Mr. Doug Bartole reports

INPLAY OIL CORP. ANNOUNCES 2023 FINANCIAL, OPERATING AND RESERVES RESULTS

InPlay Oil Corp. has released its financial and operating results for the three and 12 months ended Dec. 31, 2023, and the results of its independent oil and gas reserves evaluation, effective Dec. 31, 2023 (the reserve report), prepared by Sproule Associates Ltd. InPlay's audited annual financial statements and notes, as well as management's discussion and analysis (MD&A) for the year ended Dec. 31, 2023, will be available at SEDAR+ and on the company's website. An updated presentation will be available soon on the company's website.

Two thousand twenty-three financial and operations highlights:

• Achieved average annual production of 9,025 boe/d (barrels of oil equivalent per day) (58 per cent light crude oil and NGLs (natural gas liquids)) and average quarterly production of 9,596 boe/d (59 per cent light crude oil and NGLs) in the fourth quarter, an increase of 7 per cent compared with 9,003 boe/d (57 per cent light crude oil and NGLs) in the third quarter of 2023.
• Achieved a quarterly record for light oil production of 4,142 bbl/d (barrels per day) in the fourth quarter of 2023.
• Generated strong adjusted funds flow (AFF) of $91.8-million ($1.03 per basic share), the second-highest level ever achieved by the company, despite WTI (West Texas Intermediate) prices decreasing 18 per cent and AECO (Alberta Energy Company) natural gas prices decreasing 50 per cent compared with 2022.
• Realized strong operating income profit margins of 58 per cent during 2023, notwithstanding the significant benchmark commodity price decreases.
• Returned $16.5-million to shareholders through the company's monthly base dividend and normal course issuer bid (NCIB) share repurchases, representing an annual yield of 8.2 per cent relative to year-end market capitalization. Since November, 2022, InPlay has distributed $22.8-million in dividends, or 25.5 cents per share, including dividends declared to date in 2024.
• Recorded net income of $32.7-million (37 cents per basic share, 36 cents per diluted share). InPlay has now returned to a positive retained earnings position on the balance sheet, demonstrating that the company has generated positive earnings since inception (net of dividends paid).
• Invested $84.5-million to drill, complete and equip 12 (10.5 net) extended reach horizontal (ERH) wells in Willesden Green, five (5.0 net) ERH wells in Pembina, one (1.0 net) multilateral Belly River well and three (0.6 net) non-operated ERH wells in Willesden Green, in addition to capital spent on two major natural gas facility upgrades to increase operated natural gas takeaway capacity for future growth.
• Exited 2023 at 0.5 times net debt to earnings before interest, taxes and depletion (EBITDA), which is among the lower leverage ratios amongst the company's peers.
• Renewed the company's revolving senior credit facility with a total lending capacity and borrowing base of $110-million, providing significant liquidity to be used for tactical capital investment and strategic acquisitions.
• Dedicated $3.3-million to the successful abandonment of 29 (23.1 net) wellbores, 114 (103.3 net) pipelines and the reclamation of 35 (29.3) wellsites.

Two thousand twenty-three reserve highlights:

• An organic 2023 capital program without acquisition/disposition (A&D) activity resulted in:
  • Proved developed producing (PDP) reserves of 17,293 mboe (million barrels of oil equivalent) (56 per cent light and medium crude oil and NGLs);
  • Proved developed non-producing (PDNP) reserves of 1,002 mboe (76 per cent light and medium crude oil and NGLs) are expected to move to the PDP reserve category throughout the year, with over 60 per cent of the related wells expected to be finished and on production in the first half of 2024;
  • Total proved (TP) reserves of 45,919 mboe (62 per cent light and medium crude oil and NGLs);
  • Total proved plus probable (TPP) reserves of 61,594 mboe (63 per cent light and medium crude oil and NGLs);
  • On a year-over-year basis, PDP, TP and TPP reserves remained relatively unchanged.
• Reserves life index (RLI) for PDP, TP and TPP of approximately 5.2 years, 13.9 years and 18.7 years, respectively, highlight a sizable drilling inventory for InPlay to sustainably develop over time.
• Delivered TPP finding, development and acquisition (FD&A) costs (including changes in future development costs) of $23.36/boe, notwithstanding $7-million in capital expenditures spent on non-recurring facility projects in 2023 to enhance InPlay's natural gas takeaway capacity. This generated a recycle ratio of 1.4 times based on an operating netback of $31.61/boe.
• Achieved healthy NPV BT10 (net present value discounted at 10 per cent) reserve values:
  • NPV BT10:
    • PDP: $242-million;
    • PDP plus PDNP: $261-million;
    • TP: $571-million;
    • TPP: $824-million.

