International Petroleum Corporation

Okay, so welcome everybody to IPC's third quarter results update presentation. I'm William Lundin, the CEO, and joining me in presenting this morning is Christoph Negrarian, our CFO. I'll begin with the highlights and touch on the operational performance of our assets, then pass it to Christoph for a more detailed overview of the financial numbers. Following that, we'll open up the floor to take questions, which can be submitted by a conference call or by the web. So getting right into it in the highlights for the third quarter of this year, IPC delivered an average production of 45,000 barrels of oil equivalent per day, which was in line with the forecast range for the quarter. Our full year 2024 production guidance is maintained at 46 to 48,000 barrels of oil equivalent per day. On the operating cost front, the Q3 OPEX per BOE was $17.90, slightly below guidance. We've taken the opportunity to revise our full year operating expenditure per BOE for this year at below $18 per BOE. The organic growth side, it is a peak investment year for the company where we expect to spend 437 million USD. That number is unchanged since CMD. In Q3, we spent $102 million and 82 of that 102 was incurred at the Black Rod Phase One Development Project. For operating cashflow in Q3, the business delivered 73 million USD and the full year forecast is expected to be between 335 to $342 million with a tightened outlook between 70 to $80 Brent for the remainder of the year. Q3 free cashflow was minus 38 million USD or positive 44 million USD, excluding the Black Rod growth spend. Similarly to the OCF, we've tightened the free cashflow range for the full year between minus 140 to minus 133, between $70 and $80 Brent for the remainder of the year. Balance sheet is in good shape. Our net debt is at 157 million USD. So a slight build relative to the prior quarter, largely attributed to the growth spend at Black Rod as well as share buybacks that it continued throughout the third quarter. Gross cash resources available to the company is just shy of 300 million USD. And the hedges for 2024 that we have in place is about 70% of our WTI to WCS differential exposure is at $15 a barrel. We also have about 50% of our Canadian crude at a hedged at a WTI level at $80 Brent for the second half of this year. And our Brent linked production, about 50% of that is hedged for the second half of this year at $85 dated Brent. We also elected to add some gas hedges for the remainder of this year. We have about 14.5 million scuffs hedged at just under $1.60 CAD per MCF. The sustainability side, pleased to share there were no material safety incidents reported or recorded in the quarter. And we're well on track to achieve our net emissions intensity reduction target come 2025, which was extended to and through to the end of 2028, which was announced at our capital markets day earlier this year. On the share repurchase side, as at the end of September, we purchased 7.5 million shares under the normal course issuer bid program. So we're well on track to fulfill that buyback program. And we're pleased to share that we have received board approval to renew the NCIB program come early December of this year. Onto the production, the 2024 production again, as I stated for the third quarter was 45,000 barrels of oil equivalent per day. We're pleased to share that the plan turnaround activity at Onion Lake Thermal was successfully completed. That was a 14 day turnaround with a lot of activity that took place. In the third quarter, we also saw a continued weakness on gas prices, which translated into reduced optimization activity at our Suffield gas assets. And on the international side, the assets continued to deliver robust production. We had a plan turnaround that was also completed at Burrtem successfully. And as you can see on the production chart, we have recovered production levels since the plan maintenance activity took place in September. So the year to date production in 2024, taking into account the first three quarters is 47.4 thousand BOEs per day. We're well positioned to deliver within our CMD guidance of 46 to 48 thousand BOEs per day with about 14% of our production being Brent weighted from Malaysia and France. A one third of our production mix is natural gas weighted. And the remaining percentage of our production mix is largely heavy Canadian crude. What's important to note as well on the bar chart shown on this slide, it shows the prior years of our production performance relative to our guidance. So every year the company has had the ability to deliver within or above production guidance. And we see no change to that going forward as well for this year in 2024. Moving on to the operating cashflow. So Q3 again was 73 million USD generated by the business. The year to date OCF generation is about 264 