Mr. Doug Bartole reports

INPLAY OIL CORP. ANNOUNCES THIRD QUARTER 2023 FINANCIAL AND OPERATING RESULTS

InPlay Oil Corp. has released its financial and operating results for the three and nine months ended Sept. 30, 2023. InPlay's condensed unaudited interim financial statements and notes, as well as management's discussion and analysis (MD&A) for the three and nine months ended Sept. 30, 2023, will be available at SEDAR+ and the company's website.

Third quarter 2023 financial and operating highlights

• Realized average quarterly production of 9,003 boe/d (barrels of oil equivalent per day) (57-per-cent light crude oil and NGLs (natural gas liquids)), a 6-per-cent increase compared with 8,474 boe/d (57-per-cent light crude oil and NGLs) in the second quarter of 2023 despite extended curtailments and unplanned downtime experienced in the quarter of approximately 550 boe/d.
• Generated strong quarterly adjusted funds flow (AFF) of $25.2-million (28 cents per basic share), an increase of 16 per cent from the second quarter of 2023.
• Returned $4.0-million ($12.0-million in the first nine months of 2023) directly to shareholders through the company's monthly base dividend.
• Increased revenues by 17 per cent to $46.7-million compared with $39.8-million in the second quarter of 2023.
• Improved field operating netbacks by 8 per cent compared with the second quarter of 2023.
• Achieved net income of $7.5-million (eight cents per basic share; eight cents per diluted share). InPlay has now returned to a retained earnings position on the balance sheet demonstrating that the company has generated positive earnings since inception (net of dividends paid).
• Invested $27.5-million to drill, complete and equip three (2.9 net) extended reach horizontal (ERH) wells in Willesden Green, three (3.0 net) ERH wells in Pembina and one (0.35 net) non-operated ERH well in Willesden Green.

Fourth quarter operational update:

• Drilled and completed two (1.6 net) ERH wells in Willesden Green which were recently put on production.
• The three (3.0 net) Pembina ERH wells brought on production shortly before start of the quarter are producing at strong rates of approximately 260 boe/d (87-per cent light crude oil and NGLs) per well.
• Brought on line the company's second natural gas facility upgrade at Leafland, which has increased operated facility capacity by 66 per cent while improving the company's liquids yield by 40 per cent. Production benefits are already being realized through reduced back pressure on wells, lower declines and providing more consistent runtimes.
• Current production is 9,700 boe/d (60-per-cent light crude oil and NGLs) based on field estimates, excluding the impact of the two (1.6 net) ERH wells in Willesden Green showing strong flowback rates in the early clean-up stage.

Third quarter 2023 financial and operations overview

The third quarter of 2023 was a capital intensive quarter for the company. InPlay invested $27.5-million drilling, completing and equipping three (2.9 net) ERH wells in Willesden Green and three (3.0 net) ERH wells in Pembina. The company also participated in one (0.35 net) non-operated ERH well in Willesden Green not previously budgeted.

In addition to the upgrade of a natural gas facility in the second quarter, the company completed a second material upgrade of a gas facility during the third quarter which was brought back on line in early October. This project modernized existing infrastructure in the Leafland area of Willesden Green and has resulted in an approximate 66-per-cent increase to the natural gas processing capability of this facility. The addition of a refrigeration plant to this facility has also improved NGL recoveries by approximately 40 per cent. This additional capacity has lowered field pressures in the area which is expected to improve production and reduce declines on existing wells and future drilling locations. This upgrade is expected to accommodate future development in Leafland and provide more consistent and reliable processing capacity within the company's operational control.

The company has been focused on a high oil weighted drilling program. Three (2.9 net) Willesden Green ERH wells came on production in August into high-pressure pipeline systems with average initial production (IP) rates per well of 203 boe/d (94-per-cent light crude oil and NGLs) over their first 30 days and 215 boe/d (93-per-cent light crude oil and NGLs) over their first 60 days. The impact of the company's facility improvements has enabled these wells to have multiple weeks of flat to improving production rates and after two months they continue to produce at an average rate of approximately 280 boe/d (87-per-cent light crude oil and NGLs) per well. The production witnessed from the most recent six wells drilled in Willesden Green have recently benefitted from reduced field pressures and consistent facility runtimes resulting from the company's operated natural gas facility expansions.

In addition, three (3.0 net) Pembina ERH wells came on production at the end of September with average initial production (IP) rates per well of 227 boe/d (88-per-cent light crude oil and NGLs) over their first 30 days. These wells have also continued to clean up after completions and are currently producing approximately 260 boe/d (87-per-cent light crude oil and NGLs) per well.