Message to shareholders

InPlay had another year of solid operational and financial performance in 2023 while continuing to deliver strong returns to shareholders and maintaining a solid balance sheet. The continued development of the company's drilling inventory has yielded consistent and sustainable results, with InPlay's team constantly evaluating options to provide further shareholder returns.

Average 2023 production of 9,025 boe/d generated AFF of $91.8-million ($1.03 per share). InPlay returned $16.5-million to shareholders through its monthly base dividend and normal course issuer bid share repurchases. The company maintained its balance sheet strength with a net debt to EBITDA ratio of 0.5 times and total debt capacity of $110-million, allowing the financial flexibility to take advantage of strategic opportunities and weather periods of market volatility.

InPlay achieved strong before-tax estimated net present values of future net revenues associated with its 2023 year-end reserves, discounted at 10 per cent, although impacted by weaker future commodity prices in comparison with Dec. 31, 2022. Forecasted WTI and AECO prices used in the reserve report decreased by 8 per cent and 48 per cent in year one, and 4 per cent and 23 per cent in year two, respectively. The company achieved NPV BT10 reserve values of $242-million (PDP), $571-million (TP) and $824-million (TPP) based on a three independent reserve evaluator average pricing, cost forecast and foreign exchange rates as at Dec. 31, 2023, as used in the reserve report.

InPlay remains focused on disciplined development of ist high-rate-of-return assets, with a focus on maximizing free adjusted funds flow alongside a reasonable production growth profile while maintaining conservative leverage ratios, with the ultimate goal of maximizing returns to shareholders. The company will remain disciplined and flexible, and can quickly adjust capital activity to respond to changing market conditions.

Outlook and operations update

InPlay's capital program for the first quarter of 2024 started with a two (1.9 net) ERH well pad in Willesden Green, which came on production at the end of February and is in the early stages of clean-up. Drilling of three (3.0 net) Pembina Cardium ERH wells has been completed, with completion operations currently under way. These wells are expected to come on production by the end of March, and offset five successful wells drilled in 2023 characterized by low decline rates and high light oil and liquids weightings. An additional two (0.3 net) non-operated Willesden Green ERH wells have recently been drilled, are being completed, and are expected to come on-line in mid-March, with another one (0.35 net) non-operated Willesden Green ERH well drilled in March and expected to be on production in the second quarter.

The company's first (1.0 net) multilateral Belly River horizontal well was brought on production in December. The well has been on production with no decline and is meeting internal expectations with initial production (IP) rates of 84 boe/d (96 per cent light crude oil and liquids) and 89 boe/d (97 per cent light crude oil and liquids) over its first 30 and 60 days, respectively. The Belly River is characterized by high-quality sweet light oil that receives premium pricing to InPlay's realized benchmark MSW (mixed sweet blend) commodity price. InPlay is encouraged by the results that it is seeing from this well and will continue to evaluate expanding the use of this technology on further potential areas in its Belly River play.

WTI prices remained volatile early in 2024 but have improved throughout the quarter to approximately $78 (U.S.)/bbl, exceeding the $75 (U.S.)/bbl assumption utilized in the company's previously released 2024 budget. Future differentials to WTI, including MSW, are forecasted to significantly improve by 55 per cent to 60 per cent throughout the balance of the year compared with the fourth quarter of 2023 and first quarter of 2024, as new pipeline capacity comes on-line in the second quarter. The relatively weak Canadian dollar is supportive of the Canadian crude oil price environment and is expected to continue throughout the year. Natural gas prices have been challenged with warmer-than-average temperatures impacting winter demand, resulting in weak AECO prices forecasted through to the end of the summer. InPlay has implemented crude oil and natural gas hedges at favourable pricing levels to mitigate risk and add stability during periods of market volatility.