million USD. And that's been at an average differential between Brent to WTI of $5 a barrel and from WTI to WCS between $16 a barrel in the average year to date. So we're well in line to deliver our cashflow that we had forecasted at the beginning of the year where we expect now to generate between 335 to 342 million USD between $70 to $80 Brent for the year. The capital expenditure front, there is a significant amount of CapEx deployed this year. It's largely targeted towards the Black Rod asset but also further supplemented by some oil well drilling in the Southern Alberta assets we have in Canada. Year to date CapEx and ARO incurred is about 313 million USD and about $245 million so far through 2024 has been spent at the Black Rod phase one projects or full year guidance of 437 million USD is unchanged for 2024 as we look to have a big spend quarter in this quarter four. So with the CapEx taken into account our free cashflow generation, year to date free cashflow is 171 million USD excluding Black Rod and including the growth CapEx at Black Rod is minus 74 million USD. So the full year forecast for 2024 free cashflow excluding the growth CapEx on the right hand side of the slide is expected to be between 220 to 230 million USD highlighting the cashflow generative ability of the base business producing assets taking into account the growth CapEx we expect to be between minus 133 to minus 140 million USD which is in line with expectation that we went out with at capital markets day. The share repurchase program. So we have repurchased just shy of 70 million shares since the company was formed and the average repurchase price of all the shares that have been purchased and canceled by the company is at 71 sec per share or $9.50 Canadian per share which is well below our current share price. As I had stated, we are on track to complete our 2023-2024 normal course issuer bid program in November and very pleased again to share that we have approval to renew our normal course issuer bid program in December of this year where we expect to be able to repurchase another 7 million shares under that program. So it's really optimal timing for the company to be canceling out our shares since 2022 around 25% of our shares outstanding have been repurchased and canceled in parallel with significantly increasing the value of our business since we were originally formed in 2017 which shows on the highlights in the right hand side of this slide we've increased production fivefold since we began at life in 2017 our 2P reserves has increased more than 16 times. We've added 19 years to our 2P reserves life index increased our contingent resources by an excessive a billion barrels of oil equivalent and added a significant amount of net asset value in excess of two and a half billion dollars. So our net asset value as at the beginning of 2024 corresponds to a fair share price of 32 CAD per share or in excess of 242 sec per share and current levels where we're trading at represent in excess of a 50% discount. So again, as I had stated in previous quarterly reporting periods this really underpins the reason why our shareholder returns are guided towards share buybacks versus dividends and we intend to continue doing that provided we keep trading at this discount relative to our intrinsic value. Moving on to the Black Rod phase one development a picture says a thousand words and that's why we've made it a key component of our updating periods to provide more pictures as this asset continues to change on a daily basis with more activity taking place. Responsible development continues and really pleased to share as prime contractor at the site no material safety incidents have been taken place since we sanctioned this project in early 2023. So the teams have done a tremendous job staying vigilant and enforcing our strong safety culture with the vendors who are onboarded at site. This project is well in line with the overall schedule and budget which is a total installed cost of 850 million USD to first oil in 2026. So since this project has been sanctioned we've spent around 485 million USD and the overall activities continue to progress in line with plan facility construction continues to see good progress. As you can see on the picture at the bottom left-hand side of the slide an aerial shot of the plot plan. You can see a lot of activity and moving parts there. We have a lot of packaged equipment that's been delivered to site. Over 300 pieces of equipment have been ordered so the procurement's well on track here and moving up to the top right-hand picture of the slide you can see one of the inlet degasers. So one of our process modules being delivered to site and further on in the pictures below that the tank farm's pretty much fully erected at this point in time. We have pipe rack modules being delivered to site and things