Production for the three months ended Sept. 30, 2023, averaged 9,003 boe/d (57-per-cent light crude oil and NGLs), 6 per cent higher compared with the three months ended June 30, 2023. Third quarter production was impacted by approximately 550 boe/d (52-per-cent light crude oil and NGLs) primarily due to the continuation of multiple third party natural gas takeaway constraints on the company's operations and the commissioning of the company's expanded gas facility that slightly exceeded the anticipated start-up timeline. The continued third party facility outages forced the redirection of associated natural gas to less favourable third party facilities impacting production through increased back pressure on producing wells as well as higher operating costs.

InPlay generated AFF of $25.2-million (28 cents per basic share) an increase of 16 per cent from the second quarter of 2023. The company achieved net income of $7.5-million (eight cents per basic share; eight cents per diluted share) and has returned to a retained earnings position on the balance sheet. This is evidence of the long-term sustainability of the company as positive earnings have been generated since inception (net of dividends paid).

Outlook and operations update

The majority of InPlay's capital program for the year has been completed. The company's drilling program for the fourth quarter is under way with two (1.6 net) ERH wells in Willesden Green having been drilled to date. These two wells have been completed and are in the early stages of production. In addition, a 1.0 net Belly River well is now planned to be drilled in the fourth quarter and anticipated to come on line in December with its first full month of production expected to commence in January, 2024. This well replaces a previously planned one (0.8 net) Willesden Green well.

The investments made in increasing natural gas takeaway capacity through the two facility upgrades in Willesden Green will be important in alleviating potential production issues from third party facility outages going forward. These upgrades have increased the company's natural gas processing and takeaway capacity in Leafland from approximately 8,400 mcf/d (thousand cubic feet per day) to 17,300 mcf/d. These projects have already shown their importance by reducing back pressure on wells, lowering declines and providing more consistent runtimes, and the reduction in field pressures has the added benefit of improving the company's liquids weighting. Current production is approximately 9,700 boe/d (60-per-cent light crude oil and NGLs) based on field estimates, excluding the impact of two (1.6 net) ERH wells in Willesden Green which are in early stage cleanup and with only four days of production are showing strong flowback rates.

As a result, the fourth quarter is forecasted to be the company's highest production quarter of the year and given the strong crude oil pricing environment and weak Canadian dollar, the fourth quarter is also projected to be the company's highest AFF quarter for the year. As the majority of the 2023 capital program was completed by the end of the third quarter, significant free adjusted funds flow (FAFF) is expected to be generated in the fourth quarter resulting in a sizeable reduction to net debt prior to year-end.

The company's updated 2023 drilling program will be more active than previously planned by approximately 0.6 net well consisting of 21 (17.1 net) horizontal wells. The changes include an additional one (0.35 net) non-op ERH Willesden Green well and a 1.0 net Belly River well instead of a previously planned one (0.8 net) Willesden Green well. As a result, InPlay has revised its 2023 development capital expenditure guidance to approximately $83-million. The timing of the Belly River well will not materially add to 2023 production but will pave the way for potentially an increased Belly River program in 2024 given the high oil weighting and high netback nature of this play. This area is defined by high light-oil weightings that receive a premium to the Mixed Sweet Blend (MSW), the company's pricing benchmark. The company's two recent horizontal wells drilled in the area came on line in November, 2022, and have had operating netbacks of approximately $71.25/boe since being brought on production, and light oil and liquids weightings of approximately 94 per cent to date. These wells have had very low decline rates over this period with average IP rates per well of 98 boe/d (97-per-cent light crude oil and NGLs) and 115 boe/d (92-per-cent light crude oil and NGLs) over their first 90 and 335 days respectively.

The company remains committed to providing strong returns to shareholders. The company's monthly base dividend of 1.5 cents/share represents approximately a 7-per-cent yield at the current share price. To date, the company has returned $16-million to shareholders through dividends since the company's inaugural dividend was declared in November, 2022, representing approximately 7 per cent of the company's current market capitalization while maintaining a strong financial position. The generation of shareholder returns through significant FAFF, top-tier production per-share growth while maintaining low leverage all remain top priorities of InPlay.

InPlay would like to thank its staff, contractors and suppliers for their continued dedication and execution, and thanks the board of directors and shareholders for their continued guidance and support. The company looks forward to releasing its 2024 capital budget and associated guidance in January.

We seek Safe Harbor.