Mr. Doug Bartole reports

INPLAY OIL CORP. ANNOUNCES 2024 CAPITAL BUDGET

InPlay Oil Corp.'s board of directors has approved a capital program of $64-million to $67-million for 2024.

2024 capital program highlights

InPlay's 2024 exploration and development capital program of $64-million to $67-million is forecast to deliver the following:

• Annual average production of 9,000 to 9,500 barrels of oil equivalent/day (59 per cent 61 per cent light crude oil and natural gas liquids (NGLs));
• Drilling program focused on high-return oil-weighted locations driving annual oil production growth at the midpoint of guidance of 7 per cent over 2023;
• Operating income profit margin of approximately 59 per cent;
• Reduction in capital spending of 20 per cent to 25 per cent compared with 2023, including reduced facilities and infrastructure spending by over 50 per cent providing strong capital efficiencies;
• Adjusted funds flow (AFF) of $89-million to $96-million;
• Free adjusted funds flow (FAFF) of $22-million to $32-million;
• Net debt of $37 $44-million with a net debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of 0.4 to 0.5 times which is among the lower leverage ratios amongst InPlay's peers;
• Base dividend of $16-million to $17-million at the current monthly dividend rate of 1.5 cents/share (18 cents/share annualized) which represents approximately an 8-per-cent yield at the current share price;
• Significant unutilized financial liquidity which can be used to pursue potential tactical capital investments.

The attached table highlights InPlay's 2024 guidance.

With continued commodity price volatility, specifically weak natural gas fundamentals, and current low investor sentiment, InPlay has taken a measured and disciplined approach to capital allocation for 2024, seeking to maximize capital efficiencies, AFF and FAFF supporting strong returns to shareholders with a priority on maintaining its pristine balance sheet. Despite a 20-per-cent-to-25-per-cent reduction in capital spending year-over-year, InPlay is forecasting to deliver approximately 7-per-cent growth in its oil volumes as it focuses on higher oil-weighted assets that deliver greater returns. The capital program is designed to responsibly manage the pace of development, maintain flexibility and remain focused on delivering return of capital to shareholders.

Given the higher rate of return of InPlay's oil weighted properties, the company plans to direct its 2024 capital budget toward oil-weighted drilling in the Cardium and Belly River. Plans are to drill approximately 11 to 12 net extended reach horizontal (ERH) Cardium wells in Willesden Green and Pembina. Also, 3.0 net wells are planned in the Belly River taking advantage of the very high oil weighting of approximately 90 per cent. These Belly River wells exhibit increasing oil rates over the first three quarters of production and a low decline rate thereafter. InPlay's two most recent horizontal wells drilled in the Belly River, which came on-line in November, 2022, have delivered operating netbacks of approximately $71.25/boe since being brought on production. The company's higher oil-weighted locations are characterized by strong light oil rates with lower total boe/d rate relative to wells with higher natural gas weightings. The company's 2024 drilling program plans on drilling fewer wells in 2024 compared with 2023, as a result of its cautious, disciplined capital approach for the year, and is structured to take advantage of improving differentials starting in the second quarter of 2024 and throughout the balance of the year. Facility capital in 2024 is forecasted to be approximately $6.4-million less than 2023 due to the reduced drilling program and significant capital spent on two major natural gas plant upgrades completed in 2023.

InPlay's first quarter of 2024 drilling program consists of five (4.9 net) ERH Cardium wells and three (0.7 net) non-operated ERH Cardium wells. Drilling has started on a two-well (1.9 net) pad in Willesden Green which is expected to come on production in February. Capital activity will then move to Pembina to drill three (3.0 net) Cardium ERH wells. These wells will offset InPlay's five successful wells drilled in 2023 characterized by low decline rates and high light oil and liquids weighting with average initial production (IP) rates of 257 boe/d (89 per cent light crude oil and liquids), 265 boe/d (86 per cent light crude oil and liquids) and 239 boe/d (82 per cent light crude oil and liquids) over their first 30, 60 and 180 days, respectively.

InPlay made significant investments in 2023 to increase operated natural gas takeaway capacity for future growth in Willesden Green and to mitigate potential production issues arising from third party outage and capacity constraints. These projects have already shown their value by reducing back pressure on wells, lowering declines and providing more consistent runtimes while improving InPlay's liquids weighting with a higher natural gas liquids recovery. To further enhance its natural gas takeaway capabilities, InPlay has entered into a long-term gas handling agreement with an industry partner guaranteeing access to natural gas takeaway and processing capacity in the company's Pembina area where it was initially curtailed by approximately six million cubic feet/day and associated oil and liquids starting on Feb. 15, 2023, with the gradual reduction in curtailments and the full resumption of production in September, 2023. This contract will allow InPlay to restart with certainty of capacity the development of this prolific and strong rate of return growth area where drilling activity has not occurred since the spring of 2022. InPlay plans on drilling a pad of three (3.0 net) ERH Cardium wells (3.0 net) in this area in the third quarter of 2024. The company projects fewer operated and non-operated turnarounds and other infrastructure issues during 2024 after an unprecedented high level of disruptions in 2023.

To mitigate risk and add stability during periods of market volatility, commodity hedges have been secured through 2024 and into 2025 as summarized herein.

InPlay will continue to prudently allocate capital resources and adjust its capital plans in consideration of commodity prices, inflationary cost pressures and other aspects impacting its business. Should commodity prices improve and stabilize, InPlay will remain disciplined and flexible and can quickly adjust capital activity to respond to changing market conditions.

2023 update

InPlay's fourth quarter capital program consisted of drilling two (1.6 net) ERH wells in Willesden Green that were brought on production in November. Also, the company drilled its first (1.0 net) multilateral Belly River horizontal well which was brought on production in December. The well has been on production for approximately one month and is still in its initial stages of cleanup and early production results are meeting the company's internal expectations with oil cuts increasing, consistent with offsetting wells.

The increase in North American natural gas production coupled with a warm start to winter has natural gas storage inventories at very high levels resulting in weaker-than-expected natural gas prices during the fourth quarter that continued into 2024. Crude oil differentials began to weaken in November and widened throughout the quarter which impacted realized oil pricing during this period. Higher differentials are extending into the first quarter of 2024 but forward indices show them improving and narrowing starting in the second quarter of 2024 and throughout the remainder of the year.

Annual average production for 2023 is forecast to be approximately 9,050 boe/d (58 per cent light crude oil and NGLs) which was impacted by approximately 650 boe/d over the year due to extraordinary curtailments experienced from third party capacity constraints and turnarounds, Alberta wildfires, and from delays in starting up InPlay's natural gas facility in the third quarter as discussed in its prior press releases.

The attached table highlights InPlay's updated forecasted 2023 guidance.

As commented on above, continued commodity price volatility and current weak industry sentiment have resulted in the company taking a conservative, disciplined approach to capital allocation in 2024. Preliminary estimates and plans for 2025 and beyond will be dependent on the stability of commodity prices and industry sentiment balancing manageable growth and ensuring the long-term sustainability of its return of capital to shareholder strategy. As a result, the company withdraws its preliminary estimates and plans for 2025.

InPlay looks forward to the profitable development of its high rate of return asset base and continuing to provide strong returns to shareholders through 2024 and beyond. On behalf of its employees, management team and board of directors, the company would like to thank its shareholders for their support.

We seek Safe Harbor.