continue to ramp up as well on the civil work side with the access road being largely completed at this point in time. Some piling works is still taking place in anticipation of modules to be delivered within the central processing facility area. On the drilling side we're advancing at a great rate here. We're still on the second super pad here where we're drilling 16 well pairs. Our first production pad which is 14 well pairs at pad B is largely finished and now the second super pad is about 50% complete which is 16 well pairs so that continues to progress in line if not ahead of expectation. And looking at the schedule now for Black Rod, again it's all coming together this year with the peak investment program touched on the civil works and the road works largely being completed at this point in time. The facility's work scope continues to move in accordance with plan detailed sequencing of events and turning around the equipment from the fabrication shop to site is key to the success of the overall build of this project. And the drilling continues to go well. Our midstream pipelines are also progressing and tracking along as expected. So we're expecting to be commissioning during the winter period of 2025, 2026 with first steam to follow around Q1 of 2026 and first oil expected later on in 2026. So the transformational growth project continues to progress in line with expectation overall and it's gonna take IPC to new heights upon it coming on stream. Moving on to Onion Lake Thermal, as I had mentioned at the beginning of the presentation, we had a significant turnaround which was planned every three years you do a compliance driven turnaround. This was a 14 day shutdown that happened and all the activities that were planned to take place were completed and pleased to share that we have restored production at this asset and increasing in excess of 12,000 barrels per day. We continue to ramp up the latest production sustaining pad L wells where we have two more wells to be tied on and put on stream. Within the Suffield area assets, we continue to offset our historical decline rates through development and low cost optimization works as is shown on both production plots when we acquired the Suffield area assets, not a lot of capital investment had been deployed into them. You can see the pre acquisition decline rate has been largely offset through the smart money that's been deployed by IPC here and the step up in production in 2023 and oil production specifically comes from the core four acquisition that we did at the beginning of 2023. We continue to focus on drilling up the Ellersley formation. We elected to include three additional wells to be drilled this year, bringing the total of wells from five to eight, about five of these wells are online at this point in time and performing in line with expectation. The other assets within the Canada portfolio are shown on the map of this slide 14. So we continue to have some contribution in production, specifically coming from our Ferguson asset where we drilled three wells earlier this year and we're also seeing a response from the phase two polymer flood at the Mooney asset. So we're doing around 4,000 barrels of oil. Equivalent per day at these other Canadian assets within the portfolio. Moving across the pond to Malaysia, continue to get high quality, high net back results from the production in Malaysia. We had a successful completion of planned maintenance in Q3 during September. Operational excellence continues and the teams do a phenomenal job at maintaining high up times, excluding plan maintenance. We're continuing to see an excess of 99% up times. We had one lifting take place during Q3 where we had two liftings in Q2 as per comparison. So that's a part of the reason for the cashflow results being slightly softer relative to the second quarter levels. In France, we continue to have stable operations. In France, delivering robust free cashflow to IPC. Continue to assess the additional undeveloped potential here building on the good results achieved from our 2023 campaign. Looking forward into our sustainability overview. As I had mentioned, very pleased to share no material safety incidents year to date for IPC. Well on track to achieve our net emissions intensity target of 50% come 2025, which we'll look to maintain through to the end of 2028. And also to note, which was mentioned in Q1 as well, we were assessed under S&P corporate sustainability assessment and ESG ratings agency. And we ranked within the top 11% of all the companies that were screened within the peer group. So pleased to again, share that highlight and a testament to the good work that is taking place across the IPC portfolio and the sustainability teams are leading. So with that, I will pass it over to Christophe to touch on the financial highlights. Yeah, thank you very much,

