the United States have come to an end, and up to 12 million barrels are expected to be repurchased to begin refilling the SPR by the end of the year. The physical market certainly seems tighter than that priced in by the financial markets, and many commentators believe oil prices will increase from the recent market trading range. The company saw Brent prices trade in July occasionally over the $80-per-barrel mark, which had not been the case since April.

The second quarter 2023 West Texas Intermediate (WTI) to Western Canadian Select (WCS) crude price differentials averaged around $15 per barrel, $10 per barrel tighter than first quarter levels and $5 per barrel tighter than its base-case 2023 market guidance. Those market factors that have driven differentials wider such as the SPR releases, higher natural gas prices and refinery outages have turned to provide more favourable tailwinds to the WTI/WCS 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 (due to 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 $15 per barrel for the rest of 2023 and the whole of 2024 as a result of these favourable market developments. International Petroleum has taken the opportunity to lock in a WTI/WCS differential of approximately $14 per barrel for close to 50 per cent of its forecast 2024 Canadian WCS forecast production volumes. Leveraging on the traditional lower costs for condensate in the summer season, it also locked in approximately 50 per cent, or 3,000 barrels per day, of its third quarter 2023 and first quarter 2024 average daily condensate purchase forecast at WTI minus $1.60 per barrel.

Gas market prices remained below its 2023 base-case price guidance of $3.50 (Canadian) per thousand cubic feet during the second quarter. International Petroleum's average realized gas price was $2.44 (Canadian) per Mcf during the quarter, compared with $3.60 (Canadian) per Mcf during the first quarter of 2023. The recent weakness seen in North American gas prices was to a large extent driven by a much milder winter in Europe and the resulting reduced demand for U.S. liquefied natural gas. 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 $4.10 (Canadian) per Mcf from April to October, 2023, which represents approximately 50 per cent of its net long exposure.

Environmental, social and governance (ESG) performance

International Petroleum is committed to the continued advancement of its ESG practices in its sustainability focus areas. The group's six sustainability priorities are:

• Ethics and integrity;
• Rewarding workplace;
• Health and safety;
• Community engagement;
• Climate action;
• Environmental stewardship.

As part of its commitment to operational excellence, its objective is to reduce risk and eliminate hazards to prevent the occurrence of accidents, ill health and environmental damage, as this is essential to the success of its operations. During the second quarter of 2023, International Petroleum recorded no material safety or environmental incidents.

With respect to climate action, International Petroleum has made notable progress over the past years. Its operational emission reduction efforts have resulted in a reduction of greater than 125,000 tonnes of carbon dioxide equivalent emissions since announcing International Petroleum's climate strategy in 2020. International Petroleum also signed its first virtual green power purchase agreement in 2022, contributing to a greater share of green energy in the Alberta electricity grid. In addition, International Petroleum expanded carbon compensation efforts by offsetting a substantial share of the group's 2022 CO2e emissions, offsetting a total of 330,000 tonnes of CO2e for the year 2022. These initiatives put International Petroleum on track to achieve a 50-per-cent reduction in its net emission intensity by 2025, and the company announced this year at the 2023 capital markets day (CMD) a commitment to extend the reduced net emission intensity level through 2027.

Sustainability reporting and climate disclosures

Alongside the publication of this second quarter 2023 financial report, International Petroleum releases its fourth annual sustainability report and its first stand-alone TCFD report. The sustainability report provides details on International Petroleum's approach to sustainability, highlighting specific initiatives and measurable goals and targets related to the key focus areas set by the group. The TCFD report aligns with the recommendations of the Task Force on Climate-related Financial Disclosures and demonstrates its commitment to addressing climate-related risks and opportunities to its business.

The sustainability report and the TCFD report, including additional information on International Petroleum's efforts and performance across its sustainability priorities, are available on its website.

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, is described in the AIF. Proven plus probable 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) A non-international financial reporting standard measure.

(4) Estimated FCF generation is based on International Petroleum's current business plans over the periods of 2023 to 2027 and 2028 to 2032, including net cash of $175-million as at Dec. 31, 2022, less the Cor4 acquisition consideration of $62-million. Assumptions include average net production of approximately 50 Mboepd over the period of 2023 to 2027, average net production of approximately 65 Mboepd over the period of 2028 to 2032, average Brent oil prices of $75 to $95 per boe escalating by 2 per cent per year, and average Brent to Western Canadian Select differentials and average gas prices as estimated by International Petroleum's independent reserves evaluator and as further described in the AIF. International Petroleum's market capitalization is at close on July 28, 2023, $1.19-billion based on 95.92 Swedish kronor per share, 130.5 million International Petroleum shares outstanding and an exchange rate of 10.55 Swedish kronor per U.S. dollar). International Petroleum's current business plans and assumptions, and the business environment, are subject to change.

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.

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