International Petroleum (TSE:IPCO) executives highlighted strong operational execution and progress at the Blackrod Phase 1 development during the company’s 2025 year-end update presentation, while noting that capital spending kept full-year free cash flow negative.
President and CEO William Lundin and CFO Christophe Nerguararian said production and costs came in at or better than guidance, the company delivered “first steam” at Blackrod earlier than expected, and IPC refinanced its bonds to extend maturities to 2030. Management also emphasized share repurchases completed under the company’s normal course issuer bid (NCIB) program.
Production and operating performance
Operating costs were described as stable and disciplined. The company posted operating costs of $18.40 per BOE in Q4 and $17.80 per BOE for the full year, which management said was slightly below its guidance range of $18–$19 per BOE for 2025. Lundin attributed the lower full-year unit costs primarily to cheaper energy input costs in Canada and slightly higher production than the mid-case estimate used at its 2025 capital markets day.
Management also pointed to sustaining work that supported output during the year, citing activity at Onion Lake Thermal in Canada and drilling and workovers at the Bertam field in Malaysia, which Lundin said boosted production midway through 2025.
Blackrod Phase 1: first steam, budget status, and timing
A central theme of the update was construction and startup progress at the Blackrod Phase 1 development. Lundin said IPC delivered first steam at year-end 2025, around a quarter earlier than originally guided when the project was sanctioned in early 2023.
Spending at Blackrod remained substantial in 2025. IPC incurred $228 million of growth capital at Blackrod Phase 1 during the year, bringing cumulative spending to $820 million since sanction, out of a total growth capital budget of $850 million. Management said the project remains on budget and that first oil is expected in Q3 2026.
Lundin also noted that after IPC accelerated the schedule and brought forward drilling for the final pad at Blackrod, the company raised its 2025 capital guidance to $340 million from $320 million. Drilling progressed well and is expected to continue into 2026. Beyond growth capital, IPC spent $26 million in 2025 on capitalized operations and resource maturation work at Blackrod, with operating-related expenditures expected to rise as the project transitions from build to startup and then be reclassified to operating expense once commercial production begins.
Cash flow, capital spending, and balance sheet
IPC reported operating cash flow of $63 million in Q4 and approximately $259–$260 million for the full year. Lundin said the result was achieved with a full-year average Brent price of $69, adding that IPC’s prior midpoint assumption at its 2025 capital markets day had been $245 million of operating cash flow at $75 Brent. In Q4, Brent averaged $64, with management citing a wider Brent-to-WTI differential of $5, while the WTI-to-WCS discount remained tight at around $11 through the year.
Total 2025 capital expenditure, including decommissioning, was $344 million, in line with IPC’s guidance of $340 million. Because of the elevated Blackrod investment, IPC reported free cash flow of -$153 million for the year after growth capital spending. Lundin added that free cash flow before Blackrod expenditure was $103 million. He also noted that free cash flow comparisons versus earlier guidance were affected by both the revised capital program and the company’s decision to opportunistically call and refinance its bonds, which had not been included in the base-case assumptions for 2025.
On the balance sheet, IPC ended 2025 with net debt of $484 million. Nerguararian said the increase reflected the final phase of heavy spending at Blackrod and completion of the share buyback program, noting that IPC generated about $260 million of operating cash flow, which covered Blackrod Phase 1 investment but not non-Blackrod capital spending. He also cited approximately $100 million of share buybacks and said net debt rose by around $280 million over the year.
Nerguararian said IPC refinanced its $450 million in bonds in late 2025, closing in October and extending maturity to late 2030. He added that the cash cost of the refinancing was around $18 million. IPC also highlighted access to a CAD 250 million revolving credit facility in Canada; the CFO said $50 million was outstanding at year-end and that the company maintained strong bank support and liquidity. Management described leverage as around 2x at the end of 2025.
In a balance sheet snapshot, Nerguararian said cash declined from $246 million to $7 million by year-end as funds were invested into assets. Oil and gas properties increased from $1.5 billion to close to $1.8 billion, which he linked primarily to the Blackrod Phase 1 investment.
Pricing, hedging, and shareholder returns
Management discussed pricing dynamics across IPC’s portfolio. For 2025, the CFO cited average benchmark prices of $69 Brent and $65 WTI. He said the WTI/WCS differential averaged -$11, describing it as close to a record low for the Canadian market, supporting profitability. He also said IPC’s France crude is sold on parity with Brent and that Malaysia cargoes continued to achieve premiums above dated Brent, adding that IPC was seeing “very high premiums” for Malaysian cargoes in the first quarter of 2026.
Gas pricing remained a headwind. Nerguararian said storage levels were high in Canada—particularly Alberta—and that the decoupling between Canadian and U.S. gas prices continued. However, he said gas prices were seasonally higher in the fourth quarter and pointed to the LNG Canada plant running its second train, which he said is expected over time to help alleviate storage congestion.
IPC also said hedging helped financial results in 2025. Management stated that the company generated gains on WTI, Brent, and gas hedges, while losing money on differential protection and some FX hedges. Overall, the company said hedging contributed positively to performance in Q4 and the full year, and management indicated it would discuss additional hedging for 2026 later during its capital markets day presentation.
On capital returns, Lundin said IPC completed its 2024–2025 NCIB by repurchasing 7.7 million shares, representing an approximate 6.5% reduction in shares outstanding, and said IPC’s share count is now below the level at inception. He also said IPC has repurchased 77 million shares in aggregate since inception, at an average price of 79 SEK per share (or 11 CAD).
Finally, management reported that there were no material health, safety, or environmental incidents recorded in 2025 and highlighted safety performance at Blackrod, including no material incidents and no lost-time injuries since development began in 2023. Questions submitted during the session were deferred, with management indicating they largely related to forward guidance to be addressed later during the company’s capital markets day.
About International Petroleum (TSE:IPCO)
International Petroleum Corp is an international oil and gas exploration and production company. It is engaged in the exploration, development, and production of oil and gas. Geographically, the company holds a portfolio of oil and gas production assets and development projects in Canada, Malaysia and France. It is based in Canada and derives revenue from the sales of gas, crude oil, and natural gas liquids, of which key revenue is derived from the sales of crude oil.