Will. And yeah, indeed a solid quarter. So we had an anticipated drop in production which as Will mentioned was driven by regulatory turn around at Onion Lake Thermal in September. And there was a much shorter shutdown at Bertham for a couple of days. So with 45,000 of barrels of oil equivalent per day on average this quarter, we are maintaining our full year guidance between 46 and 48,000 barrels of oil equivalent per day for the full year. The oil prices were a bit volatile in Q3 with a drop of $11 per barrel between July and September going from 85 to 74. The gas prices were quite low in Canada and they're picking up slightly now. And so we're expecting moving into the winter that gas prices will come above one if not two Canadian dollar per MCF but they were on average below one Canadian dollar. And so that has driven some lower revenues, although we benefited from the hedges we would put in place for roughly 50% of all Brent and WTI oil production exposure. So with gas prices relatively low that reduced a bit the OPEX per barrel. So we had operating costs at $18 which was below our expectations. And so now we're re-guiding for the full year operating costs per BOE just below the low end of the previous range. So we had guided 18 to 19, we're getting now below $18 per BOE for the full year. So in that context, the cash flows were actually very good. 73 million US dollar this quarter for the operating cash flow 68 for EBITDA. And with more than a hundred million dollars spent on CAPEX 80% being dedicated to the Black Road phase one development that we generated a negative free cash flow of 38 million for that quarter which would have been positive 40 million if you didn't include the CAPEX for Black Road. The balance sheet is in a very strong place where at the end of September we still had 300 million US dollars of cash on the balance sheet. And so that translates into a net debt of 157 million US dollar. You can see on that slide for realized prices that on average Brent for Q3 was $80 per barrel. But as I said, it was volatile. So in Malaysia, we unfortunately sold our cargo in September. So the cargo sold at a significant premium to Brent more than $6, but actually the Brent average 74 in September. So it looks like we sold on par with the average of the Brent for the quarter, but we sold at a premium. I can assure you with that in France and Canada. On the other hand, it's, I would say business as usual in France, we're selling on parity with Brent. And in Canada, we're selling in this instance for Suffield and the Onion Lake on parity with WCS. In terms of gas prices, as I mentioned already in the previous quarter there was a bit of a disconnect now between Canadian and US Henry up gas prices. The injection has been quite high. So the storage level in Canada are quite high in anticipation of LNG Canada coming on stream. And so you can see that the realized prices in the third quarter was below one Canadian dollar per MCF the lowest ever for IPC. But we're hopeful that with winter coming and LNG Canada being commissioned in the next few months increasing to probably full ramp up by next summer. We anticipate gas prices to firm up a bit but it's gonna take some months to unwind given the high storage levels. The financial results, so if you compare the operating cashflow and EBITDA for the first nine months compared to last year the third quarter was weaker because the third quarter in 2023 saw some very strong oil prices. Now, if you look year to date and you don't look at the on a quarter per quarter basis the levels are quite similar. So year to date for this year both operating cash flows and EBITDA are around 260 million US dollars whereas it was 280 last year. Operating costs, so I mentioned the good news is that the operating costs are lower than expected. The bad news is that operating costs are lower than expected because that was driven by reasonably low gas prices. And that being said, we've revised our guidance for the full year at below 18 dollar per BOE for the full year. And that was driven really by lower gas prices lower electricity costs, lower chemical costs and some lower activity at surface gas as well. The increase this quarter on the dollar per BOE basis was mostly driven or simply driven by the reasonably lower production. In terms of netbacks, so you can see that this quarter was a bit lower, but year to date the netbacks both on an operating cash flow basis or on an EBITDA basis were around 20 dollar per BOE which is really good. In terms of net debt evolution, so we generated an operating cash flow of 264 million for the first nine months. So that's covering most but not all of our development capex and abex. But then beyond the capex, the most significant items to fund of the first nine months were the share buyback where we bought back 81 million of round shares and canceled all of those shares. And a change in working capital which was mostly driven by high payables at the end of last year. We had a very, very high level of activity at Black Rod, very high level of activity in Malaysia, but the invoices came and were paid in January and February. And those were much higher than the payables at the end of September. So that translated into a change in working capital of 60 million. As you can see the cash, GNA component or the net cash financial items together less than 25 million are fairly small in the context of how much cash flows we generate. Looking more into the details of GNA and financial items. So the financial items are very stable. Most of our finance costs are the coupon we pay to the bond holders. We have 450 million US dollars of bonds outstanding. The reason why the net financing costs have increased a bit this quarter is simply due to the fact that the cash position went from 370 down to 300 million US dollars. And so the finance income was slightly lower, but otherwise extremely stable finance costs and the GNA remained very stable at around 4 million per quarter or less than $1 per BV at the business level, the group level. So looking at the financial results, we generated close to 600 million US dollars in revenues. The cash margin was 270 million, gross profit 167. And we posted a very strong net results already for the first nine months in excess of 100 million US dollars. Looking at the balance sheet, so the total assets, the end of September was just above 2 billion. And if you compare the balance sheet at the end of last year and at the end of September this year, you can see that the main change was really our cash position being reduced by roughly 200 million US dollars and the value of our oil and gas assets increased by almost the same 200 million US dollars. Our capital structure remains very strong, robust, solid, whichever way you wanna look at it. The, it's been stable, almost no change. The only change to make our balance sheet even stronger is that we entered into a letter of credit facility under which we have all of our letters of credit. And what that means, it's an unsecured facility where the letters of credits are issued by a Canadian bank and guaranteed by Export Development Bank of Canada. The importance of that point is that it frees up all of our Canadian revolving credit facility. So the 180 million CAD of revolver are fully committed, fully available and fully un-drown as well. So the business is in a strong position from a liquidity perspective. In terms of hedges, so you really had two sides to this, the good news or the not so unfortunate news, but actually most of our oil and gas hedges paid off this quarter because we had hedged oil brands, volumes at 85 and WTI volumes at 80. So those hedges translated into a positive result and income in this third quarter. On the FX side, we lost a bit on the USD CAD because the Canadian dollar was very weak against the USD this quarter and remains weak, but which is generally a positive because it means our OPEX and CAPEX in Canada are comparatively cheaper in USD terms. For next year, we anticipate a reasonably strong, not nowhere near as big as this year, but we anticipate a reasonably strong investment here again and so even if we're not pessimistic on oil prices, we felt it was prudent to hedge a bit of the differential going into next year. So we hedged around 40% for production at minus $14 per barrel and we've hedged 2,500 barrels a day of WTI production at $70. And that concludes my part. I will leave Will, conclude.