As previously announced, InPlay's board of directors approved a 2024 capital budget of $64-million to $67-million, which is forecast to result in annual average production of 9,000 boe/d to 9,500 boe/d (59 per cent to 61 per cent light crude oil and NGLs). InPlay has taken a measured and disciplined approach to capital allocation for 2024, with a program focused on high-return oil-weighted locations driving annual oil production growth at the midpoint of guidance of approximately 7 per cent over 2023, despite a 20-per-cent to 25-per-cent reduction in capital spending year-over-year. The capital program is designed to responsibly manage the pace of development, maintain operational and financial flexibility, and remain focused on delivering return of capital to shareholders. The company achieved record quarterly light oil production of 4,142 bbl/d, and increased its light oil and NGLs weighting to 59 per cent in the fourth quarter of 2023. This higher weighting of light oil and NGLs is expected to continue in 2024 as a result of the company's oil-focused drilling program, allowing the company to take advantage of the strong oil price environment, which is the company's main revenue and AFF driver.

Two thousand twenty-three financial and operations overview

Production averaged 9,025 boe/d (58 per cent light crude oil and NGLs) in 2023 compared with 9,105 boe/d (57 per cent light crude oil and NGLs) in 2022. Production averaged 9,596 boe/d (59 per cent light crude oil and NGLs) in the fourth quarter of 2023, a 7-per-cent increase in comparison to the third quarter of 2023. Production for 2023 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 delays in starting up the company's natural gas facility in the third quarter, as discussed in InPlay's prior press releases.

In 2023, commodity prices decreased over 2022 levels. WTI oil prices decreased 18 per cent, predominantly as a result of increased supply and sentiment on future demand. Natural gas prices weakened due to production growth in North America, with higher-than-normal inventory levels in North America and Europe, resulting in a 50-per-cent decrease in AECO pricing compared with 2022. These lower commodity prices resulted in a 24-per-cent decline in InPlay's realized sales price driving a decrease to AFF and netbacks compared with 2022, which was partially offset by realized hedging gains.

InPlay's capital program for 2023 consisted of $84.5-million of development capital. The company drilled, completed and brought on production 12 (10.5 net) extended reach horizontal wells in Willesden Green, five (5.0 net) ERH wells in Pembina, one (1.0 net) multilateral Belly River well and three (0.6 net) non-operated ERH wells in Willesden Green. This activity amounted to the drilling of 21 gross (17.1 net) wells. Capital activity in 2023 was also focused on expanding and upgrading the company's natural gas facility infrastructure to accommodate future growth. InPlay completed two major facility upgrades in 2023 to increase operated natural gas takeaway capacity and to mitigate potential production issues arising from third party outages and capacity constraints. These projects have already shown value by reducing back pressure on wells and lowering declines while improving the company's liquids weighting with higher natural gas liquids recovery. After the completion of these projects, more consistent run times and the transportation of associated natural gas to the company's lower-cost operated facilities has resulted in operating costs trending downward in the last quarter of 2023, which is expected to continue into 2024.

Corporate reserves information

The associated table summarizes certain information contained in the reserve report. The reserve report was prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities. Additional reserve information as required under NI 51-101 will be included in the company's annual information form, which will be filed on SEDAR+ by the end of March, 2024.

The $509-million of total FDC in the reserve report generates approximately $521-million in future net present value discounted at 10 per cent.

Pricing assumptions

The table entitled "Summary of pricing and inflation rate assumptions as of Dec. 31, 2023, forecast prices and costs" sets forth the benchmark reference prices, as at Dec. 31, 2023, reflected in the reserve report. These price and cost assumptions were an arithmetic average of the price forecasts of three independent reserve evaluator's (Sproule, McDaniel & Associates Consultants Ltd., and GLJ Ltd.) then-current forecast, and Sproule's foreign exchange rate forecast at the effective date of the reserve report.

The payment date for InPlay's March, 2024, dividend declared on March 1, 2024, has been amended to March 28, 2024, due to Canadian banks being closed on the previously disclosed payment date of March 29, 2024.

On behalf of InPlay's employees, management team and board of directors, the company would like to thank its shareholders for their support, and look forward to an exciting 2024 and beyond.

We seek Safe Harbor.