InPlay Oil Provides Operational Update and Preliminary 2022 Outlook

InPlay Oil Corp. is pleased to provide an operations update and a preliminary outlook for 2022.(1)

InPlay continues to achieve strong results from our 2021 drilling program focused on the Pembina Cardium asset acquired in the fourth quarter of 2020. The three 100% Pembina Cardium Extended Reached Horizontal (“ERH”) wells drilled in the first quarter of 2021 continue to flow without artificial lift and outperform our internal forecasted production volumes. Performance of the next three 100% Pembina Cardium ERH wells brought on production at the end of July has exceeded that of the three drilled in the first quarter of 2021 to date. The average combined initial flowing production rates from these latest wells over their first 30 days was approximately 1,530 boe/d(2) (78% light oil and NGLs), based on field estimates. These wells are currently producing at an average combined rate of approximately 1,737 boe/d(2) (71% light oil and NGLs), based on field estimates. This outperformance is expected to generate another record quarterly production rate for InPlay in the third quarter of 2021 of approximately 6,000 boe/d(2) (67% light oil and NGLs), based on field estimates, which represents approximately 11% growth over our previous record production level set in the second quarter of 2021.

Drilling will start on our final two 100% Pembina Cardium ERH wells for 2021 in the upcoming days and these wells are expected to be on production in the second half of October. This activity is forecasted to result in another record quarterly production rate in the fourth quarter of 2021. The strong results of the new wells, low decline on base production and the additional two ERH wells to come on production has InPlay anticipating the Company will be on the high end of our recently increased 2021 annual average production guidance of 5,500 to 5,750 boe/d(2) (68% light oil and NGLs). InPlay is also on track to generate record Adjusted Funds Flow (“AFF”)(3) and record low corporate debt leverage ratios in the third and fourth quarters based on our current 2021 guidance.

The 2021 results provide the Company with a strong foundation heading into 2022. Preliminary production targets are for the Company to average 6,300 to 6,550 boe/d(2) (67% light oil and NGLs) for 2022 which would represent a 12% – 16% increase over our 2021 annual guidance, all achieved through organic drill-bit growth. This organic growth rate is expected to be at the high end of our light oil peer group. Based on current West Texas Intermediate (“WTI”) strip pricing of US $66.30/bbl, this would result in an annual record targeted AFF of $71.5 – $74.5 million and Free Adjusted Funds Flow (“FAFF”)(3) of $32.5 – $35.5 million, based on an assumed $38.0 – $40.0 million capital program drilling 12 – 13 horizontal wells. Based on InPlay’s current market capitalization of $75 million, this would imply a 43% - 47% FAFF yield(3). Reduced debt levels from this significant FAFF would equate to a targeted net debt to earnings before interest, taxes and depletion (“EBITDA”) ratio(3) of 0.3x to 0.4x for 2022.

The Company will continue to be disciplined and flexible with capital spending. Final decisions for our 2022 capital program are expected to occur in late 2021 or early 2022 and will be largely influenced by commodity prices at that time. InPlay is executing on our strategy of measured production per share growth with excess FAFF focused on maximizing returns to shareholders.