Thanks, Christophe. And again, to summarize the highlights year to date, record investment year spent 313 million USD since the beginning of the year. Full year guidance is maintained at 437 million USD for CAPEX as well as ABEX. Production year to date is 47.4 thousand barrels of oil equivalent per day. So our full year guidance is maintained at 46 to 48 thousand BOEs per day. Operating costs year to date are $16.5 per BOE. So we have re-guided our full year operating expenditure per BOE to be less than $18 a barrel for 2024. Cash flow generation operating cash flow is 264 million USD through the first nine months of the year and free cash flow is minus 74 million USD. The full year guidance for our operating cash flow generation is expected to be 335 to 342 million USD. The balance sheet has a net debt of 157 million USD and gross cash resources of just shy of 300 million USD. We also have liquidity through 180 million CAD as Christa I thought touched on on a revolver credit facility in Canada. No safety incidents year to date and our share repurchase program is well underway to be completed the 2023-2024 program and the renewal of that is expected on December 5th of this year where we intend to continue buying back shares under that program. So with that, I will open it up to questions which we can start from conference call.

Thank you. If you would like to ask a question or make a contribution onto this call, please press star one on your telephone keypad. To withdraw your question, please press star two. We will take our first questions from Theodore Nielsen from SB1 Markets. Your line is open. Please go ahead.

Good morning, Will and Christoph. Thanks for taking my questions. Three questions for me. You highlight that 2024 will be a peak capex year. How should you think around 2025 capex? How much lower should we expect 2025 capex to be compared to 2024? Second question is on share repurchase. I see now that the dilution is only 6%. How do you think around the share repurchase when the share count is down to 0% dilution? Will it then slow down the repurchase or just continue in the same pace as now? And third and final question there is on focus going forward, like in two years time, you're probably, or you're about to deliver the Blackwood project, hopefully on time on budget. So just wonder as a CEO, what will be your focus after Blackwood? Will it be a new big project or should we expect the IPC to become a cash

capital? Okay, thank you Theodore. As we look forward to the capital expenditure program in 2025, we will be meeting with the board of directors at the end of this year to confirm our work program and budget we haven't given specific 2025 capex guidance yet. So that'll be something that will come around capital markets day. Now with Black Rod, the majority of the capex for this project will have been spent by the end of this year since it was sanctioned in early 2023. So we expect to be around two thirds to around 70% roughly. Spent of the total budget of 850 million USD on the Black Rod project. Therefore there'll be around 250 million USD remaining, depending on if there's any re phasing at the end of this year. So you can expect that the capex program for 2025 is likely to be around 250 or in excess of that, just that Black Rod alone. And so that's a general guide, but until we get formal approval for the work program and budget, I'm a bit hesitant to provide any further details on that. For the share buyback question, as you had noted, we're at around 6% share dilution since the company was formed and of course, materially increased the overall value of the business through prudent operational management of our assets, as well as through executing accretive acquisitions. We don't have a specific share count reduction target number as we've mentioned before, we're focused on maximizing the value for our shareholders here in this business. And provided we continue to trade at a steep discount as we are, the form of shareholder returns will go towards buybacks rather than dividends. So, is there a scenario down the line here where we actually go below zero upon Black Rod coming on stream, that could be a situation if we continue to trade at that steep discount. So, we continue to assess where the company's trading, what our underlying value is, and dictate our shareholder returns on that basis. As we look towards Black Rod, and you're right there, it's tracking very well, we're getting closer and closer to this project coming on stream, which is very exciting. And for a focus for IPC, it's again, we feel we have the ability to do it all as we have been. And when I say do it all, I think of organic growth, we're developing Black Rod now, we think of shareholder returns, we're buying back our stock, we think of M&A, we've done five accretive acquisitions since the company was formed, and most recently was in 2023 with the core four acquisitions. So, we did that at a time when the Black Rod project was also sanctioned. So, I think we'll have the ability to continue to grow organically, whether that be future phase expansions at Black Rod, maintain our shareholder returns, either in buybacks or dividends, and also look to grow through accretive acquisitions on the M&A market. But one can be rest assured that with the owner operator mentality here, we are gonna do everything in our ability to maximize the value of this portfolio.

Okay, thank you.

Thank you. We will take our next questions from Tom Eric Christiansen from Pareto. Your line is open. Please go ahead.

Thank you for taking my question. One for Will and one for Christoph. So, Will, you now have more than 50% of the capital for Black Rod behind you. Balance sheets remain strong and you keep hedging. Are you setting up the capability to do more M&A next year as well? And do you see more opportunities with current volatility in the oil market? Or is it too early to see anything in that market yet? So, Christoph, long-term, if you look at the own spend now at Black Rod, say when you stand there in 2027, how should you think about the correct depth level for IPC on a going forward basis? Is there a scope to increase net leverage? What's that called risk behind you? And thereby, you know, either grow more rapidly or more easily than that or buy back more shares. Thank you.

Thank you. Thanks for the question there. And to your point around the M&A and some hedges that have been taken by the company when we think about M&A, sometimes a little bit of volatility in the market supports that where we hope that there can be high quality assets shed for a discount and we can be in the right place the right time to pick that up. Now, it's a bit of a cliche answer, but we remain opportunistic to growing through M&A. So, we stay active, reviewing and screening opportunities and provided the right asset opens up on the market and we can execute a deal without stressing the company's balance sheet too much, then we will be open towards looking at that. And looking further ahead to Black Rod 2026, 2027, coming on stream in terms of what our projected leverage ratio or net debt is going to be. I mean, that's largely gonna be subject to market conditions and oil prices. So, it's hard to give a specific number at this point in time. I can say is that the company is sitting very well at this time in a financially robust position. And so, as we get Black Rod coming on stream, the amount of free cashflow generation is gonna be very significant to the business. We're gonna have the ability to rapidly pay down our debt whilst looking to also grow through M&A further and amass a war chest as well as try and maintain shareholder returns as well. So, again, similar to the question that was asked prior, we look to try and do it all.

Okay, thank you.

Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. We will take our next questions from Mark Wilson from Jeffreys, your line is open, please go ahead.

Yeah, thank you very much. Excellent operations as ever across the portfolio and including your international assets. And you highlighted the Brent-linked realized prices for Malaysia and France. Could you just remind us of the strategic angle for keeping those international assets in the overall portfolio? Is it this Brent hedge versus Canadian commodity prices, obviously very low gas in the past quarter. Is that the reason or is it to keep an international angle to the business or potentially a future growth in that business? That'd be my first question, thank you.

Thanks, Mark. So the Malaysian-French assets that we have in the portfolio were of course the foundational assets that IPC began life with upon the non-Norwegian assets being spun off from Lundin Energy. And these assets have really supported IPC to put us in a position where we are today and growing the business. They've delivered a lot of free cashflow over the years and continue to do so with the high quality Brent-linked production. With these assets, we look to continue to generate optimal returns from them and they both have very intriguing undeveloped opportunities sitting within their contingent resource categories that we look to continue to mature. In terms of the overall value within the portfolio, it's just shy of 20 sec per share out of the around 240 sec per share fair value based on our 2P reserves as of year end 2023. So there's still a lot of value in these assets and we remain opportunistic. And if we have the ability to grow in the jurisdictions where we operate in, namely in Malaysia, it make a lot of sense to leverage the connections that we have with the government there as well as utilize the best in class teams that we have overall in the region. So these assets are high quality in nature and deliver robust free cashflow to the business and we look forward to continue to maximize the value of them.

Okay, thank you. I was actually gonna ask what percentage of the NAV they are, but you've already done that, so thank you very much. Can I, just one more, can I ask Christophe about that, the gas outlook commentary that you gave, please, and the hedging, if you could just comment on that for the Canada Gas, thank you.

Yeah, no, the gas prices are currently fairly low as I mentioned and that's derived from the very high storage level you've seen in Alberta with some high injection rates over the last few months. The good news is that some gas producers are self-constraining their own production and with LNG Canada coming on stream, probably towards the end of this year with a progressive ramp up until next summer, we were anticipating as the forward curve does that gas prices are going to rebound. So that's one, and the other element is that we've seen quite a high volatility in oil prices and so we felt it was prudent to hedge a tiny bit of our WTI exposure. We don't love, but we don't hate the $70 level, if you wish, for WTI, which is around where we are. It's gone below 70 in the last few weeks. And so we're probably going to layer in some more hedges whenever there's an oil spike on the markets. We like the idea of securing some of our operating cashflow for next year. As Will mentioned, it's too early to disclose what our capex budget will be for next year. It will be lower than this year, but it will still be significant. And so as we communicated over the last few quarters, few years, we are not in the business usually of imposing or hedging strategy to our investors, but we would do some of that when we have reasonably high capex or high debt maturities and the capex will still be there. Again, it's good news that we're going to spend capex next year, it just means that the Black Rod project is progressing extremely well and we're very proud of that and the team's doing it.

Very good, thank you. I shall hand it over.

Thank you. Idair, we have no further questions. So I will hand back to your host. Please go ahead,

sir. Okay, we have a couple of questions online. The first one is in Malaysian operations. Could there be some drilling in 2025?

Yeah, there's a very intriguing opportunity in Malaysia. We actually have a couple locations that we're holding in our contingent resources within the Northeast structure. We think there's some undrained oil potential that needs to be accessed through another penetration in the reservoir there. So largely going to be a capital allocation decision, whether we sanction that project for 2025 or not. The point being there is further upside drilling potential in Malaysia, but not definitive at this point in time, whether it would go forward in 2025 or not.

Okay, and then moving to Canada. What activities are on the critical pass for Black Rod and how much delay risk do they have?

Yeah, in Black Rod, when we sanction this project from the beginning of 2023, we made sure to put some provisions in place, whether that be schedule allowances or contingencies. We took 110 million USD contingency provision for this project and we're happy that a lot of that contingency hasn't been consumed so far since the project was sanctioned. As we look forward to the critical path activities for this project, it's similar to what I had noted at the prior quarter, which is ultimately the detailed sequencing and phasing of events as it relates to having the equipment delivered to the fabrication shop, getting the modules assembled and delivering the modules to the CPF and ensuring that your CPF is ready to accept all of those modules for the overall installation at site. So if we look at mechanical, even electrical, all long lead equipment has been ordered, everything continues to track in accordance with plan on this project. So there's not really one particular item as it relates to a critical path that's gonna potentially compromise the overall schedule or budget there. It's gonna be things that are in control or are control continuing to maintain that and things that are outside of our control, whether it be weather events or extreme weather events, those type of things can potentially impact some of the productivity and efficiency that we're seeing but with the provisions that we've implemented into this project from a cost and schedule standpoint, we feel really well positioned to deliver within the budget even if there are some hiccups or extreme weather events that take place. And another part of the key scopes here is the connection, the pipeline connections to this project. So TransCanada's been out in both South is gonna be taking care of the natural gas and dilbit pipeline to be installed at the Black Rod project. And those pipelines continue to progress and are being installed through this winter period. Also the diluent line is already put in place and just the lacked unit is needed to be installed. So we sit well in order to deliver on the Black Rod project. And the other key scope being drilling is definitely not a critical path item. And we're achieving really good rates in terms of the pace of drilling that we've seen so far. Also the costs have been coming in line with expectation.

Thank you. The next question is, what are your thoughts on the draft regulations on the emissions released yesterday in Canada?

Yeah, no anticipated. There could be a question on this. It was just announced yesterday. Yesterday, I think it was later in the afternoon in Canada. So the submissions cap proposal that's been proposed by the federal government that targets a 26% emission reduction come 2030 using 2026 as the baseline year. And so this is a new regulation that is being rolled out. And as one would expect, there is quite a lot of pushback from industry on this type of proposal. What we've been doing and we have a very prudent approach as it relates to our emissions management strategy for IPC is we have been working on CCS implementation at Onion Lake Thermal. And I should say study work specifically to start to determine if we want to go forward with an implementation of carbon capture and storage facilities within our Onion Lake Thermal asset specifically. And if we were to do that at OLT, we would be in compliance of this proposed framework. Now, that was a part of the prudence in our strategy that despite this formal regulation not being out yet, we still set a budget this year to spend around a million dollars at that asset further looking into the studies. And so I do think that this in general is a punitive proposal from the liberal government that's been put out. There's no other exploration producing country or oil producing country I shall say that has this type of framework in place. And there is an election also that happens in October of 2025. Nevertheless, we will still do our part and continue to assess implementing some serious emission reducing technologies. And we'll continue to evaluate the impact of what that may be on the business.

Thank you, Will. And the next question is to Christoph regarding financing. What terms and amounts would be available to you for secured financing right now? And any color on availability, credit margins, and if there would be any hedging requirements is much appreciated.

Yeah, no, we were very happy that we have good relationships with Canadian banks. And so they're making this 180 million CAD revolving credit facility available to us that's fully committed, fully available, fully in drone. I think it's fair to assume that we could raise more under that revolving credit facility if we need it. So whether in, if we needed more for current operations, if we needed more for an acquisition, I believe that there is certainly some appetite to support IPC from those Canadian banks and from some other Canadian banks whom we talk to regularly as well. In terms of credit, I mean, they're reasonably standard. You can assume around base rate plus 3%. It depends on the leverage, but so it's not dissimilar to the coupon we're paying to the bonds. Good news is that there are usually no hedging requirements attached to those loans. And again, balance sheet remains a strong position and we have no doubt that we could raise more financing, more debt if we needed to.

Thank you, Christophe. And that's all we have time for today.

Okay, well, thanks very much everyone for tuning in to the update presentation and a special thanks to all IPC personnel across the globe for delivering another good performance through the third quarter. And we look forward to updating everyone next time at in early February for the year end results presentation and capital markets day update. Thank you.